Best Ethereum Lending Platforms

Learn about Ethereum lending, how to earn interest lending ETH and how to borrow using ether as collateral

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What are Ethereum Loans?

An instant Ethereum loan is a way for investors to borrow against their ether quickly rather than selling it to obtain funds. The borrower uses their ETH assets as collateral to secure the loan and in many cases a credit check won’t even be required. Borrowers can use their loan for a variety of purposes including live Bitcoin trading. In addition to being able to get a fast loan, Ethereum lending provides the means for investors to earn interest from their ETH instead of having it sit idle.

How to get ETH Loan

One of the great things about Ethereum loans is how easy and simple the process is. The procedure may vary slightly depending on the site but the following are the basic steps for how to take out a loan on Ethereum lending platforms:

  • Register to a Lending Platform: There are plenty of sites where you can take out a loan using your Ethereum as collateral. Most platforms also allow borrowers to use other major cryptocurrencies such as Bitcoin as collateral as well.
  • Complete KYC (Know Your Customer) Requirements: Some sites, generally centralized platforms, will require you to provide some personal information including a copy of a passport or some other type of official ID to fulfill KYC requirements
  • Deposit Funds: Borrowers will have to deposit enough Ethereum to secure their loan. The amount to be deposited will depend on the size of the loan and the loan to value (LTV) ratio. The LTV ratio is the amount of the sum to be borrowed divided by the value of the Ethereum needed to secure the loan. To determine the amount of collateral needed multiply the amount to be borrowed times the LTV ratio. For example if you wanted to secure a loan of $1000 and the LTV ratio is 40% you would need to deposit $2500 worth of Ethereum. $1000 (loan amount) x 40% (LTV ratio) = $2500 (Value of ETH needed as collateral).        
  • Receive the Loan: Once you have completed the KYC requirements and have deposited ETH to use as collateral the funds you are borrowing will be immediately transferred to your account.

Ethereum Lending Platforms

Ethereum Lending

There are a lot of options available to those looking for an Ethereum lending platform and the number of sites is still growing. Cryptocurrency platforms that offer Ethereum lending will fall into one of two categories:

  • Centralized Platforms: With centralized platforms, the platform controls everything that is communicated. The third party has access to all communications, which makes those platforms easy to hack. The platform has access to user’s private keys and they are the one who set interest rates and determine loan terms. When using a centralized platform users will typically have to meet KYC requirements. Centralized platforms are currently the most popular type of cryptocurrency lending platform.
  • Decentralized Platforms: Decentralized cryptocurrency lending platforms offer DeFi (Decentralized Finance) lending. That means with no third party holds assets or sets the terms and rates for loans. The lending process is managed using an Ethereum loan contract, often referred to as a smart contract. Using a decentralized platform allows users to maintain control of their keys and there are usually no KYC requirements to be met.

Lending platforms aren’t limited to Ethereum. Most offer Bitcoin lending and other types of cryptocurrency loans.

Some of the factors to be considered when selecting an Ethereum lending platform are the interest rates being offered, the security of the site and ease of use. To provide a starting point for you we have provided an overview of four of the best crypto exchange and lending platforms for borrowing Ethereum.

BlockFi

BlockFi is a crypto lending and trading platform based in New Jersey that offers Ethereum backed loans as well as interest earning ETH accounts. Ethereum interest earning accounts at BlockFi have an Annual Percentage Yield (APY) of 4%. There is no minimum deposit and no monthly fees on interest earning accounts. 

The rates for Ethereum backed loans vary depending on the LTV ratio: 4.5% at 20% LTV, 7.9%   at 35% LTV and 9.75% at 50% LTV. The minimum loan amount at BlockFi is $10,000 and the duration of loans is 12 months.

YouHodler

YouHodler is a Switzerland based company, founded in 2019, that offers cryptocurrency backed loans and interest earning accounts for Ethereum and many other cryptocurrencies. The interest rate for Ethereum accounts is 5.5% APY with no monthly fees. The minimum deposit to open an account is the equivalent of $100 and you can also earn interest on over 30 other cryptocurrencies

YouHodler provides four options for taking out an Ethereum backed loan:

  • 15 day loans: 90% LTV
  • 30 day loans: 90% LTV 
  • 60 day loans: 70% LTV
  • 180 day loans 50% LTV

Minimum loan amount is $100. The amount of interest charged will depend on the option chosen. Loans may be in US dollars, Euros, GBP, Swiss Francs and BTC.

CoinLoan

CoinLoan is an Estonian crypto lending platform that offers interest earning accounts and crypto backed loans for Ethereum and a number of other cryptocurrencies. The interest rate for Ethereum accounts is 5.2% or 7.2% if you stake the CoinLoan Token. There are no fees on CoinLoan interest earning accounts. The minimum deposit to open an account is €100.

Ethereum backed loans from CoinLoan can be from 1 month up to 3 years. Depending on the LTV of the loan interest rates range from 4.95% up to 11.95%.The minimum loan amount at CoinLoan is €100 and there is a 1% origination fee.

Bitfinex

This sentence is about Bitfinex. Bitfinex is a cryptocurrency exchange and lending platform that was launched in 2012.  Bitfinex Borrow provides a peer-to-peer lending platform where users can borrow funds using cryptocurrency as collateral. Lenders earn interest on the funds they loan out and are able to set their own rates and terms. The platform takes a fee based on the amount of interest earned for matching borrowers with lenders. Loans can be made in Bitcoin, USDt, Ethereum, Litecoin, DOT, XRP, EOS, ADA, UNI, LINK, XTZ, IOTA, ATOM or SOL. The minimum loan amount is the equivalent of $100 and the maximum is $250,000.

How to Earn Interest Lending Ethereum

You don’t have to wait for the price of your Ethereum to go up if you want to earn money from it. Many platforms offer users the opportunity to earn interest on ETH deposits. The platform loans your Ethereum to other users and pays you interest on your deposit. Your deposit is secured by collateral deposited to the platform. Making money lending Ethereum is less risky than some other types of crypto investing and you can earn without having to sell your asset.

ETH Lending

  • It is relatively easy to get started lending Ethereum on a centralized platform following these steps.
    • Register to the platform of your choice
    • Identity Verification: To comply with KYC requirements you will need to verify your identity by providing a copy of your passport or some other official ID. It could take a few hours for verification to be completed.
    • Deposit Ethereum: Upon completion of identity verification you can deposit Ethereum to your account and start earning interest. All the details of managing the loan will be handled by the platform.

Frequently Asked Questions

1. What is Ethereum loan?

An Ethereum loan is the borrowing of funds, usually in fiat currency or stablecoins, using Ethereum as collateral to secure the loan. It may also be the borrowing of Ethereum using another cryptocurrency as collateral.

2. How to make money lending Ethereum?

To make money lending Ethereum deposit your ether to a crypto lending platform. The platform loans out your Ethereum to borrowers and pays you interest for the temporary use of the funds. The platform ensures repayment of deposited funds by requiring borrowers to secure loans using crypto as collateral.