Top Five Cryptocurrency Lenders
The cryptocurrency market has recorded massive growth over the past decade. Despite the current bear market, the total market cap currently stands at around $900 billion.
With the growth of the crypto space comes the entry of numerous business models. Cryptocurrency lending has become an important part of the ecosystem as it allows people to lend and borrow money without going through traditional financial institutions.
There are numerous cryptocurrency lending platforms currently available, both centralized and decentralized. Thus, making it tough for some users to decide which platforms to borrow or lend money to.
In this article, we will explore how to choose the best crypto lending platforms and give you our recommendations.
How to choose the best crypto lending platform
There are certain factors you need to consider when choosing the ideal cryptocurrency lending platform. They include;
Annual percentage yields (APYs)
This factor tells you how much return on investment you can earn on your deposits during the course of a year. When looking at these criteria, consider the rates available for the type of cryptocurrency you wish to deposit into your account and also the conversion and withdrawal fees.
Annual percentage rates (APRs)
This informs you of the cost of interest and fees over a year. The lower the APR, the lower the loan-to-value ratio (LTV) and the shorter the term length.
Fees
Look at the yield and loan fees before you make a decision. Some crypto lending platforms charge you an origination fee before sending you the funds whenever you borrow money from them.
Minimum deposit to open an account
Each crypto lending platform has a minimum deposit requirement. Look at how much you need to deposit and decide if it is something you are okay with.
Loan term
The lenders offer varying loan terms, usually from 30 days and above. The longer the loan tenure, the higher the interest you will pay.
Accepted collateral and deposits
Look at the accepted coins and currencies a platform accepts as collateral. Some platforms accept multiple currencies as deposits or collateral while others only accept stablecoins for deposits and probably BTC and ETH as collateral.
Withdrawal limits
There are usually limits on how much you can withdraw per day when using crypto lending platforms. Check the withdrawal limits of the various lenders and decide the best one for you.
Type of repayment
Each lender has its repayment term. Some lenders may require you to make monthly interest-only payments or pay the balance in full at the end of the term.
Eligibility requirements
Look at the eligibility requirements before you register with a crypto lender. Some lenders are not available in the United States.
Safety
Lastly, check the security aspect of a lender before you register with them. Verify how and where they hold users’ cryptocurrency assets and if they are held in cold storage wallets.
Best five cryptocurrency lenders
Now that you know the requirements, we will look at our recommended crypto lending platforms.
Cake DeFi
Cake DeFi is a Singapore-based staking, lending, and liquidity pool platform founded by Dr. Julian Hosp (CEO) and U-Zyn Chua (CTO). It has become popular in the crypto space as it allows users to deposit and earn yields on a wide range of tokens.
As a lending platform, Cake DeFi offers four major products: Lending, Borrowing, Liquidity Mining, and Staking. Each of these products generates varying yields and has different requirements.
Nexo
Nexo is another cryptocurrency lending platform that we recommend. It is a regulated lending platform and allows crypto investors to borrow, stake, and lend over 40 cryptocurrency assets.
As one of the leading crypto lenders, Nexo has more than four million users and is currently available in over 200 countries globally. On Nexo, users can borrow stablecoins and use their cryptocurrencies as collateral. Nexo also allows users to borrow from $50 to $2 million with instant approval.
On Nexo, there is no origination fee and no monthly repayments. Users can pay off the debt in the available fiat currencies, stablecoins (USDT or USDC) or a combination of fiat and cryptocurrencies.
Crypto.com
Crypto.com is one of the largest cryptocurrency exchanges in the world. In addition to providing trading services, Crypto.com has one of the best lending platforms in the crypto space.
On Crypto.com, users can deposit any accepted cryptocurrencies and receive loans instantly. Users can repay their loan partially or in full at any time within 12 months. The exchange said users can borrow loans in cryptocurrencies, including USDC, USDT, BTC and ETH. The deposit cryptocurrencies as collateral also include CRO, LTC, BTC, ETH, VET, LINK and DOT.
Aave
Aave is one of the top decentralized cryptocurrency lending platforms currently available. Unlike the centralized entities, Aave uses code-based smart contracts to enable direct peer-to-peer lending.
The protocol’s users can earn interest from lending their cryptocurrencies. As an open-source platform, developers can launch their apps on the protocol, boosting community security improvements. On Aave, there is no deposit limit and no lock-in period.
Yearn Finance
Yearn Finance is another decentralized lending protocol that is highly valued. The protocol provides users with a decentralized way to lend their tokens and earn interest in them.
On Yearn Finance, there are products including the Yearn Vaults and the yEarn. Yearn Finance allocates funds to lenders like Aave, Compound and dYdX.
Final thoughts
Cryptocurrency lending has become an important part of the crypto ecosystem. As a user, you need to look at certain criteria before choosing a lender. The above-mentioned lenders are some of the best in the crypto space at the moment.