Cointime

Cointime

Download App
iOS & Android

The Beginner's Guide: How to Borrow and Lend Crypto

Validated Project

Learning how to borrow or lend cryptocurrencies is becoming a hot topic in the world of finance, with more people looking to get in on the action. While buying and selling cryptocurrencies is a popular way to invest, there are other ways to make money in the crypto space, one of which is borrowing and lending cryptocurrency.

There are risks to consider when you start borrowing on margin and loaning out your own assets for other people to use. So firstly, make sure you know what they are. Secondly, you need to have a goal in mind when you’re borrowing and lending. So decide what your objective is, devise a strategy to get there, and carry out research to find the best tactics to execute.

Risks to consider

Borrowing and lending cryptocurrency is similar to traditional lending and borrowing. But with cryptocurrencies, the process is more secure, faster, and simpler. When you lend cryptocurrency, you essentially loan it out to someone else for a period of time, and in return, you receive interest on your investment. 

Conversely, when you borrow cryptocurrency, you obtain a loan from someone else, which you will need to repay with interest. Like any investment, borrowing and lending cryptocurrency come with its risks. One of the main risks is the volatility of the cryptocurrency market.

Cryptocurrencies are known for their unpredictable price swings, and if you lend or borrow cryptocurrency during a period of high volatility, you could end up losing a significant amount of money.

Another risk is the possibility of scams or hacks. If you’re not careful, you could fall victim to a fraudulent lender or borrower, which could result in the loss of your investment.

Defi platforms where you can lend and borrow

Despite these risks, borrowing and lending cryptocurrency can be a lucrative investment strategy if done correctly. Here are some of the top dapps that support borrowing and lending cryptocurrency on different blockchains:

Aave (Ethereum)

Aave is one of the most popular dapps for borrowing and lending cryptocurrency on the Ethereum blockchain. It allows users to borrow and lend a variety of cryptocurrencies, including ETH, stablecoins, and other ERC-20 tokens.

The platform also allows users to earn interest on their deposits, and offers a range of features such as flash loans and collateral swaps.

Compound (Ethereum)

Compound is another Ethereum-based dapp that offers borrowing and lending services for cryptocurrencies. The platform is unique in that it allows users to earn interest on their cryptocurrency deposits in real-time, and the interest rates are determined by supply and demand.

Users can also borrow cryptocurrency by putting up collateral, and the interest rates for borrowing are competitive.

MakerDAO (Ethereum)

MakerDAO, with their Oasis dapp, is a decentralized lending platform that operates on the Ethereum blockchain. It allows users to borrow the stablecoin DAI by putting up collateral in ETH.

The interest rates for borrowing are relatively low, and the platform also offers a range of tools for managing collateral and debt positions.

Venus (BNB Chain)

Venus is a decentralized lending and borrowing platform that operates on BNB Chain. It allows users to borrow and lend a variety of cryptocurrencies, including BNB, stablecoins, and other BEP-20 tokens. 

The platform also offers a range of features such as flash loans, and users can earn interest on their deposits.

Cream Finance (multiple blockchains)

Cream Finance is a decentralized lending platform that supports multiple blockchains, including Ethereum, Binance Smart Chain, and Polygon. It allows users to borrow and lend a variety of cryptocurrencies, and offers a range of features such as flash loans and collateral swaps.

The platform also has a competitive fee structure, making it an attractive option for borrowers and lenders alike.

Borrow or lend money against NFT assets

While you can borrow and lend crypto against cryptocurrency assets, there’s also a way to use non-fungible tokens or NFT assets to acquire a loan. Various platforms allow NFT owners to put their assets down as collateral and to get a load in cryptocurrencies. At the same time, crypto owners can provide crypto through liquidity pools or peer-to-peer loans.

These platforms allow users to borrow or lend crypto with NFT as collateral:

  • NFTfi: NFTfi is a leading liquidity protocol for NFTs. It allows NFT holders to borrow cryptocurrency from lenders by using their NFTs as collateral.
  • BendDAO: BendDAO is an NFT liquidity protocol supporting instant NFT-backed loans, collateral listing, and NFT down payment.
  • Arcade: Arcade is a leading decentralized marketplace for NFT liquidity. Users can borrow and lend against their NFTs.
  • Drops: Drops is Web3 platform that aims to help NFT holders maximize the utility of their NFTs. They do this by offering liquidity to holders who use their NFTs as collateral.
  • Zharta: Zharta is a real-time NFT loan platform for borrowers and lenders. It allows holders to get instant loans with their NFTs without losing ownership over them.

Try before you buy

Borrowing and lending cryptocurrency can be a lucrative investment strategy, but it comes with risks. It’s important to do your research and only invest what you can afford to lose.

With the growing popularity of DeFi, there are now more dapps than ever that support borrowing and lending cryptocurrency, and it’s up to you to choose the one that best suits your needs.

Crypto DeFi AAVE MakerDAO
Comments

All Comments

Recommended for you

  • The U.S. Department of Government Efficiency needs “revolutionaries with super high IQs who are committed to small government reform”

    the newly established Department of Government Efficiency (DOGE) in the United States has released an official statement via their X account, thanking thousands of Americans for their interest in joining the department. However, they have made it clear that they do not need "part-time creative contributors," but rather "revolutionaries with super high intelligence who are committed to small government reform." Applicants are required to work more than 80 hours per week and focus on plain and simple cost reduction. Applicants who meet the requirements can submit their resumes via private message, and the top 1% of outstanding applicants will be personally reviewed by Elon Musk and Vivek Ramaswami.

  • SEC Chairman Gary Gensler Makes Final Lobbying Call for US Crypto Regulation

    according to institutional reports, US Securities and Exchange Commission (SEC) Chairman, Clayton, is making a final push to allow the agency to regulate the cryptocurrency market before the Trump administration's term ends and its enthusiasm for digital assets wanes. In a speech prepared for a legal conference in New York on Thursday, Clayton reiterated that the agency should focus on "road rules" applicable to cryptocurrency sales and intermediaries such as brokers and exchanges to support proper disclosure. Clayton stated that the experience of the Great Depression made decision-makers aware of the "importance of disclosure terms, as information about securities creates a public product". (Jinshi Data APP)

  • U.S. money market fund assets exceed $7 trillion for the first time

    according to data provided by Crane Data, which has long been researching the currency market fund field, as of the week of November 13th, the management assets of US currency market funds increased by about $91 billion, and the total scale exceeded $7 trillion for the first time, which is a milestone for the industry. Due to the high and reliable yield, the popularity of this industry among investors has risen sharply. Before reaching the $7 trillion mark, the scale of US currency market assets hit a historic high for several consecutive months, which refuted doubts about whether the industry could continue to be popular as Federal Reserve officials lowered interest rates from their highest level in 20 years. After US policy makers cut interest rates by 50 basis points in September and another 25 basis points this month, investors continued to pour into currency market funds, mainly because the yield of these funds is higher than other tools, especially bank deposits. Compared with banks, the speed at which these funds transmit the impact of low interest rates is often slower.

  • Franklin Templeton Expands $410 Million Money Market Fund to Ethereum Blockchain

    Franklin Templeton expanded its $410 million money market fund to the Ethereum blockchain.

  • U.S. PPI rose 2.4% year-on-year in October, higher than expected

     US October PPI rose 2.4% year-on-year, estimated at 2.3%, with a previous value of 1.8%; the US October PPI rose 0.2% month-on-month, estimated at 0.2%, with a previous value of 0%.

  • The country's first digital RMB-based intellectual property securitization product was successfully issued

    "Yongxing-Guofu-Ningbo Intellectual Property Asset Support Special Plan (Specialization and Innovation)" with Yongzheng Asset Management as the manager and Yongxing Securities as the sales organization held a listing ceremony on the Shanghai Stock Exchange. The first issue size was 138 million yuan, with a term of 1 year and a coupon rate of 2.2%. The product's priority bond rating was AAA, and it was the first knowledge-based securities product to be invested in digital RMB form nationwide, and also a breakthrough in the Ningbo knowledge-based securities project.

  • Crypto venture capital Portal Ventures completes approximately $90 million in oversubscribed fundraising

    early blockchain venture capital firm Portal Ventures is close to completing the final fundraising for its second fund, which has a size of $75 million. Founder and general partner Evan Fisher said that the fund has been oversubscribed, with subscriptions reaching $90 million. According to documents submitted to the US Securities and Exchange Commission (SEC) in August, the initial target for the fund was $70 million, but Portal later decided to raise the ceiling by $5 million.

  • BIT Mining Invests in Prosper's Native Tokens to Support New Focus on Bitcoin Mining

    ChainwireProsper, a decentralized protocol focused on bridging institutional-grade Bitcoin mining power on-chain, has announced a new investment in its native project token PROS by BIT Mining Limited. This investment aligns with Prosper's new strategic focus on Bitcoin mining and the broader Bitcoin ecosystem, which has been well-received by the community. Prosper partners with industry players to obtain various services and products to deliver institutional-grade execution in managing its mining hashrate. BIT Mining's investment represents another significant validation of Prosper's thesis by institutional backers and supports its new vision.

  • From the US election to November 13, DOGE rose by 128%, outperforming Tesla and Bitcoin

    According to market data, from November 5th to November 13th, Dogecoin had the most eye-catching increase, surpassing the more focused Tesla and Bitcoin. On November 14th, Dogecoin and Bitcoin continued to rise. As of November 13th, Dogecoin increased by 128%, Coinbase increased by 47%, Tesla increased by 31%, Bitcoin increased by 29%, the banking sector increased by 10%, small-cap stocks increased by 4.9%, the S&P 500 increased by 3.6%, and the US dollar index increased by 3.1%. In addition, long-term US bonds, crude oil, gold, and Trump media all experienced a decline.

  • Binance Labs transferred the tokens of 4 invested projects to Gate Exchange 1 hour ago

    On November 14th, according to on-chain analyst Yu Jin, Binance Labs may be preparing to sell tokens from some of its investment projects. One hour ago, Binance Labs transferred tokens from four of its invested projects (with a total value of approximately $2.79 million) to the Gate exchange. These tokens include:

Daily Must-Read

Popular Activities

Delysium $AGI & AI Private Yacht Party

Delysium $AGI & AI Private Yacht Party

March 27 - March 27
Seoul

Popular Tags

Cointime
News
Contents
RSS
Company