What are crypto lending platforms? Know some of the major ones in India
As the returns on investments in equities dwindle, mainly due to the disruption caused by the COVID-19 pandemic, the cryptocurrency has gained acceptability among investors. Individual and hobbyist investors flocked to the industry promising decent returns, even amid the economic crisis that made many people nervous. While supporters of the cryptocurrency say it offers a great opportunity to grow wealth quickly, critics cite its extreme volatility. Although the debate continues, this industry has mushroomed over the past two years. And it is always innovating and adding new features. One of them is the crypto loan.
What is the crypto loan?
Crypto lending is a fairly new segment. It allows traders to get cash using their crypto holdings as security, without having to sell their coins. Individuals can obtain loans against their crypto assets, with the expectation that the value of the assets will increase during the period of the loan. The aim of this type of investment is to enable holders of cryptocurrency assets to generate dividends by lending a portion of their assets. The loan is generally available through crypto lending platforms.
What is a crypto lending platform?
It is an online platform that allows you to lend your cryptocoins in exchange for interest. These platforms are used by two parties. One of them acts as a lender and the other as a borrower. Borrowers need physical (or fiat) money from lenders by depositing an equivalent amount of cryptocurrency with them as collateral.
The interest rate depends on the coin. Crypto lending platforms may charge you a fee for using their services.
What are the crypto lending platforms operating in India?
Your Bitcoin can earn up to 7.5% Annual Percentage Return (APY) with BlockFi, which calculates interest daily and pays monthly. BlockFi allows a borrower to borrow against their crypto assets while retaining them.
Another such platform is Crypto.com. It offers borrowers the option of repaying all or part of the loan at any time during the fixed 12-month term of the loan.
In May of this year, ZebPay announced that it was adding crypto lending functionality to its app. Initially, it facilitates the loan against a limited number of crypto coins such as Bitcoin, Ethereum, and Ether.
One of the largest crypto trading platforms in India, CoinDCX also offers this feature to its users. ConDCX dynamically calculates its interest rate, based on market demand and supply for the cryptocurrency to lend.
A financial services platform, it allows private investors to earn interest on their cryptocurrencies by lending them to institutions. Its users can earn interest rates by depositing their crypto assets into a Hodlnaut interest account.