Embroker Team May 22, 2023 8 min read

What Is Crypto Lending? (And The Best Crypto Lending Platforms & Rates)

Two people in business attire shaking hands to signify a crypto lending deal

Remember when crypto was just a new idea, and people questioned whether it would catch on?

Interest in all things crypto has exploded in recent years. Case in point: In May 2016, it was possible to purchase Bitcoin for roughly $500. As of March 1, 2022, Bitcoin’s price tag was more than $44,000. That’s a staggering growth of about 7,800%. 

But crypto is also synonymous with volatility, which is why the acronym HODL (hold on for dear life) has become something of a mantra among crypto forums. HODLers are crypto enthusiasts who hold on to their cryptocurrency and refuse to sell regardless of increasing or decreasing value. However, HODLing doesn’t result in any productive use of crypto assets.

That’s where crypto lending comes in. Turning crypto into a business via crypto lending is an emerging and exciting prospect for entrepreneurs. You can start a business, protect it with commercial crypto insurance, and turn HODLing into a lucrative lending machine.

With crypto lending, HODLers or general crypto aficionados can earn interest by lending digital assets. According to Bankrate, the current national average interest rate for savings accounts is 0.06%. With crypto lending, it’s possible to earn substantially more interest on crypto assets without selling or trading them. 

Plus, crypto lending platforms make it easy to take out loans using digital assets as collateral.

Interested in getting involved with crypto lending? Here’s what you need to know to get started.

What Is Crypto Lending?

Crypto lending isn’t completely dissimilar to the process of traditional lending. 

With crypto lending, users can lend out cryptocurrency, much like how a traditional bank lends out physical currency, and lenders can earn interest. 

Crypto lending is a form of decentralized finance (DeFi) where investors lend their crypto to borrowers in exchange for interest payments. These payments are known as “crypto dividends.” Many platforms allow users to lend cryptocurrencies and stablecoins.

It’s important to note that while DeFi mimics the traditional financial ecosystem, it does so without the same amount of rigorous regulation.

Crypto Lending for Borrowers

With crypto lending, borrowers use their digital assets as collateral, similar to how a house is used as collateral for a mortgage. To get a crypto-backed loan, borrowers collateralize their crypto assets and then pay off the loan over time to get their collateral back. Think of it as a way to acquire money when needed by accessing the value of your cryptocurrency without having to sell it

Now, it’s possible to get a crypto loan without collateral via a flash loan, but it’s not the easiest undertaking. So you’ll want to be very familiar with crypto and the lending platforms before leaping into crypto lending without collateral.

The amount of loan you can receive is calculated based on how much collateral you can stake using a loan-to-value (LTV) ratio. For example, if a platform has a 50% LTV, that means you’ll have to stake $10,000 in crypto to get a loan of $5,000.

It’s worth noting that while you maintain ownership of the cryptocurrency you’ve put up as collateral, you do lose some rights over your assets, such as being able to trade or sell them, until the loan is paid in full.

Crypto Lending for Investors

On the other side of the crypto lending process, there are investors. Investors take part by adding their crypto assets to a pool managed by a lending platform that oversees the entire process and forwards the investors a share of the interest.

For example: Say you have 10 crypto coins that you don’t want to sell or trade. You decide to earn a passive income with them and lend the coins on a crypto lending platform. Then, every week or month, you get interest payments in return. The interest rates with crypto lending vary quite a bit, and what you receive will depend on the platform selected and the type of asset. The interest could be between 3% and 7% or as high as 17% with stablecoins. 

Remember that crypto collateral that borrowers had to pledge to get a loan? If a borrower is unable to or chooses not to repay the loan, investors can sell the crypto assets to cover losses. 

How Does Crypto Lending Work?

So how exactly does crypto lending work? The crux of the process is connecting lenders and borrowers through a third party (crypto lending platform), which acts as an intermediary. 

The general steps in the crypto lending process are as follows:

  • A borrower chooses an investment platform and requests a crypto loan amount. Unlike with a loan at a bank, there is no lengthy application process involved. 
  • Based on the desired loan amount, the platform calculates how much crypto is required as collateral based on the LTV ratio.
  • The borrower pledges their crypto collateral.
  • The investors finance the loan through the investment platform, though they don’t see the process taking place.
  • The borrower pays off the loan’s balance and interest over a set timeframe. (Most platforms don’t have penalties for paying off a loan early.)
  • Investors receive regular payments from their share of the interest.
  • The borrower gets their collateral back after paying back the entire loan.

While every crypto lending platform has its own unique rules and procedures, the general process remains the same across all platforms.

How to Select a Crypto Lending Platform

Finding a trustworthy crypto lending platform that meets your needs is crucial to having a successful crypto lending experience. There are some important factors to look into when selecting a lending platform. 

Interest rates: This is one of the main driving factors when selecting any lending platform. Choose a platform with a decent interest rate for your specific crypto assets. It’s often possible to get a crypto loan with an interest rate below 10% or even as low as 0%.

Platform risks: Another major factor for any decision about crypto lending platforms is looking into a platform’s track record regarding safety risks. Crypto has become a prime target for cyber attacks. Research shows that fraud and theft on DeFi platforms totaled more than $10 billion in 2021. So, look for platforms that outline on their website the security safeguards they have in place. 

Costs: Compare the fees on multiple platforms for various crypto assets. Keep in mind that if you have different cryptocurrencies, you don’t have to use the same platform for all of them. 

Loan duration: Make sure to verify the lending duration parameters when choosing between crypto lending platforms. Check whether the loan duration is fixed or flexible.

Minimum deposit limit: It’s a good idea to verify if a platform you’re interested in has requirements for a minimum deposit amount.

Collateral: This is key for borrowers! Take some time to compare the collateral required to get a specific loan amount across different platforms.

Geo-restrictions: Some crypto lending sites have geo-restrictions that may not be obvious right away. These restrictions mean that you may not be eligible to use a particular platform, depending on where you live.

When it comes to investing in crypto lending, you’ll also have to choose between an automated and a manual lending platform. An automated platform is the preferred option for many people since it simplifies the process by ensuring that assets keep generating a profit and aren’t forgotten about.

Best Crypto Lending Platforms

After all of this information about how to choose a crypto lending platform, you’re probably wondering about some of the best platforms available. Of course, the question of which crypto lending platform is the best is open to debate since no two operate the exact same way. But some stand out in a field that is quickly becoming crowded.

Here’s a look at some of the current most popular crypto lending platforms:


BlockFi is a one-stop shop for crypto enthusiasts, offering the ability to buy, sell, and trade crypto. Managing more than $10 million in crypto assets, BlockFi has become one of the most popular crypto lending platforms and was included on Forbes’ 2021 Fintech 50 list. The platform doesn’t have trading fees, and users can apply for a rewards credit card. And with BlockFi, you can get a loan for up to 50% of the value of your crypto collateral. What’s more, BlockFi uses various user and platform security practices, including ‘Know Your Customer’ (KYC), to prevent fraudulent activity. One important thing to note: BlockFi Interest Accounts are not registered under the Securities Act of 1933 and therefore are not available in the U.S.


It’s no surprise that Binance lands on many “best of” lists for crypto lending platforms, considering that it’s the world’s largest crypto exchange. For American customers, Binance.US offers more than 65 tradable cryptos. The platform has developed its own ecosystem and even introduced its own coin, BNB. Binance’s fees are among the lowest in the crypto lending industry. Users can take advantage of a flat fee of 0.1% for spot trades and 0.5% for crypto buy/sell. It’s also possible to get a 25% trading fee discount if you use BNB to pay fees. Binance.US is not available in all states, so it’s best to first check whether you’re eligible to use this platform.


Celsius has quickly become one of the most well-known names in the crypto lending market. In fact, Celsius has paid more than $1 billion in digital assets to its users – the most yield paid out to users by any crypto platform. With Celsius, users can earn up to 17% APY (annual percentage yield) by lending crypto, with payments made weekly. And Celsius provides yield on 46 different digital assets, including stablecoins. For borrowers, Celsius has interest rates available as low as 1%. Plus, the platform doesn’t have fees for borrowing, transferring, or lending coins.


CoinLoan is considered one of the pioneers of crypto lending. Today, CoinLoan offers worldwide coverage for various stablecoins, fiat, and cryptocurrencies (including some unique coins like Monero). With CoinLoan, users can get several different loans simultaneously, which can help diversify risk by avoiding losing a huge chunk of crypto assets if a particular currency suddenly drops in value. In addition to offering crypto-to-crypto loans, the platform also boasts “bank-grade security and one-of-a-kind flexibility.”

Finding the Best Crypto Lending Rates

And finally, we get down to the hot topic of crypto lending rates. Every platform has different rates for crypto, so your returns will depend on your chosen platform. 

Since every platform has a unique ROI associated with certain risks, it’s good practice to consider using multiple lending platforms to diversify your crypto portfolio and spread the risks. Remember that high returns mean high risks.

Typically, the lending rates for cryptocurrencies fall somewhere between 3% to 8%. However, the rates for stablecoins are higher and are often in the 10% to 18% range. 

Keep in mind that each lending platform has different rates for different coins. So, to ensure you get the best returns for your crypto assets, compare the rates on different platforms for a specific cryptocurrency.

The Bottom Line

For HODLers, crypto lending is a worthy alternative to just having crypto assets burning a hole in digital wallets.

If you’re interested in getting involved with crypto lending, whether as an investor or borrower, it’s essential to do thorough research first. Certainly, when done with a trustworthy platform, crypto lending can be advantageous to both investors and borrowers. 

Crypto lending has gained tremendous popularity in a relatively short time. Existing and emerging platforms will undoubtedly continue finding unique opportunities for crypto enthusiasts to earn dividends, borrow loans, and expand their crypto portfolios.

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