Cryptocurrencies are known as “a digital representation of value”, not issued by any central bank or another public authority. Furthermore, they can essentially be stored, traded electronically, and transferred. Although crypto is not considered a currency in a traditional sense, its adoption is skyrocketing!
Due to the potential of blockchain technology, a variety of use cases have emerged, for instance, asset-backed tokens, NFTs, and using cryptocurrency for providing financial services. Owing to the growing popularity of crypto, many people have invested in crypto assets such as Bitcoin and Ethereum. Earlier, users would hold crypto coins and wait for their prices to appreciate in order to gain profits from them. However, users can now lend crypto assets (just like traditional banks) and earn interest on them with the evolving crypto space.
This is an exciting premise that enables hodlers to leverage the opportunity costs of holding a coin. When the cryptocurrency market undergoes price swings (which by its very nature is quite frequent), hodlers may think of selling their coins so as to earn money before the value falls.
However, a smarter alternative is to lend the coins that you hold and earn interest in them. It is also an easy way of alleviating the risks associated with the crypto industry in general. Instead of keeping your coins in the wallet sitting idle, you can deposit them with a crypto lending platform and earn lucrative interest rates on them!
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How Does Crypto Lending Work?
Crypto lending has a pretty straightforward mechanism. In fact, it is similar to how traditional banks work. You deposit your coins with a crypto lending platform and start earning interest on your cryptocurrencies. These platforms usually lend the coins that you deposit to institutional borrowers. Platforms like Hodlnaut lend cryptocurrencies to rigorously vetted financial institutes that may need loans as per their business requirements.
For such crypto lending platforms, you are generally needed to open an account and deposit your coins with them in order to begin your interest-earning journey. However, you need to complete a mandatory KYC procedure for most of these crypto lending platforms. When you hold your coins with the crypto interest-earning platforms, you create a passive source of income that will help you make the most of your crypto assets. And there it is! A simple way to earn more with your crypto.
Here, we bring you the top 5 crypto lending platforms that will help you earn passive income.
Earn Passive Income with Crypto Lending
Here are the top 5 platforms with which you can hold your coins to start earning passively today!
Started by two Bitcoin maximalists in Singapore, Hodlnaut is a platform that provides crypto lending and borrowing services. Users can earn up to 7.5% APY on Bitcoin and up to 12.73% APY on stablecoins with Hodlnaut. The platform is quite easy to use, and users can sign up for their Hodlnaut Interest Account from the web app or the iOS mobile app.
Hodlnaut supports six crypto assets: BTC, ETH, DAI, WBTC, USDC, and USDT. There are no minimum deposits or lock-ins needed, and users can withdraw their funds anytime! Hodlnaut currently has an AUM of US$500 million and is an emerging platform in the crypto lending space. From over 100 users when they began in 2019, the platform has grown to more than 10,000 users to date. With a Trust pilot rating of 4.8, Hodlnaut is known for its exceptional customer service. To learn more, read Hodlnaut review.
BlockFi has an easy-to-use web interface and allows users to deposit their funds in their web wallet to earn interest on them. Founded in August 2017, the company is based in New Jersey. It supports cryptocurrencies such as BTC and ETH. BlockFi has recently adjusted its interest rates and offers up to 4.5% APY on BTC and up to 8% APY for stablecoins. The platform has a tiered structure and the rates vary based on the amount deposited for the chosen crypto.
Coins can be sent to and withdrawn from BlockFi at any time. However, the interest payments are made only once a month. Moreover, the withdrawal fees are waived for one withdrawal a month. BlockFi’s funds are ensured by the Gemini Trust Company that issues GUSD. To learn more, read the BlockFi review.
YouHodler is an EU-based company that focuses on crypto-backed lending as well as fiat loans. You can earn interest in crypto like Bitcoin and stablecoins such as USDC. YouHodler offers weekly interest payments, and the payouts are in stablecoins and crypto. By lending your crypto with YouHodler, you can earn up to 4.8% APY on BTC and up to 12.3% APY on stablecoins.
Moreover, YouHodler also allows using savings funds as collateral for lending. With YouHodler exchange, you can borrow fiat anytime, depending on the value of crypto assets. The platform has grown exponentially since its inception and supports a wide range of crypto as well as stablecoins. To learn more, read YouHodler’s review.
Celsius is yet another crypto lending platform that you can consider if you wish to earn interest on your crypto assets. It has an iOS and Android application and supports several cryptocurrencies along with Bitcoin Gold, Bitcoin Cash, and the like. With Celsius, you can earn up to 6.2% APY and 8.8% APY on stablecoins. The interest is paid out weekly, and you can add or withdraw the coins at any time.
The interest rates are subject to change and vary based on the market conditions. To know about the latest rates, you can always check their website. Additionally, the platform also has a native token called CEL token in which users can earn a higher interest rate.
Also, read Top 5 Celsius Alternatives
Crypto.com is a popular crypto credit card and wallet provider that also offers crypto lending as a service. With their Earn program, users can earn up to 8.5% APY on BTC and up to 14% APY on stablecoins. However, the lending rates vary based on how long you hold the coins with them and the amount your lock in. If you wish, you can choose not to lock the coins on the platform, but the interest rates will be reduced.
For the latest interest rates, it’s best to always refer to their official website. Please note that Crypto.com coins are not available universally, and the residents of Hong Kong SAR, Malta, or Switzerland cannot avail of the Earn program. To learn more, read Crypto.com review.
Also, read A Review of Crypto.com NFT Platform
Many users have their cryptocurrencies and tokens lying idle in different wallets. Instead of storing them in wallets and waiting for their value to appreciate, you can make them work for you by lending them to the platforms mentioned above. Opt for a platform that offers sizable interest rates and follows all the security best practices to secure your crypto assets. Nevertheless, you should always do your due diligence before depositing your coins with a crypto lending platform. Make sure that the platform you choose is available in your country, and read the terms and conditions carefully while investing to grow your crypto assets by lending them.