How can you use your idle Bitcoin or crypto to earn more crypto? Through cryptocurrency lending!
Thanks to the currently blooming world of cryptocurrency lending, the opportunities to earn passive income with idle crypto are increasing. But, with the ever-increasing number of crypto lenders, a dilemma follows investors. Which one is the best? Where can you earn more? Which crypto lending platform should you use?
Well, this guide is designed for you. It highlights some top crypto lenders and why they are good options.
How to Choose a Crypto Lending Platform
Investors’ biggest question is, how do I Choose a good crypto lending platform? Well, here are a few key considerations:
- Supported crypto coins
- Interest rate options
- Flexible loan options
- Reputation
- Security
- User-friendliness
- Lower APRs for borrowers
- Higher APYs for lenders
- Types of crypto loans
Two Types of Crypto Loans
There are two widely accepted categories of crypto loans: They include:
- Custodial crypto loan – This is a popular type of crypto loan seen in centralized finance (CeFi). A centralized entity holds the borrower’s collateral as they access the loan.
- A DeFi Non-custodial loan – These loans operate on top of smart contracts and have no central organization. Traders taking out a DeFi crypto loan retain the keys to their assets unless they default.
Now that you understand the types of crypto loans available today, it is time to look at the top platforms offering such services.
Nexo: Best Cryptocurrency Lending Platform
As an EU-licensed and regulated institution, Nexo carved out a unique niche among the premier lending platforms. Founded in 2018 by Kalin Metodiev, Antoni Trenchev, and Kosta Kantchev, Nexo has amassed a massive user base of about 6 million.
So, what is so good with Nexo that it attracts such numbers?
First, Nexo brings competitive interest rates. Of course, different assets attract different rates of return on this platform. The most established assets like BTC and ETH have a higher reputation and rates. Stablecoins and other tokens have lower rates. But, in general, Nexo’s rates can hit high ceilings of 16% per year on some crypto assets and stablecoins.
The platform’s ability to withstand the harsh market conditions in 2022 bolsters its reputation. When others like Celsius fell, Nexus stood firm.
Regarding low-interest loans, Nexo is the place to be.
Your asset choice determines the interests you earn and the frequency of payouts. Lock-n periods are also afforded.
Aqru
Founded in 2019, Aqru is among the most used Crypto lending networks of 2023 and is primed to be among the best in 2024. When compared to Nexo and Aave, Aqru is a relatively smaller network. However, it still has a massive followership.
So, what makes Aqru a top platform?
Among Aqru’s most inviting features are its security, user friendliness and lucrative interest rates.
Security? Yes!
The platform is registered in several jurisdictions, including Bulgaria, Lithuania, and the UK. This means regulatory recognition.
Secondly, Aqru has multi-layered deposit insurance. A child of its collaboration with Fireblocks, Aqru leverages strong Multi-seg technology.
Secondly, user friendliness and lucrative interests!
Aqru’s lending process is straightforward. Start by depositing crypto and earning interest. It offers several stablecoins with interests of up to 10%. Other assets have lower interests.
Even with its strengths, Aqru still has room for improvement. The network has suffered from multiple cases of withdrawal issues. Moreover, the APYs are low.
Aave: Highly Reputable
You can’t talk about crypto lending platforms without mentioning Aave. It is one of the earliest DeFI and Cryptocurrency lending platforms!
Dawned in November 2017, Aave established itself among the top decentralized networks, offering loans with crypto collaterals. Among the networks-supported cryptos include Ethereum, Polygon, Avalanche and Harmony.
But what makes Aave stand tall among the best cryptocurrency lending networks? Its large portfolio of services.
Foremost, Aave brings a high Loan-to-Value (LTV) rate. This allows space for low-interest loans, something every borrower wants.
Secondly, the platform brings flash loan options, allowing investors to take advantage of these instant loans and arbitrage opportunities. The Flashloan concept is widely believed to be a child of Aave.
Thirdly, the inclusion of high-interest rates reaching 18% APY on USDT and BUSDT allows users to collect substantial sums spent on online stores accepting USDT. However, the interest rates range between 0% and 3% for most other coins.
Despite its enticing features, potential investors should keep in mind the fluctuating rates, which complicate investment planning. Also, the platform is more suited for experienced investors due to its complex incentivization protocol.
In summary, Aave offers a robust platform with high LTV rates and low-interest loans, a wide range of supported cryptos, and the unique feature of flash loans. However, the complexity and fluctuating rates make it a platform high on reward but also high on risk.
CoinLoan
Licensed under the Estonia Financial Supervision and Resolution Authority, Coinloan stands out among the top cryptocurrency lending platforms. Despite launching in 2017, the platform has hundreds of thousands of users.
But why?
Firstly, CoinLoan’s product offering is unique, with its APYs of 12.3%. In fact, it’s among the lending platforms with the highest yields for investors. For borrowers ready to take loans with a 20% LTV ratio, CoinLoan offers low APRs of about 4.95%.
Currently, CoinLoan supports 22 top crypto assets, including BTC, ETH, LTC, BCH, SOL, and DOT. Of course, as in every other lending network, stablecoin rates are higher.
Secondly, security!
The platform emphasizes security, securing users’ funds with BitGo and providing custody through Fireblocks. This means users can have peace of mind having their funds in CoinLoan.
Third, the deposit amount is as low as $100. The barrier to entry is low.
YouHodler
YouHolder claims to have issued its first-ever crypto loan in November 2018. Albeit issuing many services, including buying, trading, selling, cloud mining, and storing, it’s in lending that YouHodler thrives.
What features does YouHodler bring to the table?
YouHolder offers an option where borrowers can leverage their crypto as loan collateral. The loan options could be as low as $100.
The process of loan approval is nearly instant once your identity is verified. Moreover, loan terms and fees at YouHodler are highly transparent and vary depending on the crypto used as collateral.
The Turbocharge and Multi HODL features allow users to reinvest borrowed funds and make market moves.
Arch
Another top-rated platform is Arch!
Pioneered in 2022, Arch crypto lending site has climbed the ranks to stand among the top-performing crypto lenders. Unlike competitors, Arch secures client assets in cold storage under bank-grade security.
Moreover, Arch operates in a fully compliant and regulated form in about 32 states, offering high standards.
Accessing a loan via Arch is a simple and practical process, where borrowers receive their funds in their wallet within minutes. Accessing the loan involves:
- Selecting the collateral type.
- Entering the loan amount.
- Completing a short KYC process.
- Signing the loan agreement.
- Sending the collateral to Arch’s custodian.
- Receiving the funds.
The network’s APR is competitive to highs of ~12%, with an LTV of up to 65%. It’s a great platform for lenders.
CoinRabbit
CoinRabbit is a user-friendly platform for lending that simplifies the process of earning passive income through digital assets. The cryptos supported include USDT, USDC, USD Coin, BSC, and Binance USD, with an APY of 5%. Its most impressive feature is its free withdrawal option for any assets.
With as little as $100, you can get interest accruing daily.
Security? At CoinRabbit, the security is strong. Imagine a combination of cold storage and multi-sig transactions bolster the safety of assets.
Binance
The renowned crypto exchange network Binance also offers lending options. The platform is the king in the crypto universe and offers over 180 crypto assets at competitive APYs.
Interestingly, Binance brings diversity with its lending by introducing the Simple Earn and Auto-Invest options. As it’s named, the auto-invest option is an autonomous investment plan designed to yield daily returns.
Binance’s big name in the crypto realm is why it’s on this list. However, Binance’s recent regulatory troubles and bad customer support discourage investors.
Crypto.com
Yet another crypto exchange network in this list is Crypto.com.
Already reigning in the markets among the largest crypto networks, Crypto.com introduced lending services. And, just like its other crypto trading services, Crypto.com lending did not disappoint.
The network brings about 22 cryptos, including BTC, ETH, and stablecoins, with the APYs hitting 12.5%. A standout feature is the calculator tool, which helps users estimate their potential earnings.
Those holding the Frosted Rose Gold, Icy White, or Obsidian card from Crypto.com can enjoy an additional 2% interest.
However, the network’s general APYs for flexible lock-in are low.
Unchained Capital
Based in Austin, Texas, Unchained Capital offers crypto lending primarily in the US. Yes, Unchained Capital offers Bitcoin lending. But with a twist.
Most platforms offer Bitcoin loans to third-party custodians. However, Unchained Capital brings Bitcoin loans through dedicated multi-sig vaults, giving customers full control and transparency.
Many users praise the network’s intuitive and user-friendly US, plus its top customer support.
What are the limitations?
Its primary limitation is the higher APRs when compared to industry averages. This network’s APRs range between 12.58% and 15.42%. Moreover, it only offers support for Bitcoin.
Compound Finance
Compound Finance, a California-based network, also thrives in the crypto lending niche. It developed a yield farming model that birthed interesting lending and borrowing rates, largely accepted across the markets.
Moreover, Compound Finance is hugely transparent with its rate structure, which is displayed on the web page.
Interestingly, it’s only among the few crypto lenders with no KYC and strong identity protection. Security comes first.
Bybit Lending
Like Binance and Crypto.com, Bybit was originally a crypto trading network. With time, the exchange expanded its offering to lending. The idea of the platform is to act as a matchmaker between lenders and borrowers. Those depositing funds for lending earn interest by the hour.
Notably, Bybit lending features some flexibility for deposits and withdrawals. This means you can reclaim your assets anytime during the redemption window.
Nebeus
The Central Bank of Ireland (CBI) authorized Nebeus to operate in issuing electronic money. Backed by a $100 million insurance fund, Nebeus offers top financial security for its users.
Within the bounds of Nebeus, the interest rates rise to 12.85% for those renting crypto assets.
Nebeus allows people to access two types of loans: Quick loans and Flexible loans. The idea is to cater for the different daily needs of its users.
However, there is a minor downside– limited availability of crypto assets. Albeit the downside, Nebeus stands among the top crypto lenders.
Ledn
The Canadian crypto lending platform allows users to access dollar loans for buying BTC. The platform works as a savings account for BTC and USD, giving super competitive returns.
Ledn‘s most interesting feature is the B2X loans, which help double your Bitcoin balance.
Moreover, the APYs for lenders can hit a high of 7.5%, which is paid in USDC, or 5.25%, paid in Bitcoin. On the contrary, borrowers get an APR of 9.9%.
However, Ledn confines its transactions to Bitcoin and USDC, which may limit some users. In summary, Ledn is a top-tier crypto lending platform for Bitcoin enthusiasts.
OKX
Closing the list is another crypto network whose primary service has been crypto trading OKX.
The network boasts over 20 loanable assets, including popular stablecoins like USDT. OKX claims to offer a fixed rate of about 2%, with the LTV ratio at 70%.
Moreover, OKX fosters more flexibility with 24-hour APYs for its assets.
The biggest issue with OKX is its limited availability in countries like the USA. However, its loan option is highly competitive.
Select a Good Cryptocurrency Lending Site
The above-mentioned lending networks are just a few in the vast and diverse universe of cryptocurrency lending. Their global reach, asset support and great interest rates for lenders make these networks thrive over their peers.
Note: Before making any final decision, please research the projects, their risk tolerance, reliability, transparency and security.
FAQ – Frequently Asked Questions
The simplest definition of crypto lending is the act of lending and borrowing virtual currencies with a mission to earn interest. Crypto owners earn passive income by lending their digital assets in storage to borrowers, who may be individuals or institutions.
The process of crypto lending is straightforward. The lender deposits crypto assets to a lending network, and borrowers take loans. In return, you receive interest.
Crypto lending carries risks, just like all other investments. It’s your research that will help you mitigate the risks. The use of the over-collateralization policy by most crypto lenders helps safeguard investors.
The interest rate you can earn depends on factors like the lending platform, the type of cryptocurrency, and the market demand. Different platforms and cryptos come with different rates.
In some cases, yes. However, this majorly depends on the terms of the lending platform. Some platforms allow you to withdraw your cryptocurrencies at any time, while others might require you to commit for a certain period. Always read the platform’s terms and conditions thoroughly.