In short, crypto lending platforms allow users to get a crypto loan or to lend crypto to borrowers. The crypto you can borrow or lend varies from standard cryptocurrencies like BTC, ETH, etc. to stablecoins like TUSD. Asset-backed crypto tokens like DGX are also available.
How Cryptocurrency Lending Platforms Work
Thanks to the surge in popularity of blockchain, loan applications can now be processed directly on the internet.
Blockchain enables possibilities that were once unthinkable. One of the opportunities provided is the use of cryptocurrency lending platforms.
Previously, to get a loan, you had to go to certain financial institutions and register yourself in their office. They will process your application and access your risk as a borrower. Credit history does not matter to crypto lenders.
The process is different now. Due to the crypto revolution, everything can be digitized, and people can get loans much faster.
A lending platform in the crypto world works similarly to the lending process in traditional institutions, but the process is more efficient.
You won’t face the struggle of answering a long list of questions on crypto lending platforms. If you simply have enough collateral, you should be able to get instant cryptocurrency loans.
So, how do you do it?
Well, first of all, you need to go to one of the crypto lending applications mentioned below. You will then find the lending terms of your preferred crypto-asset and deposit your collateral.
Once you deposited enough collateral, everything can be processed instantly, and you will get your loan.
On some of these platforms, you don’t even need an extensive KYC check; it depends on what company you are dealing with.
If you are interested in lending your crypto-assets to borrowers, you can do it with these same platforms. You will earn interest for the crypto-assets you lend to borrowers. This allows you to earn passive income instead of letting your assets sit idle.
Top Cryptocurrency Lending Platforms
Let’s name a few of these platforms to understand things better. You are here because you want to know which companies facilitate crypto lending, right? Let’s get started!
One of the most popular lending platforms is Nexo. With Nexo, you can easily get loans in the form of crypto-assets or even fiat currencies. The credit here does not need any kind of ‘credit check.’ As mentioned on its homepage, you can easily get a Nexo loan with three easy steps.
First of all, you need to deposit crypto into your Nexo account.
The second step is simply receiving a flexible credit line. It will become instantly available once Nexo detects your cryptocurrency deposit.
Then, you can spend the money directly with the Nexo card or withdraw it to your bank account.
Everything is automated and you will gain full access to Nexo’s features once you verify your identity with their third-party verification service provider, Onfido. You don’t need to worry about Nexo’s legality. They are fully licensed and regulated.
Dharma is a popular alternative to Nexo.
The official promo text on its homepage, “Earn 8.1% interest from anywhere in the world”, is clearly directed at he crypto lenders who want to maximize their ROIs.
Dharma is directly powered by Compound.finance, an open-source protocol that specializes in the ‘interest’ and ‘borrowing’ features of crypto-assets.
With Dharma, you can just log in with a simple 4 digit pin. Forget about seed phrases and complicated smart contract processes. Everything is seamlessly integrated into the platform.
Another well known lending platform is Celsius.Network. Its CEO is Alex Mashinsky, who is one of the inventors of VOIP (Voice Over Internet Protocol).
Celsius.Network is similar to Nexo, just with different rates and some other minor differences. They promise cash and stablecoin loans to start at 4.95% annual interest rate, which is considered competitive in the crypto space.
They also have their own loan calculator app, where you can calculate everything. You put your collateral type, loan amount, LTV (loan to value), and loan terms. That’s it. Everything that’s displayed there is accurate, so you won’t be misled.
Another player in the crypto lending space is dYdX.
This platform is a little more unique than the others because of its ‘decentralized’ nature.
dYdX is a decentralized margin trading and derivatives platform. The idea is similar to a decentralized exchange, but you can open a short or leveraged position with dYdX. Since it’s a margin trading platform, dYdX also needs the ‘borrower’ and ‘lender’ of crypto-assets.
The borrowers on dYdX are mainly margin traders who require leverage in their open trading positions. The lenders here can continuously earn interest over time, depending on the competitiveness of the rate and the demand from the margin traders. Visit dYdX website here.
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