7 Best Crypto Lending Platforms of 2023
It’s not hard to see that the digital age has left a permanent mark on the world of finance.
Cryptocurrencies, and the distributed ledger technologies on which they are built, have changed how we make various transactions in our everyday lives.
Nowadays, cryptocurrency trading platforms and exchanges have become a preferred choice for people interested in buying and selling digital currencies.
There is, however, another way people use cryptocurrencies to their advantage, and that is through crypto lending platforms.
With more businesses starting to accept cryptocurrencies as forms of payment, lenders now offer the possibility of borrowing cash against crypto assets stored in a crypto portfolio tracker.
Thanks to this new technology, borrowing and lending are no longer limited to banks, allowing individuals faster and more efficient ways to get the funds they need.
Finding a crypto lending platform is not tough, with a market exceeding $10 billion in loan origination.
However, finding the right lending company for your needs is not always easy.
Each platform will offer different features that will suit some more than others.
In this article, I’ll share with you the best crypto lending platforms available right now, platforms that might quickly become the future of banking.
For this reason, it’s important to know what’s available in the crypto lending space.
Let’s dive deep into this topic.
The following are the best crypto lending platforms available right now.
Nexo helps you invest in cryptocurrencies and earn interest, trade coins or borrow money against your digital assets, as well as get a return on your investment.
Nexo makes it secure and straightforward to create your cryptocurrency or crypto-backed loan by providing the proper authentication and supporting multiple assets.
Nexo currently has over 2.5 million users and continues to increase.
The Nexo platform connects the traditional banking system and the crypto economy, making it easier to invest in cryptocurrencies.
The Nexo platform also has an industry-leading security architecture to safeguard your money at all times.
- You may use Nexo to put your idle assets to work right away and obtain a regular source of passive income without taking any additional risks.
- Simply top-up your account, and you’ll receive up to 20% yearly interest right away – there’s no need for further action on your part.
- Select a coin and a quantity to see how much interest you might be earning on your assets with the right investment.
- You may safely store hundreds of tokens while simultaneously growing your portfolio.
Are you looking to buy, sell, or trade cryptocurrencies? If so, BlockFi is one of the best ways to do so.
With a minimum loan amount of $10,000, BlockFi allows you to borrow cash against your crypto assets, so you can obtain a loan while retaining crypto possession.
It is quick and straightforward to open an account and create a new BlockFi Wallet by entering basic details.
You can then buy, sell, and store your cryptocurrency whenever convenient for you.
Over 1 million clients and 350 global institutions trust them to safeguard over $10 billion in assets.
- Increase your stack without having to sell any of your crypto assets.
- You may borrow up to 50% of the value of your cryptocurrency with a BlockFi loan.
- You may utilize your crypto-backed loan to acquire a wide range of assets.
- They offer the possibility of providing you with USD as payment, and then you return Bitcoin (BTC), Ethereum (ETH), or Litecoin (LTC) in exchange.
3. Celsius Network.
Celsius Network is a worldwide social network for cryptocurrency investors that pays out up to 17% interest on crypto holdings.
Every week, you’ll get paid new coins and borrow money at a 1% interest rate.
You can easily buy, sell, and store your cryptocurrency whenever it is convenient for you.
With no fees, you may earn, yield, borrow and transfer crypto in various ways.
You can use your web browser or even a dedicated mobile app (iOS or Android) to earn and borrow money.
One great thing about Celcius is that, like clockwork, you will get paid every Monday.
- When you choose to earn Celcius (CEL) tokens, you will get up to 25% more rewards.
- Earn up to 17% annual percentage yield (APY) weekly when meeting their requirements.
- You may get a loan at a 1% annual percentage return with your crypto.
- Use your cryptocurrency as collateral instead of having to sell it.
- With no origination fees, you won’t have to worry about hidden charges sprung on you.
- Celcius offer some of the lowest industry rates currently available on loans.
Unchained Capital helps you unlock the value of your crypto holdings.
They make it super convenient for you to make the most when lending Bitcoin, and other currencies, by keeping control of your crypto keys.
Self-custody is their solution to protecting your cryptocurrency, regardless of its value.
In addition, each team member has their key, with the ability to sign transactions as needed.
This eliminates the need for a separate multi-sig wallet for each team member and allows for more granular access permissions.
Begin immediately with personalized one-on-one coaching that will help you better understand your financial situation and formulate an action plan.
You can store bitcoin in self-custody on a tax-advantaged basis, which means you have complete control of your assets and all key management actions.
- They give you the power to control your private keys, so there is no need for extra security layers.
- Start with their free customized advice to grow your Bitcoin
- Bitcoin can be purchased or borrowed directly to your vault at favorable rates.
- You may buy or sell bitcoin without selling your coins for dollars.
- Most trusted hardware wallets are supported through Unchained Capital.
Oasis Borrow uses its digital currency known as DAI to perform transactions on the blockchain.
DAI is one of the world’s first free-market currencies, and its value always moves in tandem with the US Dollar.
Being a stable coin, DAI is a cryptocurrency that avoids the fluctuations common among other digital currencies.
If you use the DAI to acquire extra collateral, it will be applied immediately to your Oasis.app account and may be utilized right away.
You may borrow DAI and use it to acquire more collateral in one transaction, making it a highly efficient service.
You may also deposit collateral and earn up to 4x on your ETH in leverage-like trading – all while retaining the protocol’s security.
Users can borrow Dai and create Multiplies, similar to leveraged or margin positions, without borrowing funds from a centralized counterparty.
This can be accomplished using Oasis Multiply, built on top of the Maker protocol, 1inch DEX aggregator, and Aave.
- You can open a multiply position with no prior Vault requirement, which means that you can borrow at will without having to wait for funds to clear or even needing previous borrowing history.
- Entering into a collateralized position with the click of a button within your wallet is made easy.
- You can increase your risk without adding new collateral, so selling your collateral for a margin call is unnecessary.
- Closing your safe vault can be done in one click, without the need for DAI or collateral, allowing you to exit a trade before it’s liquidated.
Compound Finance applications are limited by a current permission paradigm that ties developers to vendor-specific, proprietary libraries.
Institutions can earn, manage, report, or remit investors earning interest on their cash securely.
This company’s protocol enables software developers to build financial applications that anyone can use safely and efficiently.
Invest in various precious metals and commodities while securely storing money and sending it through their secure wallet.
With no seed phrase or gas fees required, you can pool with other digital asset owners to receive more frequent earnings and make your money work better for you.
- View a visual overview of your compound and automatically track all interests.
- Create a Compound Finance transaction and fill in the blanks with data from your existing MakerDAO CDPs.
- COMP token-holders will be able to work without any gas fees involved.
- Automated portfolio management allows for volatility to be mitigated with great accuracy.
Aave provides its users with the opportunity to take out loans that aren’t backed by any collateral.
Aave’s Flash Loans were explicitly designed for software developers, allowing them to borrow instantly without the need for collateral – as long as the liquidity is returned in one transaction block.
If this does not happen, the transaction is canceled to rewind all operations completed by that point.
This prevents any issues that could arise while trying to borrow funds.
Flash Loans allow you to benefit from liquidity as it comes in and then sell when the time is right.
- The distribution of assets to the users is carried out through smart contracts, ensuring that the funds in the reserve pool are secure.
- Blockchain removes restrictions on conventional lending and allows you to borrow rapidly according to your company’s needs.
- Flash Loans do not need any money to get started, lowering the barrier to entry and making them a valuable instrument for anyone to get going.
- The Aave protocol’s governance will be responsible for adjustments to the fee structure.
Other platforms not mentioned in this article include YouHodler, Binance, and Coinloan.
Crypto loans are provided in cryptocurrencies, generally offering digital tokens against some other type of currency.
The right cryptocurrency lending platforms allow you to borrow using crypto by offering financial services not available in traditional banking products.
True to their name, crypto lending providers are built on the blockchain, which provides crypto-tokens for borrowing money, whereas traditional banks and P2P platforms give out fiat loans.
Some people prefer to use crypto lending platforms for various types of trading, while others favor such platforms due to their anonymity and security.
The great thing when choosing the right platform is that you can invest your money into these projects with relative certainty that your funds will be safe.
As more time passes, there are several completely transparent ways in which loan applications are dealt with to ensure that this remains the case.
There are many benefits associated with crypto lending, especially when it comes to cryptocurrency.
One of the most significant benefits is keeping your cryptocurrency while still earning interest on your investment.
As an investor, you can choose to lend out some of your coins while using others for different purposes.
Blockchain technology has also made it easy for entrepreneurs worldwide to raise funds swiftly by using cryptocurrencies instead of fiat money.
This new form of funding overcomes geographical limitations and allows anyone worldwide to invest their money in a business.
When you lend money to crypto lending platforms, your funds might be converted into US Dollars or other fiat currencies and loaned out in exchange for high-interest rates.
This way, lenders can acquire the correct type of currency without different processes involved.
Let’s now compare traditional lending with crypto lending to understand their difference.
P2P (peer-to-peer) Lending Platforms offer their users loans backed by deposited assets.
This means that if the borrower defaults on their loan, they lose their assets.
Crypto-backed lending works differently – it does not require an interested party to give up any assets to get funds and allows them to keep all crypto while getting a loan.
In P2P lending, the interest rates are generally fixed, whereas crypto-lending platforms offer customers flexible interest rates depending on trading volume and possible liquidity.
This makes it easier for people to get loans since the platform itself decides the loan terms of borrowing based on their funding needs – unlike traditional P2P networks, which choose funding options based on one’s credit score.
There is also no need to exchange money when you lend cryptocurrency because everything takes place over the blockchain.
This increases transparency across all transactions that take place through this process.
Finally, P2P lending traditionally works with fiat currencies, while crypto loaning uses cryptocurrencies as its transaction medium.
Traditional banking platforms are defined as centralized, which means that a single company or individual operates the platform.
In addition, legacy finance institutions will keep your funds and lend them out as needed to people on the other end of the spectrum.
This ecosystem is not very transparent because these companies keep their records hidden from everyone except those they share them with.
It’s important to note that there is no transparency regarding any dealings happening with traditional banks.
With crypto lending, everything is transparent and visible on the public ledger, which means that all transactions are open to everyone who has access to the internet.
Another benefit when comparing traditional lending versus crypto lending is that a crypto exchange over the blockchain takes place instantly.
There is no need to wait for any approval before you can process your transaction.
This also makes it easier for potential customers to check past reviews of the platform they choose and see if previous customers have had good experiences.
This happens quickly and easily before entering into contractual agreements with such platforms.
Exchanging cryptocurrencies through crypto lending platforms requires much less time than exchanging fiat currencies.
Central banks usually impose restrictions that say you must give them a specific number of days in terms of the notice.
Finally, similar to P2P networks, traditional lenders usually use credit scores to determine how much a person can borrow and at which interest rate.
This means that they usually only allow those with a high credit score and/or high income to borrow money from them.
Since crypto lending platforms don’t use credit scores, most can access cryptocurrency without worrying about their credit score or the amount of money they make.
You need to carefully consider the following factors before taking out a crypto loan.
When you lend cryptocurrencies, you are opening yourself up to exchange rate risk, which means that the value of your cryptocurrency could go down during repayment.
This may cause problems since borrowers will have to pay more to cover their loans if the cryptocurrency price decreases over time.
The exchange rate affects crypto-backed loans since they are paid back in crypto.
The interest rates that lenders charge on their loans will vary depending on the platform being used.
While some platforms charge high rates, attempting to take advantage of borrowers who don’t know how much their crypto is worth, others are more reasonable and in line with market standards.
You need to make sure that you understand all the terms and conditions before making any agreements with these companies.
Interest rates might change based on many factors.
In such situations, borrowers usually pay higher amounts than the original loan was for.
Before you borrow any money, it’s essential to check out the platform’s reputation in the crypto community.
You can do this by checking social media platforms to see if any unsatisfied customers haven’t been able to repay their loans or were scammed after borrowing money from such platforms.
It would help if you also looked for members of the team who have a public profile and got in touch with them to help answer any questions you might have.
Ensuring that a knowledgeable team is behind these companies can help you feel confident if anything goes wrong.
Lending cryptocurrency in a crypto loan market with vast growth potential can be profitable if you borrow money to buy more cryptocurrencies.
However, the value of your debt may increase over time during repayment since interest rates are high in most markets.
This means that you will have to borrow more money to keep growing your profits.
Understanding your loan to value ratio is key to ensuring that you stay on the positive side of the equation.
When someone takes out a crypto loan, they must choose between short-term and long-term repayment plans.
Some lenders only allow people to repay in short-term loans – usually less than one year – while others can set terms for borrowers for periods as long as three years.
The shorter the repayment period is, the higher your interest rates.
The cryptocurrency lending platform of your choice should give you the flexibility to repay your loan either occasionally or in equal installments.
Having a minimum deposit limit on your account can be a huge inconvenience, especially for newbies who don’t have enough funds to cover their loans.
If you withdraw more than the limit, there may be specific fees that you will need to pay, and these can vary from one platform to another.
Having a deposit limit might also mean that you cannot withdraw all your money and use it in other investments without paying unnecessary fees.
With various crypto lending companies allowing borrowers to borrow as little as $10 or $20, some might consider this not to be very profitable.
In such cases, the interest rates would be too low compared to those you will pay for larger loans.
On the other hand, if you can only borrow large amounts but only need smaller ones, there’s no point in borrowing money.
It will take a long time before your investment starts generating any profits in these circumstances.
You should choose a company that has flexible minimums and maximums so that you can scale your repayments according to your needs.
Crypto lending platforms often require extensive personal documentation to be submitted.
This might include information such as proof of residence, ID cards, and more.
On the other hand, some platforms don’t require any of this. It’s essential to ask about what’s needed before using any company’s services.
DeFi lending platforms are decentralized finance platforms that allow borrowers to amongst other things, take out cryptocurrency-based loans.
They work similarly to traditional bank-issued loans, where investors can lend their money to borrowers who pay back an interest rate on the principal amount.
These rates vary according to many factors.
There’s usually no centralized authority on these platforms, which means that anyone can apply for such loans.
Some of these platforms even let borrowers create their terms for the loan they want to take out from lenders who must decide whether to trust a particular borrower or not.
Fintech companies are adopting blockchain technology because it allows them to remove the need for a central authority on their platforms.
Instead of having third parties manage funds, companies create smart contracts responsible for handling these tasks.
Crypto lending companies usually have multiple smart contracts on their platform, including those that borrowers use to set up terms for loans.
In addition, others will have further contracts that help investors release funds after the conditions for repayment have been met.
Staking, which is the process of storing funds in a contract until specific conditions are met, can also be automated on these types of companies.
While a credit card company or a bank might take several business days before releasing money to you, smart contracts can sometimes release the funds within minutes, making it an attractive technology for fintech companies.
USDT and USDC coins are two stablecoins that Tether created.
They can be used as a hedge against volatility on cryptocurrencies since their value is usually tied closely to the dollar.
People use these types of tokens to store funds because, unlike most other cryptos, they don’t have high volatility.
You can use them as collateral for lending platforms and decentralized finance applications.
As a lender, cryptocurrencies can be a great way to generate passive income from your investments.
Understanding the terms and conditions involved is key to a win-win situation for all parties involved.
With that said, both lenders and borrowers need to understand how cryptocurrency platforms work to make informed decisions in these types of situations.
To summarize, the best crypto lending platforms right now are:
- Nexo: Best overall crypto lending platform right now.
- BlockFi: Best for those wanting to borrow cash when acquiring various assets.
- Celsius Network: Best for having the power of crypto lending on your smartphone.
Be sure to check out these platforms and see which one is the best for your needs.
Also, remember that you should take investment advice carefully and always do your research to form your own opinions in any situation.
Finally, make sure you do not invest more than you can afford to lose.
What do you think about crypto lending platforms? Is there any other crypto lending platform I should include in this list? Let me know in the comments section below.
Further reading on AdamEnfroy.com: Want to take your crypto and NFT knowledge to the next level?
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