BEST CRYPTO EXCHANGES
In a hurry?
The best crypto lending platform in 2023, as found in our independent testing, is Nexo!
There are many ways that the digital age has left a permanent mark on the world, and one of these is through finance. Cryptocurrency has changed how we live our lives when it comes to our finances.
These days, cryptocurrency trading platforms have become a popular choice for people that want to buy and sell digital currencies.
However, there is another way that people make the most cryptocurrencies, and this is through a crypto lending platform.
With more businesses beginning to accept cryptocurrency as a form of payment, lenders now offer clients the ability to borrow cash against cryptocurrency assets that are stored in a cryptocurrency portfolio tracker.
Thanks to technology like this, lending and borrowing is not only exclusive to banks, which lets people access more efficient ways to obtain the funds that they need.
The good news is that finding a reputable cryptocurrency lending platform isn’t difficult but finding the right leaning company for your needs can be challenging.
This is because each platform is going to offer a variety of different features that are going to suit some people, but not others.
In this article, we’re going to discuss the best crypto lending platforms in 2023, so that you can be well prepared when cryptocurrency becomes the future of banking. Let’s do it.
Best Crypto Lending Platforms 2023
Here’s a quick look at the best Crypto lending platforms:
- Nexo – 🏆 Winner!
- BlockFi
- Celsius Network
- Unchained Capital
- Oasis Borrow
- Compound Finance
- Aave
1. Nexo
Nexo is a crypto lending platform that can help you invest in cryptocurrency, and trade coins, earn interest, and borrow money against your cryptocurrency investments.
They can also help you get a return on your investments as well.
They make it straightforward and secure to create a cryptocurrency loan, by offering the right authentication, as well as supporting multiple assets.
Currently, they have more than 2.5 million users, and this is continuing to increase.
They connect the conventional banking system to the cryptocurrency economy, which makes it really easy for you to invest in cryptocurrency.
They also use security that is industry-leading commerce so that you can feel really confident that your money is protected at all times.
With Nexo, you can easily put your assets to work, and start making a passive income, without having to take a big risk.
All you need to do is top up your profile, and you are going to get 20% annual interest straight away.
Choose a coin, as well as a quantity, to see how much interest you could earn by making the right investment.
You can also safely store hundreds of different types of cryptocurrency tokens, while at the same time growing your portfolio.
2. BlockFi
BlockFi is a good choice as a crypto lending platform if you want to borrow cash, when you are trying to acquire a number of different assets.
Whether you are looking to buy, purchase, or trade cryptocurrency, these guys are a great option.
They have a minimum loan amount of $10,000, and they let you borrow cash against your cryptocurrency assets, so that you can take out a loan while keeping your cryptocurrency.
They say that it is quick and easy to open an account with them, and you can create a new wallet with them by entering your basic information.
Then, you can purchase, sell and store your cryptocurrency tokens whenever it is convenient for you.
They have more than one million clients on their books, and they keep more than $10 billion worth of assets safe.
One of the biggest advantages to this crypto lending platform is that you can increase your assets without having to sell any of them.
You can also borrow as much as 50% of the value of your cryptocurrency, and you can use a cryptocurrency backed loan like this to acquire a number of different assets.
3. Celsius Network
Celsius Network is another great choice as a crypto lending platform that is ideal if you want to be able to do everything through your smartphone.
More and more people are turning to their smartphone to get the job done, whether this is buying or selling their cryptocurrency, so why not take a loan out using your cryptocurrency coins through your smart phone?
They pay out as much as 17% interest on their cryptocurrency holdings, and each week, you will get paid new tokens, and you’ll be able to borrow money at an interest rate of 1%.
They don’t have any fees, so that you can borrow and transfer cryptocurrency in a number of different ways, and you can either choose to use a web browser, or your smartphone to borrow and earn money.
Their app is available for both Android and iOS.
One of the biggest advantages to this crypto lending platform is that you can use your cryptocurrency as collateral, as opposed to having to sell it.
They don’t have any origination fees, which means that you don’t have to worry about hidden charges.
4. Unchained Capital
Unchained Capital is one of the best crypto lending platforms for those that are trying to find a self-custody solution.
They can help you unlock the value of your cryptocurrency holdings.
They make it really easy and convenient for you to make the most of lending Bitcoin, as well as other cryptocurrencies because they are going to help you keep control of your cryptocurrency keys.
They say that regardless of the value of your cryptocurrency, they want to make sure that you are in charge of it.
Additionally, each team member has the key, so that they can sign transactions when it is needed.
This means that you don’t need to use a separate wallet for each team member, streamlining the process.
You can also start immediately with a one-on-one coaching service, that is going to help you understand your current financial situation and come up with an action plan for the future.
You can also store your Bitcoin in self custody, meaning that you are going to be able to retain complete control of your assets, as well as all the important management actions.
We think that the fact that they offer customized advice when it comes to growing your Bitcoin is essential, and you can also borrow or purchase by going directly to your vault – and they have favorable rates.
5. Oasis Borrow
Oasis Borrow is an excellent crypto lending platform option if you want to make the most of a digital currency that performs transactions on the blockchain.
These guys use their own digital currency, which happens to be one of the world’s first free market currencies, and its value is always going to move in parallel with the US dollar.
Because it is a stable coin, you don’t have to worry about fluctuations that are common with other digital crypto currencies.
You can make the most of DAI to obtain additional collateral, which you can apply straight away to your account.
You can deposit your tokens and earn as much as four times on your Ethereum, and you can retain the protocol security.
Another thing that we love about these guys is that you can open a collateralized position, and you don’t need a prior vault requirement to do so.
This means that you can borrow whenever you need to without having to wait for your funds to clear, or needing evidence of borrowing history.
You can enter a collateralized position with just one click and you can also increase your risk without having to add new collateral.
If you want to close your safe vault, you can also do this in one clip.
6. Compound Finance
Compound Finance is an ideal crypto lending platform if you are trying to pool your resources with other stakeholders.
This is the type of crypto leaning platform where you can manage, earn, report, or remit investors that are earning interest on their cash securely.
The protocol of this company enables software developers to develop financial applications, that anybody can use efficiently and safely.
You can also invest in a number of different commodities and precious metals, while storing your money securely, and sending it through a secure wallet.
They don’t require gas fees or a seed phrase, and you can pool with other cryptocurrency owners, so that you can earn more, and make your money go further.
You can see a visual overview of your coins, and you can also automatically track all interests.
Additionally, the fact that their portfolio management is automatic means that you can mitigate volatility in the cryptocurrency market with great accuracy.
7. Aave
Aave is a good choice as a crypto lending platform if you are a developer that needs instant cryptocurrency borrowing power.
This means you can take out loans that aren’t backed by collateral.
They offer flash loans that are designed explicitly for software developers, which lets them instantly borrow without the need for collateral.
They can do this as long as their liquidity is returned to them in one transaction block.
If this doesn’t happen, then the transaction is cancelled. This avoids any issues that could come up while you’re trying to borrow funds.
Flash loans makes it really easy for you to benefit from liquidity, because you can sell when the time is right.
Block chain removes restrictions when it comes to conventional lending, and lets you borrow according to what your company needs.
The best part about flash loans is that you don’t need any money to get started, which is of course going to lower the threshold to entry.
What is a Crypto Lending Platform?
A crypto lending platform provides cryptocurrency loans against another type of currency.
The best cryptocurrency lending platforms are going to let you borrow using cryptocurrency by offering financial services that you won’t be able to access through conventional banking products.
Crypto lending platforms are built on the block chain, which offers cryptocurrency tokens for borrowing money, as opposed to traditional banks that give out Fiat loans.
Of course, some individuals are going to prefer using a cryptocurrency lending platform for a number of different kinds of trading, while others prefer a crypto leaning platform because of its security and anonymity.
One of the advantages to choosing the right platform for cryptocurrency lending is that you can invest your money into projects like this knowing that your funds are going to be safe.
There are also a number of different ways that loan applications are dealt with, to make sure that your funds are always going to stay safe.
What are the Advantages to Crypto Lending?
As you probably have guessed at this point, there are a number of advantages associated with cryptocurrency lending, and one of the biggest advantages is being able to keep your cryptocurrency, while still earning interest on the investment that you have made.
If you are an investor, you can choose to lend out some of your tokens, while using others for different reasons.
Blockchain technology makes it easy for entrepreneurs around the world to raise funds quickly, by using crypto currencies, as opposed to traditional currency.
This new type of funding gets around geographical limitations and lets anybody around the world invest their money into a business.
When you lend money to cryptocurrency lending platforms, your funds are going to be converted into U.S. dollars, or another traditional currency, and loaned out in exchange for a high interest rate.
This way, the lender can get the right kind of currency, without different processes being involved.
The Difference Between Traditional and Crypto Lending
Now, let’s look at the difference between cryptocurrency lending, and traditional lending, so you can get a good idea of what both offer.
The Difference Between Crypto and P2P Lending
Peer-to-peer lending platforms offer clients loans that are backed by deposited assets.
This means that if the borrower defaults on their loan, they automatically lose those assets. Cryptocurrency-backed lending works a little differently.
It doesn’t require you to give up any assets to obtain funds, and it also lets you keep all of your cryptocurrency while getting a loan.
With P2P lending, generally speaking interest rates are fixed, whereas with cryptocurrency lending, a lot of the time crypto lending platforms offer their clients flexible interest rates, depending on possible liquidity, and trading volume.
This makes it easier for you to get a loan, because the platform itself determines the loan terms based on funding needs, as opposed to traditional P2P networks, and choose funding options, based on your credit score.
You also won’t need to exchange money when you lend cryptocurrency, because everything is taking place on the blockchain.
This allows for a high level of transparency across all transactions.
Lastly, P2P lending works with Fiat currencies, while crypto currency loans use crypto currencies as a transaction form.
The Difference Between Crypto and Traditional Lending
When defining traditional banking platforms, they are seen as centralized, which means that a single individual or a company operates them.
Also, when talking about legacy finance institutions, they’re going to keep your funds, and lend them out as needed to people that are on the other end of the spectrum.
This ecosystem doesn’t tend to be too transparent, because these companies are going to keep records hidden from everybody except those that they share them with.
It is important to know that there isn’t any transparency around dealings that happen with traditional banks.
However, with cryptocurrency lending, everything can be seen on the public Ledger, which means that every transaction that takes place is available for everybody to see who can jump online.
Another advantage when comparing cryptocurrency lending with traditional lending is that a cryptocurrency exchange over the block chain is going to take place instantly.
You won’t have to wait for your loan to be approved before your transaction can be processed.
This of course makes it easier for potential clients to check pass reviews of the platform that they’ve chosen, to see if existing clients have had a good experience.
This occurs easily and quickly, before you enter into a contractual agreement.
Exchanging crypto currency through cryptocurrency lending platforms obviously is going to cost you a lot less time than exchanging conventional currencies.
Generally speaking, conventional banks impose restrictions that say you have to give them a specific number of days.
Similarly to P2P networks, traditional lenders are going to use a credit score to determine how much you can borrow, and what your interest rate is going to be.
This means that a lot of the time, they are only going to let those that have a high credit score, or a high income, borrow money.
Because crypto leaning platforms don’t rely on credit scores, the majority of people can access cryptocurrency without worrying about how much money they make, or their credit score.
What to Consider When Taking Out a Cryptocurrency Loan
Before you take out your first cryptocurrency loan, there are a number of things that you have to consider. Let’s take a look at them.
Exchange Rate Risk
When you lend out cryptocurrency, you are opening yourself up to risk, because the value of your cryptocurrency could go down during the repayment process.
This means that the borrower is going to have to pay more to cover the loan if the value of the cryptocurrency decreases over time.
The exchange rate affects cryptocurrency-backed loans because they are paid back in cryptocurrency.
Interest Rates
The interest rate that the lender is going to charge on their loan is going to depend on the platform that you are using.
Some platforms are going to charge high rates, because they are trying to take advantage of borrowers that don’t really know how much their cryptocurrency is worth.
However, others are more reasonable, and stick to market standards for the most part.
You need to make sure that you have a good understanding of all the terms and conditions before you make an agreement with these companies.
Also, interest rates can change based on a number of different factors. In situations like this, borrowers tend to pay higher amounts than what the original loan was for.
Reputation
Before you borrow any money, it is really important to check in on the reputation of the platform that you are considering using.
You can do this by looking at social media platforms to see if there have been any unsatisfied clients that haven’t been able to repay their loans or ended up being scammed after they borrowed money.
It’s also worth looking at members of the team that might have a public profile somewhere, and even potentially getting in touch with them if you have any initial questions.
Making sure that you are able to communicate with a team that is knowledgeable is going to help you have peace of mind that they are going to be accountable if something were to go wrong.
Loan to Value Ratio
Loaning out cryptocurrency in a crypto currency loan market with a huge amount of growth potential can be profitable, if you borrow money to purchase more cryptocurrency.
However, the value of your debt might increase over time during repayment, because in most markets, interest rates are high.
This means that if you want to keep growing your profits, you are going to need to borrow more money.
This is why it is really important to understand your loan-to-value ratio, so that you can keep yourself on the positive side of this equation.
Repayment
When somebody takes out a cryptocurrency loan, they need to choose between either a short-term, or a long-term payment plan.
Some lenders are only going to let people repay in short-term loans, which usually lasts less than a year, while others set terms for borrowers for up to three years.
The shorter your repayment period is, the higher the interest rate is going to be.
The cryptocurrency lending platform that you choose needs to be flexible when it comes to you repaying your loan, so that you can either do it in equal installments, or occasionally.
Deposit Limits
One potential inconvenience of a crypto lending platform is having a minimum deposit limit.
This is especially frustrating if you are brand new to the world of cryptocurrency, and you don’t have enough cryptocurrency to cover the loan.
If you want to take out more than the limit, then there are going to be specific fees that you’ll need to pay, and these are going to vary based on the platform that you are using.
Having a deposit limit can also mean that you can’t withdraw all of your money and use it on other investments without paying fees that are considered unnecessary.
Maximum and Minimum Loan Amounts
With a number of different cryptocurrency lending companies that allow people to borrow as little as $10, or $20, some might not see this as very profitable.
In cases like this, interest rates would be too low compared to how much you’re going to pay for a bigger loan.
On the other hand, if you could only borrow a large amount, but you are hoping to be able to borrow a smaller amount, then there is no point in borrowing money.
It’s going to take a long time before your investment starts to generate a profit in circumstances like this.
Therefore, you need to choose a company that has flexible maximums and minimums, so that you are able to scale your repayments, according to what you need.
Documentation Associated with the Loan Application
A lot of the time, crypto lending platforms require a lot of personal documentation that you will need to submit in the beginning.
This can include information like ID cards, proof of residence, and more.
However, there are also some platforms out there that don’t ask for any of this.
Naturally, it is important to ask about what is going to be required, before you sign up for any services.
FAQs
What is a DeFi Platform?
A DeFi platform is a decentralized finance platform that lets borrowers take out loans based in cryptocurrency.
They work similarly to bank-issued loans, where an investor can lend their money to a borrower who is going to pay the loan back with interest.
Interest rates are going to vary according to a number of different factors.
Typically, there is no centralized authority on platforms like this, which means that anybody can apply for a loan.
Some platforms are even going to let borrowers create their terms for the loan, and the lender has to determine whether they can trust a specific borrower or not.
Why are Fintech Companies Adopting Blockchain Tech?
Fintech companies seem to be adopting blockchain technology because it lets them remove the need for a central authority when it comes to their platforms.
Instead of having a third party managing their funds, companies can create a smart contract, which is responsible for handling tasks like this.
Cryptocurrency lending companies typically have multiple smart contracts on their platform, including those that borrowers used to set up the terms and conditions for their loans.
Additionally, others are going to have contracts that assist investors with releasing their funds, after the conditions for repayment have been met.
The process of storing funds with a contract until those specific conditions are met can take time, but this can be automated with companies like this.
With a bank or credit card company, it could take a number of business days before they release your money to you, but with a smart contract, a lot of the time you can get your money within just a few minutes.
Of course, this makes the technology appealing to Fintech companies.
What are USDT and USDC?
These are coins, and they are stable coins that were created by Tether.
You can use them to hedge against volatility on crypto currencies, because their value is typically associated closely to the dollar.
People make the most of these kinds of tokens to store funds, because unlike a lot of other cryptocurrencies, they don’t have a high level of volatility.
Therefore, you could use them as collateral for decentralized finance applications, and lending platforms.
Final Thoughts
Cryptocurrencies can be a really good way to generate a passive income from your investments, if you choose to be a lender.
Understanding the terms and conditions that are involved is really important to set up a situation that is a win-win for all parties that are involved.
With this being said, both borrowers and lenders need to understand how a cryptocurrency platform works in order to make informed decisions about these kinds of situations.
Make sure to check out the best crypto lending platforms that we have talked about above and figure out which one is going to be best suited for your needs.
Also, remember that you need to be careful about the investment choices that you make and always make sure to do a bit of research beforehand.
We would highly recommend that you don’t ever invest more than you can afford to lose.
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Written by Thomas McGovern
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