In this article, I will share with you my favorite crypto lending platforms in 2021. We will start by seeing what is crypto lending and why it is a good investment to generate passive income. Then, we will see how to choose a good crypto lending platform. Finally, I'll give you my list of the best crypto lending platforms in 2021, and why I chose them. Let's start!
What is crypto lending?
An important part of my investment portfolio is peer-to-peer lending platforms, which consists of putting money on a platform that will be used to finance loans made by individuals or even companies. Crypto lending is the same thing, except that instead of having Euros or Dollars on those platforms, everything is done in crypto. This has many advantages, which we will see now.
Why you should invest on crypto lending platforms
The first advantage of crypto lending platforms is everything that concerns the guarantee of being paid back. In crypto lending, each borrower must first deposit crypto collateral directly on the platform, with a value superior than the value of the loan. In case the borrower doesn't pay back, this collateral is simply seized to reimburse investors.
The returns are as good as most peer-to-peer lending platforms, with annual yields above 10%. There is also no minimum deposit or investment on most platforms.
Finally, there are no strategies to put in place on crypto lending platforms: just deposit money on the platform, and you will start receiving interests.
How to choose a good crypto lending platform
Now let's see how I chose the platforms for this article. I used two sets of criteria: objective criteria, and subjective criteria.
As for the objective criteria, of course I look first at the performance of the platform. Here, I'm looking for returns at least as high as those of peer-to-peer lending platforms, so around 10%. I also wanted to say here that the returns I will talk about in this article are the returns in stable coins, which are cryptocurrencies that have the same value as their equivalents in 'classic' currencies (for example the EURES token which has the same value as the Euro). The second point is the security of the platform. Indeed, since all investors funds as well as borrowers collaterals are managed by the platform, it is essential to know what the platform has in place to protect its clients money: cold storage, ISO certifications, etc.
I also use more subjective criteria, such as my own experience with the platform, the process of the creation of the account, the deposit / withdrawal of cryptos, as well as the interests generated.
Now let's move on to the list of my favorite crypto lending platforms - which of course meet all of the criteria I mentioned above.
YouHodler is the first cryptocurrency lending platform I've tried - and for sure one of my favorites. The platform is based in Cyprus, with offices in Lausanne, Switzerland.
The platform allows you to invest in crypto loans in many cryptocurrencies, including many stable coins as I mentioned above. It is therefore quite possible to invest on the platform as on a "classic" Peer-to-Peer lending platform.
In terms of yields, we are around 12% on most stable coins like the USDT, which is excellent for an investment that is completely passive.
Opening an account was very easy on YouHodler, and it took less than a minute to verify my ID. I have also tried depositing and withdrawing cryptos on the platform, without any issues. In terms of security, YouHodler has given its funds to be managed by a security specialist in the sector, Ledger Vault, which is a very good point for the security of the platform. CoinLoan is another cryptocurrency lending platform, based in Estonia. As with the other platforms in this article, CoinLoan allows investors to deposit money and generate interests, and on the other hand manages borrowers so they can make loans in exchange for collateral in cryptocurrencies.
In terms of returns, we are also around 12% on most stable coins, which makes it one of the most profitable platform in this article.
It was very quick and easy to open an account on the platform, and including identity verification it took me less than 3 minutes. I have also tried depositing and withdrawing cryptos on the platform, without any issues. I also really like the interface of the site, which is very easy to use.
In terms of security, CoinLoan uses cold storage of user funds - meaning that most funds cannot be accessed through the internet, which makes them immune to an outside hacking attempt.
Note that the platform has a license in Europe, and also implements an anti-money laundering policy.
The next platform is Nexo, which is a US-based crypto lending platform.
It is one of the largest platforms in this article, with over 1.5 million users in over 200 countries.
Nexo offers over 18 cryptocurrencies you can invest with, and with returns around 12% for stable coins.
In terms of security, they are also doing great with an ISO certification, cold storage for investor funds, and $357 millions in insurance on these funds.
I of course also tried the platform myself, and everything worked out - whether it was setting up an account, depositing cryptocurrency or receiving interests.
One thing that sets Nexo apart from other platforms is that they recently started offering a credit card linked to your account - which means that you can directly spend your earnings on the platform for your everyday purchases. I also wanted to mention Celsius which is a UK-based platform.
It is also a very important platform - with almost 1 million users and over $ 21 billion in funds managed by the platform.
Returns are excellent on the platform - with annual returns around 11% on most stable coins.
They also take the security of the platform very seriously - for example, they regularly organise live streams to discuss with investors the latest security measures taken by the platform.
I also tried Celsius myself by creating an account through the mobile app on iOS, and the process was very quick and easy. I also tried depositing / withdrawing money, which went smoothly.
The only thing I didn't like about the platform is that you have to go through the mobile version of the app to create an account - it's not possible through the web version. But it's really personal and it's a small detail compared to the qualities of this excellent platform.
BlockFi is a crypto lending platform based in the United States, which also offers to invest in crypto loans.
Yields are a bit lower than on other platforms, around 9%.
It is also a platform that takes the security of its clients funds very seriously, with funds placed with a third party to avoid any internal or external thefts.
The only negative point of BlockFi (apart from the somewhat lower returns) is that the only stable coin available is in Dollars, so it is not possible to invest with stable coins in Euros as on other platforms of this article, but it's still a great platform.
Note also that the platform has an investment license in the United States.
This is already the end of this article - I hope it has been useful for you! As said, all the platforms I mentioned in this article are great platforms that pass all of my selection criteria.
If I had to choose a good one to start I would tend to say YouHodler - for its good returns & its excellent security policy But really, I encourage you to try them all to find the one that suits you the most!