Blockchainbased financial activities are increasing over the past decade and Crypto loans have emerged as one of the use cases. Unlike the traditional personal loan in which a centralized entity (Financial institution) is involved to control the process, cryptobacked loans need borrowers to keep digital assets as collateral and the entire process will be carried out by the system built on the distributed ledger technology.
There are so many benefits of this sort of collateralized loan as lenders need not meet the strict requirements as a centralized bank adjusts. No matter if you have fluctuating earnings or a bad credit score, you won’t be disqualified for this sort of loan. As the popularity of crypto lending is growing, users have to be careful. There are malicious platforms too. The benefits vary from platform to platform. Some popular platforms like Aave and Compound have been offering services over the past few years.
There can be other excellent platforms to generate excellent yields too, so users’ feedback can be very important before choosing the platforms.
We have asked 804 Experty community members questions related to "Best Crypto Lending platforms. How to earn on crypto loans in 2022". We have received many valuable replies, the best ones (based on Experty community feedback) you can read below.
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BD & Partnership Head
Which crypto lending platform would you recommend and why?
Crypto Lending Platform can be divided into CeFi (Centralized) and DeFi (Decentralized). CeFi is further divided into Exchanges and Platforms. Exchange: Binance, Gemini, VAULD, CoinDCX, etc; Binance has multiple crypto assets for stalking and also has SAFU insurance so is probably the safest, while CoinDCX gives 16% APY on stable coins. Platforms: NEXO, Celcius; Voyager, HARU, CABITAL, B2C2; Celcius had a good reputation but the recent BadgerDao hack exposed that they deploy user funds directly onto other platforms using Metamask for earning yield. So although user funds are protected, the act itself sets dangerous concerns. NEXO & HARU are similar in their ways of earning interest. CABITAL is a new entrant who are trying to do everything in a compliant manner. DeFi : MakerDAO. COMPOUND, AAVE; For ETH-backed loans, MakerDAO has is the better choice. COMPOUND gives COMP tokens (2-3%) to both borrowers and lenders. While AAVE has the max no of digital assets supported on its platform along with being the pioneer for providing flash loans.
How to earn on crypto loans?
So, for individuals, the main challenge is depositing fiat to crypto, so if you are considering saving in USD, you might as well take the opportunity to save in USDT as this would give higher interests than banks. So, any platform offering direct fiat deposit and conversion should be considered more profitable than using OTC to send USDT to the platform. In CeFi, Binance has many assets for staking and also the security of SAFU funds so most users can directly use it. In DeFi, COMPOUND is the better choice for individuals as they also get COMP tokens. Also, CABITAL, VAULD, etc offers direct deposit of FIAT and good yields on staking. For Institutions, choosing a platform should depend on the legal standing and in this regard, B2C2 & CABITAL is the better choice for CeFi and AAVE for DeFi. CABITAL is doing everything to get the related regualtory approvals while B2C2 is one of the largest market maker owned by SBI Capital. AAVE is the next generation of DeFi to invest in supporting the highest no of Crypto assets for asset collaterilization.
What are the main risks in the crypto lending process?
Crypto lenders earn interests in a few ways which are - 1. Borrowers pay high interests to Lenders to get loans for getting USDT for trading and this can well be over 30-40% annually. 2. Lenders can directly contribute to CeFi projects and they invest in other DeFi or lend to borrowers while lenders get a fixed yeild. 3. Lenders can directly contribute to USTD pools in DeFi and the DeFi allows borrowers to borrow against collateral. 4. Lenders can also put their USDT in the Binance (or other Crypto exchange) leverage pools and depending on market trends can earn profits, but this is strictly for technically equipped personnel. Risks- 1. DeFi hacks - Celcius had a good reputation but the recent BadgerDao hack exposed that they deploy user funds directly onto other platforms using Metamask for earning yield. While the process itself is normal but using a Metamask wallet exposed it to the front end hack suffered by Badger DAO. 2. In Sept, 2021 COMPOUND accidentally gave away 280K COMP tokens due to a pushing ahead with a bugged update, the reverse might also happen and users might loose funds due to vulnerabilities. 3. Besides backend and frontend vulnerabilities, smart contract vulnerabilities too can cause users to lose funds. 4. Last, but not the least if the yeild is too good to be true, it could definitely be a scam so do a through background check about the CeFi or DeFi before investing.
Mwila WiseGeneral Manager @ Excoincial Exchange
Which crypto lending platform would you recommend and why?
Cryptocurrencies have made people create fortunes for themselves via participating in crypto lending and borrowing schemes. There are many lending platforms that favour huge APY and APR with vast security and good reputation. However, in 2022, banking institutions are coming on board and are taking with them ideas of DeFi and blockchain properties. I personally would recommend www.africuniabank.com which will be a digital bank with real life contact to people whilst based on blockchain technology. It will be one of the banks in the world that will digitalize its asset with a good monthly and annual returns of about 30%, transfer money like world remit into mobile money accounts and bank accounts for traditional money, buy Airtime credits and data bundles. It has its AFCASH crypto deployed on BSC and its own mainnet chain will also be deployed. The ecosystem is huge which includes AFRICUNIA TV station with a physical office; EXCOINCIAL Crypto Exchange; AGRICUNIA Bio Organic Farm that is currently producing healthy products in markets; JOINTIUM social media network akin to like Facebook; PANGRAM.CITY video streaming platform which is similar like YouTube; AFRICUNIA-DEX and many other products. Get to know the people that you will also be lending your money to, thus promoting reality verses virtual. Cryptocurrencies are only providing us ideas on how financial institutions should be runned affectively. In conclusion for 2022 project, I would recommend www.africuniabank.com and its huge ecosystem.
How to earn on crypto loans?
Earning on crypto is very simple you can actually deposit some funds directly from bank account or crypto which can be used as a collateral in AFCASH tokens or stable coins. Loan can be acquired by also by paperwork submissions in areas/places/countries where the bank is operating from, civil servants, govt workers and non governmental workers will be encouraged to apply. These loans vary from short term to loan term loans from weeks, month, and years.
What are the main risks in the crypto lending process?
There are many risks in crypto lending process; 1. Due to volatility in price movements, you end up making huge losses and fail to reply the loan. 2. Crypto platforms are exposed or open to many attacks like script attacks, rugpulls, and hashing attacks. Projects without known location would disappear without trace at any given time.
Offelia OggA farm and a laboratory that utilize blockchain technology for genetic purposes.
Which crypto lending platform would you recommend and why?
Celsius is the best crypto lending platform, here you can earn up to a 17% APY in case of earn yeild. In case of borrowing you can choose interest rate from 1% up to 8,95%, depends on rate the amount of collateral will be decrease. In both cases if you used native CEL token you have more interesting conditions for profit (up to 25% more profitable). There is no transfer, origination, withdrawal fees.
What are the main risks in the crypto lending process?
1. The platform will go away with your money 2. High volatility on market espeshially in chosen token 3. The long term of lending (more than 10 years) 4. The lack of strategy
Eric CrawfordCEO
Which crypto lending platform would you recommend and why?
AAVE is my recommended crypto lending platform. It offers security for borrowing from blue chip crypto assets in an organization with a substantial TVL. Staking and borrowing rewards are paid in Matic which has a strong future.
How to earn on crypto loans?
Crypto loans are novel ways to earn passive income. An ideal method respects the value of an asset while managing the risk associated with the high volatility of crypto. Recommendations start with locking a high value asset in a DeFi platform that offers an attractive yield. Collateralize your asset and borrow a stablecoin on it, look for yield earning on both of these mechanisms. Trade your borrowed stable coin for an asset that is in high demand for lending. Put your lending asset on the market for well balanced yield for the lender and interest rate for the borrower.
What are the main risks in the crypto lending process?
The most significant risks in the process occur at each level of action. The first being custody of the collateralized assets, the platform in which they are locked and can be rehypothecated to. The second being the volatility of the asset that is collateralized risks liquidation. The third being the security of the final lending and borrowing platforms for asset owners. Depending on your methods, you may submit custody to one or more lending platforms.
GREEN FORESTtrader
Which crypto lending platform would you recommend and why?
aave, because since the first appearance it has been growing, we can see the price in the market is increasing, they offer credit to benefit users, I believe their project can compete with other similar projects
How to earn on crypto loans?
we can do long-term staking or trade but of course with a big enough risk, for me, I choose to do staking so it's easier to do without having to constantly look at the market
What are the main risks in the crypto lending process?
if the market price is very unstable and easily slumped by market players, to minimize losses we need to do long-term staking, one has to be willing to take risks with the decisions taken
Johanan OrokEngineering Technologist
Which crypto lending platform would you recommend and why?
Aave is a great lending platform. The reason is that it is competitive. If you do not like the rate of one lender you can always choose cheaper options. It's the flexibility for me. The disadvantage of Aave is the gas fee. Investors with little funds may loose a lot of funds if lending directly from aave.com , it can be very frustrating for investors with little funds. We all want to make money, but not spend all paying gas fee or transaction fee. I suggest those who want to use Saved, use on decentralized exchange as margin lending as that will save you massively from the fees. Another advantage of Aave is the Liquidity. It has huge liquidity, currently sitting at about $25 Billion. That's really huge and huge liquidity boost investors confidence greatly. The third advantage will be the community. Most Crypto enthusiast know that a great community is super support for any Crypto. My second lending platform of Choice will be Kucoin. Kucoin is a centralized exchange that offer margin lending. I love it because it's very easy to use especially for beginners. Binance on the other side is quite complex and beginners may not easily understand thier margin lending.
How to earn on crypto loans?
Kucoin is the best for me. Especially for startup. I noticed they give loan of up to 10x your initial capital. Meaning if you have $80, you can get a loan of up to $800 . That's a huge leaverage opportunity.
What are the main risks in the crypto lending process?
The main risk will be liquidation. Crypto currency market is a highly volatile market. Prices can fluctuate very excessively and it's very discouraging for beginners. collateral process usually involve the borrower leaving some money on the table which is used as collateral for the loan. If the coin or token price of that is being borrowed against goes too low beyond the "limit" and the borrower doesn't understand risk management, there is a high chance that they will get liquidated and loose thier funds even before they start making profit. As a ln extra advice, I suggest borrowers learn and understand risk management most importantly before venturing into any kind of Crypto borrowing. The knowledge will save them from a lot of avoidable losses.
Vincent MichaelCrypto Article Author
Which crypto lending platform would you recommend and why?
Compound finance.. this is because they are centralized and they use collatratelization method to provide these loans. And they give opportunities to the community to gain more through their services.
How to earn on crypto loans?
You can become a lender by putting money to their pools and staking, which they give good APY for their user's. You will have stable returns from your investment.
What are the main risks in the crypto lending process?
Liquidation call, when the value of loan is exceeds the value of your collateral, you will get a liquidation call. This is is the risk found on compound finance.
Joseph RockinsBusinessman
Which crypto lending platform would you recommend and why?
The whole point of crypto lending is to allow individuals with cryptocurrency assets to generate some dividends, with quite a few crypto lending platforms out there, and some popular names also, it's difficult to overlook platforms like e.g binance. But I will recommend CELSIUS, the reasons why are simply stated below 1. Accessible reach. Celsius has got a wide global reach, including the U.S.A. 2. Based on my research it's got the highest stable coins yield (up to 17.7%) and Bonus ($50) Up to 17.7% APR on stable coins 3. They also offer one of the most wide options in lendable coins (incl. BTC, ETH, USDT), basically up to 41 coins to choose from. 4. Process & security. The process is pretty swift and secure in both ends. So funds are safe. 5. They also have a good flexible lending duration.
How to earn on crypto loans?
Choose an Interest rate. You can choose to Start with stable coins, which generates you higher interest rates most times than assets such as Bitcoin or ethereum. Also a good way to earn good returns, is to invest in native platform tokens, like $Cel & $Cro. These platforms want you to invest in their own tokens, so they offer you higher interest rates when you do this with them. Also having a good lock up period is essential to earning even more dividends, the longer the lockup period the better your interest.
What are the main risks in the crypto lending process?
One of the risk associated with crypto lending is that your deposits are not insured. 2. High volatility, this could be a good thing most times but if you don't know what you are doing, might end up hurting you. 3. Counterparty risk. This is basically what is being done with your money, something to take note of. Also smart contract risk, custody risk and so on. These are things to take note of, if you plan on getting involved with crypto lending
Anisha MehtaActive trader
Which crypto lending platform would you recommend and why?
'AAVE' is quite renowned in this factor for me but because of ease and easy access to the services i would say 'binance'. The people i know of mostly use this 'Binance' platform because they get all of the services they need with easy access. Hm, but they have a con regarding their user interface of application as well as website which I'm highly unsatisfied with.
How to earn on crypto loans?
When the lenders give crypto loan to borrowers, these borrowers offers thier crypto assets as collateral so, this lenders can earn from the intrest rates monthly or weekly.
What are the main risks in the crypto lending process?
There are many risks included like fraud and security risks, uncollateralized lending and also collateral asset value drop(now that's a huge risk that leads to loss one way or another). If not understood carefully it may certainly cause financial harm.
Reza FebriadiComputer Technician
Which crypto lending platform would you recommend and why?
Binance. Why? I think choosing binance is the right choice. Because the crypto lending platform provided by binance can be done very easily. Apart from that, the undoubtedly important thing about binance is their all-encompassing security.
What are the main risks in the crypto lending process?
The most striking of the risks of Crypto Lending is the unstable price volatility of cryptocurrencies. Intermediary institutions on crypto credit are usually only used as credit in crypto currency, although there are also those who provide fiat credit.
Summary
So, Crypto lending at its core has both risks and rewards. If everything works fine for users’ satisfaction, the trusted platforms generate attractive yields for the assets by keeping initial amounts unaltered. We asked a few questions related to crypto lending to crypto enthusiasts. Most of them have shared their thoughts on different lending platforms like BlockFi, Binance, Aave, etc, and the risks associated with crypto lending. Cryptocurrencies are not insured so if you lose your assets by mistake or any other reason, there will be no rebate and rewards. More precisely, crypto lending generates more profits than traditional banking in most cases. So, if there is a higher return from something, there must be a higher risk too. Simple as that.
This is not a financial advice. Please do your own research and consider the risks of trading cryptocurrencies.