The information contained herein, mainly regarding cryptocurrencies and the state of digital networks does not intend to be a source of advice or credit analysis with respect to the material presented. Ergo, the information and/or documents contained in this website do not constitute investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting the company with an expertise in crypto. The author suggests to consider and evaluate each of the risk factors and all other information contained herein. It is worth noting, however, that trading and investing in cryptocurrencies solely rely on how well a customer perceives the digital asset based on its market industry.
The pandemic is still present and continuously making a depression on the economy of most third-world countries. This has been the most challenging year for the countries who have been affected by the virus. Numerous establishments, businesses and institutions have been forced to close due to the massive impact. Even the cryptocurrency and legacy markets have plummeted and are now struggling to recover.
However, during the last months of the year 2020, many venues have risen to make a change, combat and flow along the current unprecedented happenings. I can still remember when Bitcoin reached $12,000 in August — a significant jump from the $3,600 price plunge. Although it was not only Bitcoin who made an impressive rally for cryptocurrency, we also have Dogecoin, KCS and a lot more. While the economies around the world are still scrambling, these tokens are continuously dominating to stand out as valuable financial assets despite the tumultuous year.
This could be the best time to introduce crypto lending in the market.
Crypto lending is a type of trade where users can lend out their cryptocurrencies and earn an interest from it. In short, crypto lending is an alternative investment form. They can lend either fiat money cryptocurrency to other borrowers in exchange for interest payments. Basically, the idea is just the same with lending money to another person. There would be two main parties involved in this loan — borrower and lender.
The interest will depend on some cases, but oftenly very competitive. Other platforms also offer loans with up to 12% interest on Annual Percentage Yield or commonly known as “APY.” We also have assets with collateral, usually with crypto, and thus called crypto-backed loans. However, a lender can also set specific parameters for borrowers to consider such as the duration of the loan, the interest rate and the minimum amount required.
Frankly speaking, I am still gathering my resources to fully understand the process but it really caught my interest. So, I have listed here my top 5 crypto lending platforms that are worth noting.
On the 5th place, we have Lendroid. A platform that was founded in 2017 and was known to develop the need for reliable credit in the blockchain space. Lendroid is a trust minimized, open protocol on the Ethereum blockchain. Lendroid powers peer to peer loans and lending-based dApps on the blockchain. Technically, it is a non-custodial lending engine powering financial services on the Ethereum blockchain.
This decentralized peer-to-peer platform allows traders to access a pool of lenders willing to provide credit lines for competitive fees in exchange for collateral.
The platform focuses mainly on the margin trading market of digital currency. Nowadays, not many crypto exchange platforms offer margin trading options, which allow traders to amplify their exposure with a credit line.
BlockFi was founded in 2017, which aims to be the most trusted financial services provider in the cryptocurrency market. The company prides itself on being on top of their game by providing market-leading rates with institutional-quality benefits.
Inside the platform, they can earn up to 8.6% annual interest rate on BTC, ETH, LTC, USDC, GUSD, and PAX, which made them eligible to buy stablecoins with fiat currency of their choice and deposited into the interest account to start earning interest.
It was also known to be one of the most promising crypto lending platforms that has managed to bag a prominent place in this market landscape. BlockFi is popular for its competitive rates given to borrowers and lenders alike. The platform is specially providing competitive rates for Ethereum and Bitcoin.
The platform is certainly filled with some features that give it a superior edge among the competitors and allow it to emerge as one of the strongest crypto lending platforms.
KuCoin is a well-known name in the crypto industry which was established in the year 2017. The exchange has over 200 cryptocurrencies, more than 400 markets that made them as one of the largest trading platforms in the current era.
The KuCoin app has a lot of features, pleasing UI and offers the lowest trading fee. Undoubtedly, they have the bank-level security, beginner-friendly and a wide range of crypto services.
KuCoin Lend is a C2C product, where users can lend their crypto assets. Users that need to borrow funds will match with appropriate lending orders on their own. According to their website, once the transaction is matched the lending user will receive value-added income from interest payments.
I am glad that KuCoin supports a lot of different coins. I personally prefer lending stablecoins to borrowers and have no worries because the application is firmly secured.
On the 2nd place, a UK-based crypto lending platform named Celsius Network. It was launched back in 2017 as a crypto wallet and mobile application. The platform provides a unique range of financial services. For instance, crypto investors can earn interest by depositing their digital assets to their Celsius Wallet or borrow fiat currency using their crypto as collateral at lower interest rates. This platform has the lowest interest rate among all the applications I have used.
Furthermore, it offers a variety of Crypto backed loans and facilitates borrowing of stablecoins and fiat money against the collateral of digital assets on specific terms.
According to their website, one of the benefits of lending and borrowing in Celsius Network is that the holder can earn 10% APR on 25 different crypto assets including Bitcoin, Ethereum, Litecoin etc.
Last but definitely the least, we have Nexo. It is one of the largest crypto lending institutions globally which offers the world’s first ever instant crypto-backed loans. As of today, they have processed more than $3 billion worth of transactions for over 800,000 clients in 200 countries.
Through their platform, users can earn interest in their crypto or fiat assets deposited in the interest account. The interest rates for crypto stood at 5% and up to 10% for stablecoins and paid out daily.
Nexo has expanded their services with the launch of Nexo Card, which gives qualifying users instant access to the Crypto Credit Line that they can spend without selling their crypto.
As far as interest rates concern, Nexo currently has some of the lowest rates available starting at 5.9% APR. Borrowers can use the funds with the Nexo Card (depending on their location) or withdraw to a bank account.
Nexo is the most famous platform for lending as of 2020.
From the author:
The cryptocurrency itself is a risk and these platforms could be a help for users to balloon their investments. However, the most effective way to manage finances is to acquire knowledge through research.
Cryptocurrency lending can help you access cash without selling your crypto. Money that can be spent for daily expenses.
I hope I was able to at least provide you a gist of crypto lending. Thank you for reading!