What is a crypto lending platform?

Crypto lending platforms act as an intermediary for lenders and borrowers, and both centralized and decentralized markets are available. Cryptocurrency lending platforms offer opportunities for investors to borrow against deposited crypto assets and the ability to lend out crypto to earn interest in the form of crypto rewards.

How does a lending platform work?

A lending platform offers investors the means to earn interest on crypto deposits. The investor then opens a savings account with the platform to make such deposits. The lending platform offers these deposited assets to other investors seeking crypto loans. The borrower secures this loan by providing collateral exceeding the loan amount.

How does crypto finance work?

Lenders deposit their crypto into high-interest lending accounts, and borrowers secure loans through the lending platform. These platforms then fund loans using the crypto that lenders have deposited. The platform sets the interest rates for both lending and borrowing, allowing it to control its net interest margins.

Is crypto lending a good idea?

While it’s seen a huge spike in interest in recent years, crypto lending comes with its own set of risks and is highly volatile, especially in the short term. Crypto lending allows you to borrow money — either cash or cryptocurrency — for a fee, typically between 5 percent to 10 percent. It’s essentially a secured personal loan.