There are fantastic crypto lending sites that allow you to make a coin through interest earned on loans. Alternatively, if you require cash or crypto assets to trade with, these sites also can lend you a low-interest rate collateralized crypto loan to get you going.
These lending platforms have quickly become a fresh way for investors, hedge funds, the unbanked, and crypto miners to leverage their assets and support business ideas.
These platforms facilitate institutional borrowing of digital currencies, generating a lot of liquidity for trading activity. Unbeknownst to many retail traders, these services are the bread and butter of these prime brokers.
What Are the Benefits of Crypto Loans?
The platforms also have a multitude of benefits for the small-scale crypto investor. These include;
- A credit source than unlike traditional banks does not require credit checks. Crypto loans are secured with digital collateral, and your legibility is dictated by your online credibility
- These platforms provide fast loan services than those offered by traditional lenders
- You can earn your passive income from these lending networks as you await bull markets
- The loans have lower interest rates as compared to those of traditional banks
Which Are the Best Crypto Loan Platforms?
Like the above, YouHodler is a crypto-backed loan service provider with a difference. Not only do they allow users to leverage their crypto holdings allowing instantaneous conversion to USD or Euro with a short-term loan attracting a mere 2.5 percent in interest, but it has a distinctively high loan-to-value ratio of 85 percent. That’s the highest in the space. At the same time, it accepts liquid cryptocurrencies like BTC, ETH, BCH, LTC, XLM, BAT and XRP as collateral. All these coins are stored at cold storages, never at vulnerable hot wallets with conversion automated via partners. What’s attractive about YouHodler is that loan approval is swift. Then again, there are no credit card checks and once there is a pass, cash transfer is near-instantaneous regardless of the time of the day. Cash is secured at Swiss Bank accounts and all transfers, deposit or withdrawals are compliant with applicable laws.
There are three types of loans offered by YouHodler, each differentiated with the holding period. The 8-day loan attracts a minimum of 2.5 percent while the 60-day and the 182-day can attract loans varying interest rates from 2.5 percent to 13 percent. Eventually, these rates will drop as users increase.
Nexo has been a very successful crypto loan lender since its inception in 2017. The startup has so far issued over $700 million in crypto credit to a massive 200,000 plus borrowers. These loans can now be accessed for a transaction on the platform’s Mastercard service. The service utilizes oracles to confirm the collateral for loans, before settling transactions in fiat. The Europe based firm is extending its services to Asia and the US before the end of 2019.
The firm also runs an Instant Crypto Credit Line service that can be used to borrow against various cryptocurrencies. You can also use Nexo to earn good interest on cash and stablecoins. The startup works with Chainalysis, a blockchain investigative firm to ensure that it does not deal with ill-gotten tokens.
The firm is backed by some of Wall Street‘s most active traders including Devonshire Investors a subsidiary of Fidelity. BlockFi lends cash to crypto investors, and despite the market volatility, the firm has grown substantially originating over $10 million in credit.
Its loans have a low APR rate of 4.5 percent, and it can give up $10 million in crypto loans. The low-interest rates are an excellent incentive for borrowers who in turn provide increased liquidity for the lender. BlockFi stores its assets with Gemini, a third-party depository trust and custodian with no records of hacks or customer assets losses.
This peer-to-peer lending platform has topped the $300 million-coin deposits level in the last one year. A press release shows that the firm has originated over $2.2 billion on crypto loans too in the past year too. Billed as one of the fastest-growing lenders, the platform has originated over 160,000 crypto loans, and given over $3 million in interest to its investors.
The firm does not charge any deposit, withdrawal, transaction, origination or early termination fees. It also allows the deposits of multiple assets and does not have a minimum deposit amount either. The firm does not offer insurance for assets on its platforms.
CoinLoan is a peer-to-peer crypto lending platform that allows crypto HODLers to receive 60 percent high-LTV crypto loans. The Estonian platform also allows investors with excess fiat to access health returns. The firm gives stablecoin based loans as well as crypto loans in varied fiat currencies. You can also obtain a CoinLoan native token loan in CLT, the platform’s native token. The CLT loan, however, only has a 20 percent LTV because the token enjoys less liquidity than other cryptocurrencies on the platform.
Long-term investment in the cryptocurrency market is not for the faint-hearted. The extreme market volatility is enough to make anyone’s head spin. There are, nonetheless, new digital currency products that will ease the stress of HODLing your crypto for months.
Disclaimer The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of CoinGape. Do your market research before investing in cryptocurrencies. The author or publication does not hold any responsibility for your personal financial loss.