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Crypto lending is growing in popularity as a way to access capital without having to sell crypto assets. Crypto loans allow you to leverage your holdings to get cash or stablecoins while avoiding tax events. In this comprehensive guide, we’ll explore the top 10 crypto lending platforms and how to get started with crypto-backed loans.
Overview of Crypto Lending
Cryptocurrency lending platforms allow you to use your crypto as collateral to borrow cash or stablecoins. There are two main types of crypto loans:
- Overcollateralized loans – You put up crypto worth more than the loan as collateral. This protects the lender.
- Undercollateralized loans – You put up less crypto than the loan amount. Higher risk for the lender.
Crypto lending offers multiple benefits:
- Access capital without selling crypto and triggering taxes
- Avoid missing out on upside potential while assets are liquidated
- Leverage holdings to fund investments and purchases
- Lower interest rates than traditional loans
However, there are also risks to be aware of:
- Volatility causes collateral value to drop
- Potential liquidation if collateral falls too far
- Smart contract risks and bugs
- Custodial vs. non-custodial tradeoffs
Now let’s dive into the top 10 crypto lending platforms available in 2023.
1. Celsius Network
Celsius Network is one of the largest crypto lending platforms, with over $8 billion in assets.
Loan terms:
- Interest rates from 1%
- No minimum or maximum loan amounts
- No credit checks
- No origination fees
- Loans issued in stablecoins or fiat
Celsius offers flexible, low-cost loans. You can use dozens of crypto assets as collateral and obtain loans in stablecoins. One major risk is that Celsius loans are custodial – you give up control of your crypto collateral during the loan.
2. BlockFi
BlockFi is a major crypto lending provider based in New Jersey.
Loan terms:
- Interest starting at 4.5%
- Minimum $7,500; maximum $100 million
- 1-12 month terms
- No prepayment penalties
BlockFi allows loans up to 50% of your collateral value. You can borrow using BTC, ETH, LTC or stablecoins as collateral. BlockFi experienced difficulties during crypto market volatility in 2022 but has since recovered.
3. Nexo
Nexo is a European crypto lending platform available worldwide.
Loan terms:
- 5.9% APR
- No minimum loan amount
- Loan up to 50% of collateral
- No credit checks
- 1 to 12-month terms
Nexo supports dozens of cryptocurrencies as collateral. They offer a user-friendly mobile app and instant loan approval. Nexo gives you custody of assets during the loan term.
4. CoinLoan
CoinLoan is an Estonia-based crypto lending platform.
Loan terms:
- Interest from 5.2% APR
- Loan up to 70% of collateral
- No minimum loan amount
- No origination fees
- 1 to 12 month terms
CoinLoan allows borrowing against BTC, ETH, and stablecoins. A key benefit is no liquidations – collateral value can drop without liquidation. However, the platform does have high minimum collateral requirements.
5. Salt Lending
SALT Lending is a US-based crypto lending platform.
Loan terms:
- Rates from 5.95% APR
- Loan amounts from $5,000 to $25 million
- Loan up to 60% of collateral value
- 3 to 24 month terms
SALT offers both crypto-collateralized and cash-collateralized loans. A key feature is competitive rates for large loans above $75,000. SALT also provides custody of assets during the loan.
6. YouHodler
YouHodler provides crypto loans and savings accounts.
Loan terms:
- Rates from 4.8%
- Minimum $100
- Loan to value up to 90%
- Instant loans in stablecoins
YouHodler supports the widest variety of cryptocurrencies as collateral – over 30 coins. They also offer credit lines and the unique option to buy crypto directly using borrowed funds.
7. AAVE
AAVE is a decentralized finance (DeFi) lending protocol.
Loan terms:
- Rates set by algorithm
- No minimum/maximum loan amounts
- Loans overcollateralized
- No credit checks
AAVE uses smart contracts, so there are no centralized institutions involved. This provides more transparency but also smart contract risk. Interest rates can also be volatile based on algorithmic market dynamics.
8. Compound
Compound is another DeFi lending protocol.
Loan terms:
- Rates set algorithmically
- Loan up to 50% of collateral
- Loans typically overcollateralized
- No origination fees
Compound allows you to lend and borrow crypto including Dai, USDC, Ether and more. Like AAVE, Compound involves smart contract risks as opposed to a centralized custodian. But as a DeFi platform, it does offer transparent rates.
9. MakerDAO
MakerDAO is a decentralized protocol for Dai stablecoins and loans.
Loan terms:
- Rates from 0.1% APR
- Collateralized with ETH
- Loans issued in Dai stablecoins
- Highly overcollateralized
MakerDAO uses Ethereum as primary collateral. One key benefit is the Dai stablecoin maintains its peg to $1 USD even during volatility. This avoids exchange rate fluctuations in loan value. However, there is still risk of ETH collateral dropping.
10. Unchained Capital
Unchained Capital provides Bitcoin-backed loans and collaborative custody.
Loan terms:
- Rates from 10% APR
- 3-24 month terms
- Loan up to 60% of BTC value
- $10,000 minimum
A key differentiation for Unchained Capital is providing multi-signature Bitcoin collateral accounts. This maintains user control while still allowing Unchained oversight of the loan health. However, they only support Bitcoin as collateral at this time.
Other Emerging Platforms
The crypto lending space is rapidly expanding. Other emerging providers include Ledn, Hodlnaut, CoinFLEX, SpectroCoin, CoinRabbit, and Coincheck. New entrants are offering features like no credit checks, flash loans, and support for a variety of niche crypto assets as collateral.
The decentralized finance space is also spawning new lending protocols on platforms like Uniswap, Compound, and AAVE.
How to Get Started With a Crypto Loan
Here are the key steps to get started with a crypto-backed loan:
- Select lending platform – Research interest rates, supported collateral and currencies, loan terms, risks, and reviews to select the ideal platform for your needs.
- Connect wallet – Install the platform mobile app and connect your crypto wallet, whether self-hosted or custodial exchange account.
- Deposit collateral – Transfer eligible crypto assets to your address on the lending platform as collateral.
- Setup loan parameters – Enter the desired loan amount, term length, and withdrawal currency. Double-check check collateral requirements are met.
- Pass verification – Crypto lending platforms will verify your identity and jurisdiction depending on applicable regulations like KYC.
- Obtain a stablecoin loan – Once approved, you will receive the loan amount in stablecoins, fiat, or BTC to your connected wallet.
- Manage and repay – Ongoing management depends on the platform. You may need to add collateral if its value drops. Repay the loan and interest during the term to avoid liquidation.
Tips for the Best Rates and Approval
Here are tips to get the best crypto lending rates and smooth approval:
- Supply more valuable collateral like BTC to get the lowest rates
- Try overcollateralizing more than the minimum if possible
- Pick longer 1-2 year loan terms to get better rates
- Avoid very large loan amounts your first time
- Pass KYC verification upfront for faster approvals
- Research platforms with lower liquidation risks
Frequently Asked Questions
Do I need to sell my crypto to get a loan?
No, the key benefit of crypto lending is accessing cash or stablecoins without having to sell your crypto and trigger tax obligations. You simply put up crypto as collateral while maintaining ownership.
What cryptocurrencies can be used for collateral?
Most platforms accept BTC and ETH. Other common collateral options include Litecoin, Bitcoin Cash, AAVE, Uniswap, Binance Coin, Stablecoins, and more. Some niche platforms accept dozens of altcoins.
How risky are crypto-backed loans?
The main risks are volatility dropping collateral value and platform hacks or errors leading to loss of collateral. Overcollateralizing and using reputable established platforms helps mitigate these risks.
What happens if collateral drops in value?
If your loan becomes undercollateralized, most platforms will issue margin calls demanding you deposit more collateral. If you fail to add collateral, they will liquidate collateral to repay the loan once it hits a critical threshold ratio.
How to choose the right crypto-lending platform?
Compare interest rates, supported collateral and loan currencies, LTV ratios, liquidation risks, whether loans are custodial or non-custodial, available terms, and customer reviews across top platforms to find the best fit.
Conclusion
Crypto lending opens up innovative opportunities to leverage cryptocurrency holdings. Platforms like Celsius, BlockFi, and MakerDAO allow access to capital without selling assets using crypto as collateral.
With overcollateralized loans, upside potential remains intact while avoiding taxable events. Just be aware of risks like volatility and smart contract bugs on DeFi platforms. As crypto adoption advances, crypto lending will likely continue maturing into a viable alternative to traditional financing.
This covers the key highlights of the top 10 crypto lending platforms in 2023. Let me know if you have any other questions!
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