What Is Crypto Lending?
— Platform, Crypto lending, Blockfi, Two components, Digital wallet, Deposit, Deposited collateral, Ltv ),, Value )., Locked — 1 min read
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. Lending platforms became popular in 2020 and have since grown to billions in total value locked on various platforms. There are two main types of crypto lending platforms: decentralized crypto lenders and centralized crypto lenders. Both offer access to high interest rates, sometimes up to 20% annual percentage yield (APY), and both typically require borrowers to deposit collateral to access a crypto loan. Some platforms offer a cryptocurrency line of credit instead, like Nexo, who offers 0% APR. The risks of Crypto Lending include margin calls, illiquidity, a drop in value of the deposited collateral could trigger a margin call. Source