9 Crypto Lending Platforms To Help You Borrow Funds Against Your Crypto Holdings by@anikavass

9 Crypto Lending Platforms To Help You Borrow Funds Against Your Crypto Holdings

Lending is a vast ocean of possibilities, and you need to learn how to navigate them properly. Lending systems have been developed, which allow users to borrow money by using digital coins as collateral. Some crypto lending and borrowing platforms have minimum and maximum sums that can be loaned out. LTV and APR rates can be fixed at a certain percentage or dynamic and changeable according to the type of asset or market conditions. Fixed rates are more reliable and less risky, and they are better suited for people who prefer no surprises. Crypto lending has several other features that make it attractive.
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Anika Vass

Hey all, my name is Anika, I'm 24 y.o. from Budapest, my big dream is to become a crypto journalist and write for Forbes

According to some statistics, around 20 million US citizens have an outstanding personal loan. The lending market is constantly growing because people always need money for real estate purchases, consolidating debt, handling medical expenses, etc.

Thanks to cryptocurrencies, there is now finally an alternative to traditional bank loans. New lending systems have been developed, which allow users to borrow money by using digital coins as collateral. What this means for you is easier access to funds and liquidity.

The Main Features of Crypto Lending

Just like in traditional lending markets, crypto loans are a vast ocean of possibilities, and you need to learn how to navigate them properly. Detailed analysis, comparisons, and considerations are required to find what is best for you. I had to do this research myself because not that long ago, I needed a loan myself, and I now feel confident sharing what I discovered with my readers.
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https://www.ledger.com/wp-content/uploads/2021/03/cover-2-1.png

For example, if you want to borrow money, you could provide cryptocurrency as collateral for your loan. That’s what crypto lending is. It's not uncommon for people to take out a loan in stablecoins or another kind of digital currency instead of in real cash and fiat money.
There are a few main aspects of crypto loans worth considering: How high is the APR and LTV, and how much money can I borrow?

APR is the Annual Percentage Rate. It’s the interest and profit a service provider generates to lend out its money. As a borrower, you will, of course, be interested in platforms charging low APRs. Luckily for you, a lot of the service providers in the crypto space do just that. In addition, cryptocurrency loans come with much lower interest rates than what you would get from your local bank. So instead of paying an APR of 20%, you can halve these costs, although they can be as low as a few percent in rare circumstances.

Next up is the Loan-To-Value or LTV ratio. You see, your collateral’s value determines how much you can borrow. For example, you can’t expect to receive $1.000 worth of USDT for $1.000 of Bitcoin. Many borrowers could decide to default on their loans, and that way, the lending platforms aren’t making any money. To protect their business, the collateral needs to be more valuable than the borrowed asset. Going for a crypto loan with a high LTV rate is in your best interest because you are getting more value for your collateral that way. You should be aiming for an LTV of 50% or more. That would mean that for $1.000 worth of BTC collateral, for example, the lender would give you $500 of alternative coins.

Some crypto lending and borrowing platforms have minimum and maximum sums that can be loaned out. There are no firm rules, and each service provider decides for themselves. If you need a small crypto loan, you should know that certain lenders require their clients to borrow at least $10.000. But luckily, some have no minimum or maximum amounts. Always try to pick services that aren’t forcing you to go above your own limits.

LTV and APR rates can be fixed at a certain percentage or dynamic and changeable according to the type of asset or market conditions. Fluctuating rates provide more opportunities but greater uncertainty. Fixed rates are more reliable and less risky. They are better suited for people who prefer no surprises.

Crypto lending has several other features that make it attractive:
  • There is a variety of digital coins to select between depending on your demands.
  • A quick onboarding process for clients. Your loan takes less than an hour or a few blockchain confirmations to be approved.
  • Anyone with adequate collateral may get a loan without running through credit and security checks.

An Overview of Crypto Loans Services

Let’s now take a look at some familiar names in the crypto lending space.

Aave

app.aave.com

app.aave.com

Aave is a non-custodial and decentralized liquidity provider. You can borrow various assets in exchange for suitable collateral. The platform has a market size of several billion dollars. It allows its customers to take out a loan instead of liquidating their assets.

This decentralized lender offers LTV rates from 40% to 80% and has two different interest rates: stable and variable. The client is free to select and switch between these APR rates from his profile. The stable option includes fixed interest for the entire duration of the loan. Variable rates can change depending on market conditions and the offer and demand.
The interest amounts vary from coin to coin and can be between 2% and 16%. Aave has no limits in terms of minimum and maximum loaned amounts or the length of the loan contract.

Pros and Cons:
Pros:
  • LTV rates of up to 80%.
  • The ability to switch between stable and variable interest rates.

Cons:
  • High APR rates of up to 18% for some assets.
  • Not enough liquidity for all currencies.

BlockFi

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BlockFi offers crypto-backed loans with three different types of fixed LTV and interest rates. The Loan-To-Value amounts to select from are set at 20%, 35%, and 50%. The APR percentages are 4.5, 7.9, and 9.75. This platform has a minimum loan amount of $10,000 and a maximum of $100,000,000.

However, the geographical location bears a significant effect on the rates you will receive. Customers from the United States may be offered different terms than international clients. The loaned sums are sent out the same day, and the maximum loan period is one year. Suppose the collateral value drops below a certain threshold. In that case, a partial or total liquidation can happen unless additional collateral is provided.

Pros and Cons:
Pros:
  • Low-interest rates.
  • Customizable LTV ratios.

Cons:
  • High minimum loan amounts.
  • Maximum loan period of one year.
  • Differences are made between US and non-US clients.

Celsius

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https://www.blockchainwg.eu/wp-content/uploads/2021/04/Celsius-420X220.jpg

The Celsius network supports over 40 cryptocurrencies as collateral and allows you to borrow six different stablecoins. On this platform, you can select between interest rates of 1, 6.95, and 8.95 percent, but each category has its own LTV figure. For the lowest APR, you will have to accept a 25% LTV. On the other hand, a Loan-To-Value ratio of 33% is available if you select a 6.95% RTP. To get the biggest 50% LTV rate, your only option is to pick the 8.95% RTP.

The minimum stablecoin amount that can be borrowed is fixed at $500, and the assets can be kept for up to three years. Celsius doesn’t offer loans in all countries, and additional limits may apply depending on your location. The network has a native CEL token that can be used to pay back interest with discounts of up to 30%.

Pros and Cons:
Pros:
  • Borrowing at 1% interest rates.
  • Long loan periods.

Cons:
  • Not available worldwide.
  • Low LTV ratios when selecting the lowest APR rates.
  • Minimum loan periods of six months.

ChangeNOW (NOWLoans)

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https://changenow.io/blog/changenow-content/uploads/2021/08/NowLoans-2.png

NOWLoans allows people to take out a loan in USDT or USDC by supplying collateral in Bitcoin, Ethereum, Dogecoin, or any other supported assets. Clients who need Bitcoin are welcome to deposit stablecoins to the ChangeNOW platform instead.

You can keep the borrowed assets indefinitely because there are no time limits. In addition to the fixed APR of 10%, NOWLoans also features an LTV ratio of 50% for all currencies. There are no limits to how much you can borrow, but there is a minimum of $100 worth of crypto.

Pros and Cons:
Pros:
  • No time limits or maximum loan periods.
  • Low $100 entry loan amount.
  • Identical ARP and LTV figures for all coins.

Cons:
  • The platform doesn’t support loans in popular alternative coins.

CoinLoan

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https://miro.medium.com/max/1400/1*3B3eeZ7St0HlYhdXdiEldQ.jpeg

CoinLoan is a custodial borrowing platform with APR rates starting at 4.95%. The site allows you to loan stablecoins as well as fiat currencies. The minimum loan period is one month, and the borrowed funds can be kept for up to three years.

CoinLoan offers four Loan-To-Value rates to pick from. The interest increases the higher the LTV is. The APR figures are 4.95%, 7.95%, 9.95%, and 11.95% for the LTV rates of 20, 35, 50, and 70 percent. The platform features a professional live support team, 2FA, and Biometric authentication. Before you can borrow from CoinLoan, you will have to verify your identity, which only takes a couple of minutes.

Pros and Cons:
Pros:
  • No minimum amounts.
  • Customizable LTV figures.

Cons:
  • Necessary to undergo identity verification.
  • The platform charges a 1% origination fee on all loans.

Crypto.com

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Crypto.com is a cryptocurrency platform with over 10 million registered users. One of the services the site renders is lending cryptocurrencies. The maximum loan period is 12 months, after which the interest fees have to be paid. The APR on crypto.com depends on the amount of staked CRO tokens (the native currency of the platform) and the LTV ratio. The interest rates vary from 2% to 12%.

In addition to that, digital coins can be borrowed with LTV figures of 25%, 33%, and 50%. Crypto.com users can loan stablecoins, Bitcoin, or Ethereum. The smallest borrowing amount is $100 worth of crypto, while the maximum is $2 million.

Pros and Cons:
Pros:
  • Lower interest rates when staking the native CRO tokens.
  • Small loan amounts.

Cons:
  • Not available in France, the USA, UK, Germany, and several other countries.
  • Multiple loans can’t be taken out.
  • KYC verification is required to be considered for a loan.

Nexo

https://www.google.com/url?sa=i&url=https%3A%2F%2Fcryptotips.eu%2Fen%2Freview%2Fnexo%2F&psig=AOvVaw2MwG_6infsnJPNF9Ggw_xS&ust=1629885545007000&source=images&cd=vfe&ved=0CAwQjhxqFwoTCMj67_qyyfICFQAAAAAdAAAAABAD

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Nexo is a crypto loans platform that offers digital coins with different interest rates from 6.9% to 13.9%. This provider has a minimum amount of only $50, while the upper limit is $2,000,000. The max loan term is 12 months, but this period can be extended if necessary.

Different coins are assigned different LTV rates. Depending on several factors, you can expect to see Loan-To-Value ratios of 15%, 30%, 50%, 70%, and 90%. Discounts are possible for loyal customers who own NEXO tokens.

Pros and Cons:
Pros:
  • Low borrowing amounts.
  • Extended benefits for loyalty program customers.

Cons:
  • Only two stablecoins can be loaned out.
  • Non-customizable APR and LTV rates.

YouHodler

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https://financialit.net/sites/default/files/styles/218x150canv/public/wide_dark.jpg?itok=SiQIzbrX

YouHodler is a crypto lending platform that provides instant loans with high Loan-To-Value rates of 90%. More than 30 of the most popular cryptocurrencies can be used as collateral for a USDT loan. When borrowing stablecoins, the loan duration is 15 days, but this can be extended at any time after paying a 1% loan fee.

The minimum loanable amount is 100 USDT for crypto-backed collateral. Ledger Vault insures $150 million worth of YouHodler assets. If you are interested in taking out a Bitcoin loan, you can do that by depositing various altcoins as collateral.

Pros and Cons:
Pros:
  • High LTV rates.
  • Long list of crypto-backed collateral.

Cons:
  • USDT loan durations are only 15 days.
  • Each loan extension requires a 1% service fee and reopening commission.

Unchained Capital

https://www.finsmes.com/wp-content/uploads/2021/06/Unchained_Capital_Logo.jpg

https://www.finsmes.com/wp-content/uploads/2021/06/Unchained_Capital_Logo.jpg

Unchained Capital is a lending platform for bitcoin-backed loans which does business mainly with US customers. All deposited collateral is held in multi-signature wallets that require the signatures of 2 out of 3 private keys before accessing the funds. The company provides personal, business, and international loans. The minimum borrowing amount for international clients is $100.000, while US citizens can loan no less than $10,000.

The loans can’t be shorter than three months. The maximum holding period is three years. Unchained Capital provides LTV rates of 40% and Annual Percentage Rates from 11.16% to 14.22%. Each loan requires an origination fee of 0.5% to 1% depending on the term.

Pros and Cons:
Pros:
  • High-security level

Cons:
  • High borrowing amounts
  • Each loan requires an origination fee

A Comparison of Crypto Lending Platforms

Name
LTV
APR
Min. Amount
Max. Amount
Min. Loan Period
Max. Loan Period
Aave
40% - 80%
2% - 18%
No limits
No limits
No limits
No limits
BlockFi
20%, 35%, and 50%
4.5%, 7.9%, and 9,75%
$10,000
$100,000,000
No limits
1 year
Celsius
25%, 33%, and 50%
1%, 6.95%, and 8.95%
$500
No limits
No limits
3 years
ChangeNOW (NOWLoans)
50%
10%
$100
No limits
No limits
No limits
CoinLoan
20%, 35%, 50%, and 70%
4.95%, 7.95%, and 9.95%
No limits
No limits
1 month
3 years
25%, 33%, and 50%
2% - 12%
$100
$2,000,000
No limits
12 months
Nexo
15% - 90%
6.9% - 13.9%
$50
$2,000,000
No limits
1 year (extendable)
YouHodler
90%
1%
100 USDT
No limits
15 days
15 days (extendable)
Unchained Capital
40%
11.16% - 14.22%
$10,000
$1.000,000
3 months
3 years

Summary

As we can see from the comparison table above, there are two types of crypto lending service providers: platforms with fixed and those with floating rates. Depending on what kind of person you are and how much risk you are willing to take, you will choose what seems the most attractive to you personally.

Lending services with floating figures require more detailed analysis. The terms aren’t the same for all assets and deposited collateral. The customers need to perform due diligence to know what works best for them. Nexo offers the lowest loanable amounts in the industry, starting at $50. Unfortunately, their APR can be as high as almost 14%.

Lending operators such as BlockFi and Unchained Capital aren’t suitable for small-time players because of their $10.000 borrowing minimums. Aave doesn’t have limitations for loanable amounts or the holding period. Still, certain digital coins have interest rates of up to 18%.

No matter which of these platforms you decide to entrust your money to, ensure that you are familiar with their reputation, terms of use, and conditions of your loan.
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by Anika Vass @anikavass.Hey all, my name is Anika, I'm 24 y.o. from Budapest, my big dream is to become a crypto journalist and write for Forbes
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