Crypto investors often use their crypto as collateral to borrow cryptocurrency. New borrowers should know the best platforms to trust and build their investment to get an opportunity to borrow. Through this article, you will find out more about cryptocurrency loans and where to get at the lowest interest rates.
So, what is a crypto loan? According to experts, this is crypto funding given to ‘hodlers’ without spending their investment. They pay back with interest that is split between the platform and investors for providing liquidity to the platform.
That said, let’s dive into more insights on crypto loans.
Type of Crypto Loans
Decentralized crypto loans are commonly called DeFi and they are non-custodial. When you borrow cryptocurrency, you still have the freedom to control your collateralized digital assets through a private key. These loans are less popular and have a higher interest rate than centralized loans.
On the other hand, centralized loans, also called CeFi, are very popular. The platform takes control of the private keys so that the investor cannot access the collateral as they wish.
How to Borrow Cryptocurrency
Unlike traditional bank loans, crypto loans do not consider your credit score. How much instant crypto loan you will receive depends on the amount of collateral you have saved. The more you have, the more you are likely to get.
The fact that you already have collateral means that you have an account with the platform. So, get into the platform and take advantage of the crypto loan calculator to find out how much you qualify for and how much you will pay.
Platforms to Borrow Cryptocurrency
With the growth of the cryptocurrency sector, there is an increase in crypto loans platforms. Here are the most popular platforms you can try:
· YouHodler – Are you a hodler? Your Bitcoin, altcoins, or stablecoins could allow you to borrow cryptocurrency at affordable rates on YouHodler. They give loans backed by about 15 coins and the loan to value ratio is 90%. YouHodler is a secure platform and there is no need to get worried about your investment.
· BlockFi – This CeFi platform has successfully given crypto loans to thousands of cryptocurrency investors. This means that the user base is enormous and crypto saving is also high. BlockFi is user-friendly, which means that it is suitable for beginners. So, if you are looking for a platform to borrow cryptocurrency, try this one.
· Nexo – Another platform to borrow cryptocurrency easily is Nexo. Unlike many other lending platforms, it offers over $375 million worth of insurance to its assets, not to mention the high security of digital assets. The LTV ratio is competitively high while the lending rates are affordably low. The platform is also easy to use whether you are a beginner or not.
It is easy and helpful to borrow cryptocurrency backed by your investment when you read and take notes of the above insights. It is not too late to start if you have not done so yet. However, there is a lot more to learn before getting started, so dive into more research.