Cryptocurrency adoption is rapidly multiplying. But the crypto industry is highly volatile that investors are often very cautious. They are always interested in the safest investment options. Bitcoin System App is a powerful AI robot that automatically speculates on bitcoin prices on behalf of users. Buying and holding cryptocurrencies is secure, but there are other options such as crypto lending that can help investors earn most safely in the increasing crypto market. Let’s discuss more crypto lending in this blog.
What is Crypto Lending?
Crypto lending is one of the safest investment opportunities that allow investors to lease out their cryptos to borrowers through a crypto lending platform. The borrower pays interest payments to investors in exchange, also called crypto dividends. Though crypto lending is new in the field of loans, it offers many advantages over traditional bank lending. Lending cryptocurrency is easier and more accessible than traditional bank lending, as it doesn’t require any personal information or good credit history. Thus, you don’t need to have a high credit score and somehow prove your identity. This investing strategy allows anyone owning cryptocurrencies to earn passive income on their wallet without any specific effort.
Investors do not lose ownership of their assets because their assets are returned plus the interest payment at the end of the lending period. Therefore, investors unwilling to sell their crypto sooner can consider crypto lending a passive income source with their idle assets.
Many crypto lending platforms allow investors to lend both crypto and stable coins. Swyftx Australia is a new cryptocurrency exchange that has just launched in Australia. It is a platform that offers the highest level of security, protection and trust for its customers.
How Does Crypto Lending Work?
Crypt lending involves borrowers, investors, and a crypto lending platform. Investors have to deposit their assets on a crypto lending platform to make them available for lending and earn interest. A borrower who needs a crypto loan requests the crypto lending platform offering collateral. Once the platform approves his loan request, the assets are transferred from the investor’s account to the borrower’s account.
Investors start receiving interest payments on a weekly or monthly basis. In some cases, the interest payment is made at the end of the lending period. Once the lending period ends, the investor gets back his assets and the interest payment.
A borrower can only get back his collateral if he pays back the entire loan amount and the interest.
How Much Can One Earn by Crypto Lending?
The amount investor can earn by crypto lending depends on the interest rate and the coin you are lending. Moreover, the interest rate also varies from platform to platform.
Usually, the interest rate for cryptos can be from 3% to 6%, whereas for stable coins, it can be as high as 17%.
What if the Borrower Does Not Pay Back the Loan?
Crypto loans are secured by collateral. A borrower must deposit collateral more than the loan value, and he cannot take back his collateral until he pays back the entire loan amount and fixed interest payment.
If he does not pay back the loan, the lending platform sells his collateral to help the investor cover his loss. It means, even in the case of loan default, the investor is not at a loss.
Benefits of Crypto Lending
The following are the benefits of investing in crypto lending.
- Investors can earn passive income with their idle assets.
- They retain ownership of their assets.
- Crypto lending offers attractive interest rates.
- Investors can take out their assets at any time, even during the lending period.
- Crypto lending platform helps recover the loss by selling the collateral.
- Some crypto lending platforms do not require any minimum amount deposit for lending.
What are the Risks Associated With Crypto Lending?
The following are risks associated with an investment in crypto lending.
- Some crypto lending platforms do not offer a backup plan. In case of loan default, the investor will lose his assets.
- Crypto lending involves impermanent losses. It happens if the price of assets changes after depositing them. The investor has to deposit more cryptos in that case.
- Many crypto lending platforms are unlicensed and under regulatory pressure. Therefore, investment in those platforms results in a loss.
What are Tips for Successful Crypto Lending?
The following are some tips for secure and more rewarding crypto lending investment.
- Your crypto lending investment depends on the crypto lending platform. Therefore, always select a well-reputed and famous platform.
- Some crypto lending platforms offer special interest rates for a certain period. Look for such offers to increase gains.
- The interest rate is different for different cryptocurrencies. Therefore, choose a cryptocurrency carefully for better rewards.
- Cryptocurrencies are volatile. Therefore, choosing stablecoins over cryptocurrency could be more rewarding and safer.
- Always start with a small investment. Never invest more than you can afford to lose. Read as much as possible, good information and the latest news can often be found in what we call a Crypto press release.
Leading Cryptocurrencies for Crypto Lending
|Tether Gold (XAUT)
|USD Coin (USDC)
|Synthetix Network Token (SNX)
|Paxos Standard (PAX)
Figure: Leading crypto & stable coins for crypto lending
Crypto lending is a rewarding and safe investment option. But investors must do their research before making any decision. Educate yourself, learn from others’ experiences, and do not hesitate to explore crypto investment options.
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