A loan without a credit check is ludicrous a decade ago. The potential of smart contracts and cryptocurrency transformed the traditional loan industry. Credit checks are not required for cryptocurrency loans. It is immediate, borderless, and accessible to everybody. The crypto loan industry is growing. Technology advancements are driving the need for inventive, efficient, and secure lending practices.
1. Liquid Staking Token
LST lending and borrowing is the most popular trend in crypto lending and borrowing sector. Token holders stake their ETH on staking platforms like Lido and Rocketpool and earn a secondary token – stETH on Lido and rETH on Rocketpool, which represent the ETH staked on the platform. It’s referred as liquid staking. Staker locks up their ETH for staking rewards traded and lent freely.
2. NFT
NFT work to improve the usability of space, lending and borrowing through NFT. Peer-to-peer NFT lending sites like NFTfi allow user to post NFTs as collateral for DAI, USDC, and wETH loans. The borrower receives NFT once the loan is repaid. Lenders browse listed NFTs and accept desired loan terms. The lack of support for lesser-known NFT collection is the biggest UX issue in lending business. The NFT collection floor price is an essential measure to determine NFT utilization as collateral to borrow.
3. Stablecoin
The advanced crypto lending and borrowing side is stablecoin financing. Stablecoin lending is associated with Maker Protocol and crypto-backed stablecoin DAI. Summer.fi, Maker’s affiliate network, allow user to borrow DAI against their ETH and LSTs. Curve users create crvUSD stablecoin by encrypting ETH, wBTC, and LSTs in smart contracts. Aave is aiming for release of its GHO stablecoin in the second half of 2023. Users will be able to borrow GHO using their crypto assets as collateral.
4. Flash Loans
Aave popularized flash loans as crypto loans. Users borrow assets without putting security using flash loans. The borrower is required to repay the loan in a single block transaction. Flash loan intended for developers, owing to the technical skills necessary to perform. A flash loan is programmed as smart contract, executes and repays the principal, interest, and fees during the transaction. Flash loan is used to facilitate collateral swaps, market arbitrage, and loan liquidation incentives.
5. Zengo
Users earn Bitcoin through loans and stakes, putting it in their ZenGo wallet. The WalletConnect and ZenGo bridge connects to the ZenGo wallet using many loan protocols, including Aave, Compound, and dYdX. The protocols enable ZenGo’s non-custodial wallet, which does not require extensive private key creation and administration, high APYs, and simple crypto buying and selling. Users lend cryptocurrency directly from their ZenGo wallet.
6. SpectroCoin
SpectroCoin a cryptocurrency exchange and portfolio management application, allow user to purchase, trade, swap, and manage 40 cryptocurrencies, giving crypto loans against crypto collateral. Customers purchase cryptocurrencies in exchange for using a Visa debit card, an IBAN bank account for depositing and withdrawing payments.
7. AAVE
A list of the top crypto lending platforms is incomplete if AAVE is not included. It’s regarded as the most desirable decentralized liquidity protocol. AAVE is a non-custodial system that allows all users to earn interest on cryptocurrency holdings while borrowing cash by staking crypto assets. AAVE provides several services in lending and borrowing. Users receive a clear image of interest rates, and access to extra option as flash loans and bug bounty.
8. CoinRabbit
CoinRabbit offers the greatest cryptocurrency lending options in the market, including crypto-backed loans and cryptocurrency deposits. CoinRabbit has the finest conditions on the market, no KYC, free withdrawals, and a set 10% APY on all stablecoin deposits. The process takes 10-15 minutes making it the simplest to-use deposit and loan service. USDT ERC20 is another alternative for generating interest for individuals. You could top up your savings account, withdraw funds, and open numerous accounts any time without incurring additional costs.
9. Compound
Compound is a popular crypto lending platform that acts as a model for new businesses. The protocol supports several coins, and users borrow and deposit. The Compound has its native token, COMP, which allows it to earn higher returns by lending cryptocurrency to the network to boost liquidity. Compound’s exciting feature is that it is presently the safest crypto loan platform accessible. Compound’s live price feed offers simple and adaptable price tracking on platforms based on available liquidity.
10. Alchemix
Alchemix is an example of top crypto lending platform in the DeFi area. It offers a unique approach to crypto funding by offering a loan that is repaid over time. To receive a token user, enter DAI into a smart contract. The coin known as aIUSD represents the future yield farming potential of the DAI deposit. Smart contracts route assets in a Yearn vault, which is in charge of DAI minting. When produce is harvested Alchemix customer debt decreases. The borrower Alchemix collateral is utilized to repay the loan.
