Crypto lending platforms typically involve a borrower and a lender. Borrowers use their cryptocurrency as collateral to secure a loan while lenders deposit their digital coins to a platform to earn interest. For example, an investor (lender) may deposit their Ripple to an XRP earning site. The platform then loans the XRP to a borrower and pays the investor interest on their deposit.
What Do You Need to Take a Crypto Loan?
Taking out a crypto loan is relatively easy which is one of the reasons for their popularity. The main requirement is that the borrower must have the necessary amount of collateral in an accepted cryptocurrency to secure the loan. Borrowers may also need to complete a verification process for KYC purposes but this will depend on the platform. One thing that isn’t required to get a crypto backed loan is a credit check.
Usually, crypto backed loans are over-collateralized, meaning that the value of the digital coins being used to secure the loan is higher than the amount of the loan. Some platforms allow users to borrow up to 90% of the value of their collateral but 50% is fairly standard. For example, to borrow Litecoin with a value of $5000, crypto collateral with a value of $10,000 would typically be needed to secure the loan. The amount of the loan divided by the value of the collateral is known as the Loan to Value (LTV) ration. In the above example the LTV of the loan is 50% ($5000/$10,000). Usually, the lower the LTV percentage, the better the interest rate the borrower can secure.
Where To Borrow Against Crypto
The best place to borrow against your cryptocurrency assets is a crypto lending platform. Borrowers have plenty of choices when it comes to selecting a site for crypto backed loans. When selecting a crypto lending platform there are a number of things that should be taken into consideration.
- Interest Rates
- Amount of collateral required
- Loan term duration
- Cryptocurrencies supported
- Minimum/Maximum loan amount
- Minimum/Maximum deposit
- Fees
- Security
These are all factors to consider before choosing a crypto platform for loans.
List Of the Top Crypto Lending Platforms
With so many crypto platforms available today it can take a fair amount of time to do the necessary research to find the crypto platform that fits your needs. To simplify things, we have provided a brief overview of some of the best Bitcoin lending sites and crypto loan platforms to help you narrow the search.
YouHodler
YouHodler is a centralized crypto lending platform that was launched in 2018. Based in Switzerland, they accept. over 50 different cryptocurrencies as collateral for loans. The minimum loan amount on the platform is $100 and the maximum loan duration is 364 days. Loans can be released in the fiat currencies Euros, USD, CHF or GBP. It is also possible to borrow USDT stablecoins on the site.
Loans are available at 3 LTV ratios; 90%, 70% and 50%. Investors can also deposit and earn interest on around 50 different cryptocurrencies at YouHodler. So, is YouHodler safe? YouHodler uses a mixture of hot and cold storage with much of their digital assets being stored offline. Crypto storage is managed by Ledger and crypto-assets are insured up to $150 million.
BlockFi
BlockFi is a U.S. based centralized crypto platform founded in 2017. They accept Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Pax Gold (PAXG) as collateral for loans. Loans at BlockFi can be released in U.S. dollars, USD Coin (USDC) or Gemini dollar (GUSD). The minimum loan amount is $10,000 and loans are available at 3 different interest rates:
- 50% LTV: 9.75%
- 35% LTV: 7.9%
- 20% LTV: 4.5%
Investors can also deposit 48 different cryptocurrencies to interest earning accounts including Bitcoin, Ethereum and Litecoin earning accounts.
CoinLoan
CoinLoan is a peer-to-peer crypto lending platform established in 2016 and is based in Estonia. The cryptocurrencies accepted as collateral for loans are:
- BTC
- LTC
- ETH
- XMR
- BCH
- XRP
- XLM
- LINK
- PAXG
- WBTC
- DOT
- MKR
- ADA
- SOL
- BNB
The minimum loan amount is $100 and loans are available in EUR, GBP and 13 different cryptocurrencies. Loan terms range from 1 month up to 3 years and interest rates vary from 4.5% up to 11.95% depending on the LTV and currency. Investors can also earn interest on over 20 different cryptocurrencies.
For anybody wondering is CoinLoan legit, the site holds 3 Estonian Financial Licenses and they are registered as an MSB (Money Services Business) with FinCEN in the US.
Nexo
Nexo was established in 2018 and is based in Zug, Switzerland. They are a centralized crypto lending platform with over 5 million users world-wide. Loans are available in over 40 different fiat currencies including EUR, USD and GBP. The site also offers loans in USD Coin (USDC) and Tether (USDT). Around 50 different cryptocurrencies are accepted as collateral. Interest rates for loans start at 13.95% but can be much lower depending on the LTV of the loan and how much of the native Nexo token, NEXO, the borrower is holding. The minimum loan amount is $50 and the maximum is $2 million.
Aside from crypto backed loans, Nexo is also one of the best NFT lending platforms around, allowing borrowers to use NFTs as collateral for loans. Similar to the other crypto lending platforms discussed, Nexo offers interest earning crypto accounts for investors who deposit to the platform. You can earn interest on 33 different digital coins at Nexo.
MyConstant
MyConstant is a peer-to-peer crypto lending platform that was launched in 2019. They are headquartered in Riverside, California with satellite offices in Southeast Asia. Loans are available in the fiat currency U.S dollars. In addition, users can get a Tron loan or borrow funds in over 80 other different cryptocurrencies as well, including Tether (USDT), USD Coin (USDC), Bitcoin (BTC) and many others. Over 80 different cryptocurrencies can be used as collateral to secure loans. Interest rates for loans are competitive and start at 6% APR.
Investors can also earn by lending their cryptocurrency at MyConstant. There are currently 13 different digital coins you can earn interest on.
- Tether (USDT)
- USD Coin (USDC)
- Basic Attention (BAT)
- Bitcoin Cash (BCH)
- Binance Coin (BNB)
- Bitcoin (BTC)
- Dai (DAI)
- Polkadot (DOT)
- Ethereum (ETH)
- Chainlink (LINK)
- Litecoin (LTC)
- Polygon (MATIC)
- Solana (SOL)
Read our MyConstant review to learn more about how this peer-to-peer lending platform works.
OKX
OKX was founded in 2017 and is based in the Republic of Seychelles. Originally known as OKEx, they rebranded to OKX in January of 2024. Although best known as a cryptocurrency exchange the reason for the rebrand was to reflect that they are a full-service crypto platform and not just an exchange.
The OKX platform offer both flexible and fixed-term loans. Fixed term loans are available in USDT, BTC, ETH and OKB with around 15 cryptocurrencies being accepted as collateral. Flexible loans are available in over 20 different cryptocurrencies. It is unclear how many cryptocurrencies can be used for collateral.
Investors can also fund OKX margin loans with around 150 different cryptocurrencies, some of which offer a very good rate of return with flexible terms. Fixed term lending is also available but only for USDT, BTC, ETH and OKB. Is OKX legit or not? The platform is VFAA compliant and is among the top ten cryptocurrency exchanges by volume. They have millions of users and industry standard security measures are in place. OKX is a legitimate crypto platform.
Is It Safe to Lend Crypto?
Crypto lending allows investors to earn interest on their digital assets, but many question whether or not it is safe. As with many investment opportunities there is some risk involved with crypto lending. The volatility of cryptocurrencies is a concern although it is more of an issue with borrowers than lenders as a big drop in the value of a borrower’s collateral can trigger a margin call.
Unlike traditional banks, crypto deposits aren’t insured by any government agencies like they are by the FDIC in the U.S. This leaves lenders on centralized platforms open to loan counterparty risks when large institutional borrowers fail to pay loans. Then there are security risks such as a platform being hacked. Reputable platforms take measures to minimize the risks involved such as over-collateralizing loans, obtaining insurance against theft and using professional third-party crypto storage facilities. Overall, crypto lending doesn’t carry any more risk than many other investment opportunities.
It isn’t only crypto lending that is subject to a certain amount of risk. Crypto investment platforms like Finblox and Haru Invest face similar risks. So, is Haru Invest safe for investors? Is Finblox safe to invest your cryptocurrency in? As with lending platforms, those that focus on investment like the two mentioned take similar steps to ensure the safety of user’s deposits.
Types of Crypto Lending
There are two main categories for crypto lending; centralized lending and decentralized lending.
- Centralized Lending: Sometimes referred to as CeFi, centralized lending involves a custodial platform that controls all aspects of a crypto loan including selecting borrowers, transfer of loans and making sure lenders receive their interest payments. They have control of both the investors funds and the borrower’s collateral. The platform sets the loan terms and rates and will require users to complete a KYC verification process.
- Decentralized Lending: Decentralized (DeFi) lending uses smart contracts to manage loans rather than the platform itself dictating terms. While initially DeFi platforms just brought individual borrowers and lenders together, some DeFi platforms have now created liquidity pools to make the borrowing and lending process easier, while allowing users to maintain control of their digital assets. Some DeFi platforms also allow “flash” loans, which are crypto loans that don’t require any collateral. With flash loans the user borrows and returns the funds within the same transaction using a smart contract. If the borrower doesn’t repay the loan before the completion of the transaction, the smart contract cancels it and returns the funds to the lender. However, most DeFi loans do require collateral. No KYC verification is required for borrowing or lending on a DeFi platform
Conclusion
The demand for crypto backed loans shows no sign of lessening. Borrowers can obtain loans, often in a day or less, with no credit check while investors can gain a higher rate of return on their crypto assets than is possible with traditional deposits. While there are some risks involved, these can be mitigated by doing your research and selecting a reputable platform that meets your needs.
