The emerging digital economy developed after the cryptocurrency boom of 2017 opened the market for new financial opportunities. Cryptocurrency owners have found a store of value in coins such as Bitcoin or Ethereum and continue to accumulate more tokens.
In the growing financial market, the increase in digital asset owners created a demand for cryptocurrency loans to offer financial incentives for people that don’t fit with standard financial requirements. Cryptocurrency owners, driven by the HODL beliefs, keep hold of their coins or store them on exchanges.
The emergence of DeFi as a new norm for transacting and leveraging their assets created a paradigm shift and opened the market for new lending possibilities.
The Current Cryptocurrency Lending Process
Traditional financial systems don’t account for cryptocurrencies as classified collateral and offer limited borrowing possibilities against cryptocurrencies. As such, new crypto loan services provide liquidity against unconventional assets and have created a market for cryptocurrency-backed loans to grow.
DeFi platforms have created opportunities for cryptocurrency owners to generate passive income from using users’ tokens as collateral in the exchange pool.
With the cryptocurrency market being highly volatile, users risk decreasing their assets’ values as the price fluctuates or crashes. Moreso, platform owners can “pull the rug” and run away with users’ funds.
Ways in which cryptocurrency can obtain funds.
Cryptocurrency holders can use exchanges to sell their token at the market value and use third-party websites to cash out. This is often the preferred way for users to cash out on their investment. As the crypto market can increase in value, this is not always the best way to cash out and obtain fiat as the token can double or even triple in price.
Blockchain-based projects and centralized companies provide crypto loan services as the market demand is increasing. Users can stake their holding in exchange for fiat currency and pay back their loan in installments without losing their tokens. The current market offers highly competitive loans with low interest rates. Moreso, platforms have started accepting additional tokens as collateral besides the usual Bitcoin or Ethereum.
Crypto holders are faced with a tough decision when they require fiat funding. Cryptocurrency loan services offer an effective and safe way to fund your bank account without needing to sell your portfolio.
The best crypto loan sites with the lowest interest rates
Nebeus was established in 2014 and currently holds offices in the UK and Barcelona. The platforms offer loans with an interest rate as low as 0% during a loan period of 3 months, with a minimum loan value of $50, which places them at the top of this list. Additionally, Nebeus offers one of the highest loan-to-value ratios in the market, going up to 80%. Nebeus loans are flexible, meaning that users can customize them and select their loan term, LTV, and decide between providing collateral of ETH or BTC. For Nebeus flexible loans, the APR varies between 6% and 13.5%, depending on the LTV. 6% is for LTV’s of 50%, 10.5% is for LTV’s of 68%, and 13.5% is for LTV’s of 80%. The loan duration does not affect the interest rate.
YouHodler
YouHolder is a Swiss-founded company with offices in Cyprus and Switzerland that allows users to borrow against their crypto while keeping their assets. The company supports fiat, cryptocurrency, and stablecoins, and users can convert their currency into platform-accepted tokens. The company allows up to 90% LTV with a minimum loan value of $100. Interest payments are paid at the end of the loan contract. Their interest rates vary between 8% and 2.1%, depending on the contract duration. 8% is for LTV’s of 50% for 180 days, 3.2% is for LTV’s of 70% and a repayment of 60 days, and 2.1% is for 90% LTV’s with repayment in 30 days.
Celsius Network
Celsius Network is a blockchain ecosystem that allows users to borrow crypto or fiat against their fiat with an interest rate as low as 1%. Their interest rate is calculated based on the LTV amount. Users are allowed to borrow 25%, 33%, and 50% of the LTV. The platform enables users to select their own loan term contract. This also influences the interest rate for the loan. Loan interest is cheaper to be paid in CEL tokens with an APR of 0.75% compared to 1.00% if paid in cash.
Crypterium
Crypterum has recently announced a crypto-backed loan with a 0% interest for USDT loans for a period of up to 12 months. Users can lend against their BTC and ETH with a 50% LTV. The amount paid to the users is in USDT, and loans are handled through the platform’s native wallet. The fintech platform allows loans as little as $50 and as high as $5.000. It allows users to take out multiple loans at the same time while also paying 0% interest.
BlockFi
Founded in 2017, the company allows users to loan against their cryptocurrency and have an interest rate as low as 4.5%, depending on the payback timeline. BlockFi was founded in New Jersey and allows users worldwide to create an account and deposit funds. It offers multiple crypto collaterals, including ETH, BTC, or Litecoin. Users can borrow only up to 50% of their LTV (loan-to-value). This means if you hold $10.000 worth of BTC, you can only lend up to $5.000 worth of fiat.
Final Thoughts
Crypto-backed loans are a solution for anyone wanting fast crypto to fiat lending. They can be used if a new investment opportunity arises, and one can generate the interest to be paid back in less than 30 days. Would you take a loan using your HODL coin to make a profitable investment?
Disclaimer: This is a paid article. KryptoMoney does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products, or other materials on this page. Readers should do their own research before taking any actions related to the company. KryptoMoney is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods, or services mentioned in the article.
