Cryptocurrency lending has been around with us for less than 5 years now.
Over these years, we’ve had quite a number of Cryptocurrency lending platform. It’s interesting how in such a less time the lending volume have surged. The total lent so far is estimated to be over $10 Billion. Although we don’t have the exact data, it certainly is way beyond $10Billion.
What’s unique about Crypto Lending platform?
Let’s be honest, almost every lending institutions are same. But what makes crypto lending different is the fact that you can take Loans at the cheapest rates of as low as 0.5% on MakerDao and 0.70% as per Celcius Network data. This is undoubtedly the cheapest.
There is no hassle to take any loan via the lending platforms. While banks need verification and other documents, it is mentally stressful, annoying and time consuming while taking a loan from the banks. Also, there is a waiting period of atleast 2 days for your loan to reflect in your bank account. “Let’s not forget the Credit score required to avail a loan from banks".
The Deposits!
Just like the banks the Crypto lending platforms need money to further lend to the borrowers. The depositors usually earn upto 10% in APR, it’s still quite better than your bank saving rate or your Fixed Deposit Rates. Platforms like Nexo pay dividend to its Nexo token holders. Celcius network said it has over $1 billion in deposit, $1.47 Billion in MakerDao. So we can estimate the value can be over $5 - $6 Billion.
It’s not just about earning interest on Deposit, but it’s a way of making additional 10% passive income.
Until now, the Cryptocurrency holders had no other ways to appreciate their capital. But now with all the lending platforms, one can safely keep their Crypto in platforms like MakerDao, Celcius network and Nexo. (There are a lot more)
Today, a Bitcoin holder not only is rich, $11k worth, but also earning upto 10% on his or her Bitcoin savings.
How It Has Benefited Bitcoin Community!
As a Bitcoin holder, we only had to rely on prices of the Bitcoin going up for capital appreciation. There was no other ways to earn from our Bitcoin.
Now with the lending platforms, one not only makes money on their Bitcoin price going up, but also on the amount lent. It’s a win win situation. “Borrowers get loan at low interest rates hassle free and the lenders get interest on their lending.” Helping the Bitcoin community not sell their Bitcoin but earn interest on them. The depositors can also avail loan with their Bitcoin as a collateral!
What Are The Risk Of Defaulting The Loan!
To safeguard the deposits and to ensure the borrower repays, the lending platforms have made sure that no loan is given to the borrower without any collateral. Yes That’s right! You need to have collateral in order to borrow.
The collaterals have to be in Crypto. The platform allows various crypto as a collateral like Bitcoin, Ethereum, Litecoin and so on. The lender will provide loan upto 50% of the collateral value. This helps to safeguard the depositors money in times when the borrower defaults. But since the loan interest rate is soo less, there usually is no huge risk of default.
To summarise:
Cheap interest rates,
Depositors earn in crypto,
Depositors money is safeguarded by the collaterals,
Cryptocurrency holders can avail loan by keeping their crypto as collateral,
Instant and hassle free,
No requirement of Credit score,
Money in your destination account within few hours.
The same has been posted on Medium and blogger...
Posted Using LeoFinance
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It wasn't done intentionally! I didn't know that LeoFinance triggered a post of Hive aswell.
Hi! I am a robot. I just upvoted you! I found similar content that readers might be interested in:
https://medium.com/@cryptobillion/how-crypto-lending-is-taking-over-bf71ba7beef7
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