Do you need some cash but don’t want to sell your cryptocurrency? Are you a crypto believer who are sacred of cashing out your digital coins (as you might have to pay huge opportunity cost!)? We might suggest an idea of “ Crypto lending” by which you can access the cash without withdrawing your cryptocurrency. Crypto lending is a process to put your coins as the collateral in exchange of fiat currency or any other digital currency. There are a number of platforms available in the crypto space which can lend you money in exchange for the crypto coins. In this article, we will discuss the crypto lending, factors to consider while lendings, risks associated and a few of the popular crypto lending platforms.
What Is Crypto Lending? | Crypto Lending Platforms
Crypto lending can be understood as the process to loan fiat currency or Stablecoins for the fixed duration and interest rate. The process of lending involves a borrower, lender and a platform connecting them though some platforms lend by themselves also. Customers need to log in or create the account on such platforms to borrow money by using their cryptocurrency as the collateral and either has to provide bank account details or the digital wallet where fiat can be transferred digitally.
Working Of Cryptocurrency Lending
Though the platform differs in the process of lending, some of the general steps are followed by every platform. Firstly borrower needs to register on the site or app of the crypto lending platform and signify the sum of the money needed. Then, the crypto loan platform with the help of their inbuilt tools calculates the crypto needed to be deposited as collateral. Once the collateral is deposited by the borrower on the platform, he/she waits for the approval of loan (you need not wait in the long queue, just relax!). Once the approval is accepted, relevant funds will be deposited in the account of the borrower.
Factors To Be Considered Before Choosing The Crypto Lending Platform
Before randomly choosing the crypto lending platform after your friend’s suggestion, you need to take care of a few points :
- Rate of Interest: First and foremost thing you need to consider the interest rate applied on the money borrowed. You need to consider the amount you can pay as an interest amount per month.
- Security: Security is also an important factor to be considered for crypto lending. It is important to consider that the crypto you are keeping as the collateral will be safely kept and not mis-utilised. Don’t forget to read the security policy of the platform.
- Currencies supported: You need to choose the platform which can accept the coin you want to keep as collateral. Some platforms accept BTC and ETH only while others accept hundreds of currencies. You should skim through the listed pairs on the homepage of the website to know about the currency being accepted.
- Flexibility: Some platforms have fixed conditions while others offer customized options for the loans. You should carefully look at the term of borrowing, repayment policy and other policies before choosing the platform.
Best Crypto Lending Platforms In 2020
As the crypto space is expanding, the options for the crypto lending platform has also increased. Different platforms provide different benefits, some with low-interest rates while others with high-level security while some have the optimum solutions. Let us discuss the most popular platforms of crypto lending:
YouHodler is based in Cyprus and Switzerland primarily focussing on the lending of fiat, crypto and Stablecoins with cryptocurrency as collateral. With high and flexible Loan-to-Value (LTV) rate with 90%, 70% and 50% rate. You can easily get higher credit line even for a lower deposit. With the facility of instant cash to users, YouHodler is widely chosen by borrowers. The platform itself acts as the lender and directly works with the coordination of the bank to assures the security of the funds.
SALT Lending was registered in 2016 which provides the peer-to-peer crypto-backed loans. With the easy process of getting loans by keeping the crypto as collateral, users can assure the credit on the same day. The terms and conditions associated with loans can be customized as per your requirements. Security is one of the topmost priority of SALT lending platform as they backed all loans which are backed by the crypto assets kept in cold wallets. Some of the players in the crypto lending industry consider the platform of SALT Lending as the benchmark in terms of security.
CoinLoan is popular crypto lending platform among the Europeans. The process of lending is backed by bank-grade security, thereby the process is simple. CoinLoan offers varied choices of cryptocurrencies and fiat currency. With the transparent network of crypto lending platform CoinLoan, it offers several customised features with convenient methods of withdrawal. Facilities like guaranteed repayments, SSL-encrypted transactions, and many more captivates the interest of the borrowers.
For instantly borrowing ETH and ERC 20 tokens, you can log in to the India-based crypto lending platform, Nuo Network. With the facility of over collateralizing and under collateralizing the loans, Nuo allows clients to withdraw funds from the platform easily. With meta transactions, clients can easily access the network without any transaction fees.
Based in Australia, Helio lending is known as the first regulated crypto lending platform in the country. With the quicker transaction and minimal fees of withdrawal, Helio allows users to receive the loans in a single day. Helio offers the loans by keeping the collateral in terms of Bitcoin, ETH, Ripple and LTC. It provides the facility to take crypto back at the end loan with the simpler process.
Crypto lending platforms are indirectly meant to accelerate the adoption of cryptocurrencies and maintaining the old ones by allowing them to hold their currency after the completion of the term of the loan. With the diversification of crypto space, several platforms offer the services to borrow the money keeping the crypto as collateral. You need to be cautious and check the few policies before taking loans.