By only trading cryptocurrencies, one cannot earn a profit by up-righting their current holdings. But the market offers many other investment ways, such as cryptocurrency lending that enables borrowers and lenders to send money between one another with good interest rates, and a larger degree of safety. The cryptocurrency market is developing continuously and traditional financial instruments are also going into these emerging markets. Crypto users can go into several lending like margin lending, crypto-to-crypto lending, and crypto-to-fiat lending, etc, for either earning interest rate on coins or to get access to fiat for investments, day to day usage and larger-scale grip.
In this article, we will mainly focus on aspects dealing with the crypto lending markets, and mainly on main digital currency lending platforms that are available in the market.
The Crypto lending process is easy on many lending platforms and offers a legible service. Lenders have to deposit a part of their crypto holdings on the webpage. Then the coins are made available to the borrowers at a suitable interest rate.
Borrowers have to create an account and take a loan for a specific period. When the lending time expires, then the borrower has to return the funds and pay interest for the service. To have surety and fewer risk factors most crypto lending platforms have guarantee section or they set up collateral backing systems.
When a proper trading decision takes place, the lender will have a high-profit margin. And if there is a bad deal then the lender will have to pay for the losses by him alone. Some of the advantages of crypto lending are:
- Quite low transaction fees
- Bureaucracy is reduced
- The bank account is not required
- Gets quick approval
There are many well-known risks involved in crypto lending. These are:
- Safety of the lending platform
- The very high default rate is present
The cryptocurrency market is quite volatile, which might necessitate that debtors should pay back considerably more than they have borrowed, whereas lenders may lose profits due to excessive volatility.
Famous Crypto Lending Platforms
Here is the list of some of the most popular and widely-used market’s cryptocurrency lending platform that are growing exponentially. These are:
- BlockFi: It was founded in 2017 and represents a New York-based lending center that provides its customers with USD loans that are guaranteed via crypto-based collaterals.
The main mission of BlockFi is to provide increased liquidity in the cryptocurrency market and also helping others to afford their day-to-day expenses. Numerous traders rely on BlockFi’s services nowadays for margin trading.
BlockFi’s is quite popular now and is rising high. It is transforming the company into one of the most crucial systems in the crypto lending market.
- CoinLoan.io: CoinLoan.io is representing an Estonian lending platform for crypto-currency loans. It has been one of the most popular European crypto lending platforms and provides users with a simple lending process, bank-grade security, multiple cryptocurrency support, and of course, the P2P system.