If you have a savings account with your bank, odds are that you are getting an abysmal interest rate on it. Most savings account in 2021 are not offering more than 0.5% in annual interest to their clients, which means your money’s value is being eroded, keeping in mind the high inflation. Wouldn’t it be great if you could earn an annual interest that’s 10 or 20 times more than what you are getting at the bank? Cryptocurrencies provide you the perfect solution through smart contracts and the best part is that you don’t have to be exposed to risky ones, such as Bitcoin, to accomplish this.
Crypto loans work the same way as loans that you obtain from the bank. The bank takes the funds from your savings account and lends it to other people. You receive interest on the savings account and the bank charges a higher interest rate from borrowers for earning a profit. These phenomenal interest rates are made risk-averse and secure by two blockchain-related technologies. There are smart contracts for guaranteeing the crypto loan would be returned, no matter what the borrower’s credit.
Secondly, stablecoins allow people to get excellent interest rates without exposing themselves to Bitcoin’s volatility. Stablecoins like DAI, Tether, and USDC are equal to $1 and their USD reserves help them to maintain a stable value. Some of the best crypto lending platforms for 2021 are:
If you want to start earning money and get high interest, BlockFi is the platform to use. You can use cryptocurrencies like Bitcoin, Litecoin and Ethereum to fund your account, or go with stablecoins. If you decide to use Bitcoin for funding your wallet, the first 2.5 BTC will earn you a return of 2%, whereas any amount more than 2.5 BTC will earn you 3%. You can get 5% APY on both Litecoin and Ethereum, whereas the annual interest rates for stablecoins are between 8% and 9%.
BlockFi gives you the option of being able to withdraw your crypto whenever you want. You can make a free withdrawal once a month and extra withdrawals are charged a small fee. USD loans are also offered to BlockFi clients. You have to put up some crypto as collateral in order to borrow money and the amount of collateral determines the interest rate, which can be between 4.5% and 9.75%. There is no maximum amount for the loan, as it depends on your collateral.
This platform is a good one for miners because it allows them to leverage their current holdings for cash. You can then reinvest the cash into mining. If you have any digital assets, you can sign up on Helio Lending for getting cash for the short term. It is easy and simple to use and the company is responsible for finding the best loan on your behalf. The loan-to-value ratios available on Helio are 40%, 50% 69%, and 70% and it determines your APR (annual percentage yield).
In addition, the company also provides people a flexible list of repayment options that include full repayments or interest-only repayments. You don’t have to pay any fee to Helio. Furthermore, you will not have to worry about any margin calls. The best part is that you get downside protection for the loans and you can rest assured that your digital assets are in cold storage.
Launched in 2018, Celsius has processed around $8.2 billion in loans and has a total of 340,000 users. You don’t have to worry about your investment because Chainalysis has conducted asset verification for Celsius. You will find a plethora of cryptocurrencies offered by Celsius for funding your savings account. Plus, it offers similar APY as BlockFi for Bitcoin and Ethereum, but its APY for stablecoins is a lot more competitive. You can get a staggering 13.86% return for USDC, tether, TUSD and GUSD, all of which are stablecoins.
Like BlockFi, Celsius users can also get USD loans for as low as $500. There is no maximum amount, but a proportional amount of crypto has to be deposited as collateral for obtaining the loan. If you are on the move, you can take advantage of the mobile app Celsius offers for managing your finances from anywhere.