A Comprehensive Guide to Crypto Lending

Find out why Crypto Lending is a risky bet.

All You Need to Know About Crypto Lending Platforms

Crypto lending (or Bitcoin lending) has gained popularity over the past few months as an increasing number of investors want to earn money on their crypto-assets and interest by investing in crypto-backed loans.

Particularly during the current crypto hype, investors are looking into options on how to hedge their position and benefit from their crypto assets without liquidating the portfolio.

In this comprehensive guide, we will look at this popular lending business model by drawing a comparison between the best crypto lending platforms and offering our judgment with regards to the safety of this form of investment.

Do you prefer to watch a video? Here's our latest comparison of popular crypto lending platforms:

What is Crypto Lending?

Crypto lending is an alternative investment form, where investors lend fiat money or cryptocurrencies to other borrowers in exchange for interest payments.

The borrower deposits crypto-assets as collateral which secures the investor’s investment. If you’re looking to get started, you can do so by lending money through dedicated P2P crypto lending platforms. Those platforms connect you - the investor - with the borrower.

crypto lending explained

How Does Crypto Lending Work?

Let’s break Crypto Lending down into three digestible steps:

  1. You sign up on one of the crypto lending platforms and deposit funds to your investment account
  2. You choose your investment product (more about this later) and invest in secured loans
  3. The borrower (or the crypto lending platform) repays the principal with the accrued interest back to your account

The Details:


Your investments are secured by crypto-assets. The borrowers need to deposit cryptocurrencies worth more than the value of the loan.

Loan Value

Typically the loan to value is max. 50% - 70%. To put it simply: if the borrower wants to borrow $10,000, they need to deposit cryptos worth $20,000 (if the LTV is 50%).

As you know, the value of digital assets like cryptocurrencies is very volatile, which is why the crypto lending platform sells the collateral as soon as it reaches a certain threshold (typically LTV of 90%). That way your investment is always protected.


When it comes to the returns, the top crypto lending platforms promise annual yields between 8% and 10%.

Many bitcoin lending platforms offer an interest-type of investment account, which gives you instant access to your investment.

Earning 10% interest while being able to withdraw your money anytime sounds like a dream right?

We’re going to investigate this idea a little further. Keep reading for our findings.

Best Crypto Lending Platforms

All of the following top crypto lending platforms offer investment opportunities for crypto-backed loans. Let’s have a look at what the platforms offer as well as the pros and cons of investing there.

This crypto lending comparison will give you a better idea about the offers from individual crypto lending platforms.

Crypto Lending PlatformAverage InterestMax. LTV


Celsius Network is one of the most popular and trusted Crypto Lending apps. Celsius is a UK based company run by an experiencedCEO Alex Mashinsky. The mobile crypto lending app allows you to lend your cryptocurrencies while earning between 5% and 21.49% APY.

The interest rates vary according to the crypto you are lending. You can expect to earn 6.2% APY on your Bitcoin, 7.21% APY on your Ethereum and 13.86% APY on your USD Coin.

There is no minimum investment amount required, however, it is recommended to deposit at least a few thousand dollars worth of crypto to see some significant returns.

You should always start with a smaller amount first, to gain trust and experience with the platform.

The interest rates are being paid out every week and you can withdraw your funds anytime.

According to Celsius’ statistics, there are over 231,651 active crypto wallets with assets worth more than $2,195,008,760.

As with every crypto lending platform, you are lending money to borrowers, who need to deposit their cryptocurrency as collateral. The LTV ranges between 25% and 50%.

Celsius Network basically allows borrowers to transform their crypto into cash without liquidating it.

The download and verification on Celsius Network took us less than 10 minutes, which makes it a good Nexo alternative. Note, that you need to provide a copy of your ID card and some personal information to get access to all features.

You can simply top-up your account with crypto from your wallet or any crypto-exchange or buy cryptocurrency directly through the app (fees might apply).

Celsius' Pros

  • Co-founded by an experienced entrepreneur
  • Secured by overcollateralized assets
  • Strict AML procedures

Celsius' Cons

  • No desktop app
  • No support
  • Not suitable for complete beginners

It seems like Celsius is by far the fastest and most trusted crypto lending platform at the moment. Note, however, that there's no support (or at least) we didn't receive any answer to our questions.

This can potentially have a negative impact on your experience with Celsius. If there's no support that will address your questions, you are basically investing into a black box, which is a rather poor investment strategy when it comes to bitcoin lending platforms.


CoinLoan, an Estonian P2P crypto lending platform, serves borrowers looking to lend money for profit and deposit their cryptos as collateral and investors who are seeking secured investments backed by the digital cryptocurrency.

When reviewing crypto lending platforms, we look for a statistics page and page introducing the team, among other things. Unfortunately neither pages existed on CoinLoan and so the financial information we’ve been able to collect is very limited.

We know CoinLoan was founded in 2016, and that the platform is operated by a company called ExFinance OÜ, which is authorized and regulated by the Estonian Financial Inspection. Beyond this, however, we can’t find much more information on this business.

CoinLoan's Pros

  • Flexible lending products
  • High liquidity with CoinLoan’s interest accounts
  • Overcollateralized crypto loans

Coinloan's Cons

  • No statistics and financial data
  • No information about the team
  • Interest on the lending market is rather low
Read our CoinLoan review to learn why we don't recommend Coinloan


Nexo is an Estonian crypto lending platform that was founded in 2018. Unlike Coinloan, Nexo offers only an interest account, so investors on this platform cannot choose to invest in individual loans. Nexo was founded by the team behind Credissimo - which is a large European lender, however, both entities are separated.

Nexo’s website boasts big numbers and sells itself on the popularity of big media sites, insurances and licenses. Nexo claims it’s regulated, but in truth, neither Nexo or Credissimo possess lending licenses in Estonia, according to a statement published by the Estonian Financial Institution.

When we asked some basic due diligence questions, Nexo’s support team didn’t provide any hard evidence and, after responding to our initial emails, the team later ignored us.

Nexo's Pros

  • High yielding interest account
  • High liquidity
  • Low LTV of only 50%

Nexo's Cons

  • Claims on Nexo’s website are questionable
  • Support isn’t able to answer due diligence questions
  • The minimum investment amount is $1,000

Learn more about this crypto lending platform in our Nexo review. If we would compare Coinloan vs Nexo, neither of those crypto lending platforms would receive our endorsement.


BlockFi is a U.S. based crypto lending platform, operated by BlockFi Lending LLC, which has headquarters in New York. The company has several consumer lending and loan licenses from nine U.S. states. BlockFi also holds several money transmitter licenses.

Our research shows that BlockFi is the most transparent crypto lending platform in our comparison.

The crypto lending platform allows investors to open a crypto interest account, where you deposit Bitcoin, Ether, Litecoin, USD Coin or Gemini Dollar and earn an annual interest of up to 8.6%.

Your funds will be invested in “trusted institutional and corporate borrowers” and your crypto assets will most likely be lent on overcollateralized terms.

BlockFi also specifically indicates that you should not view your BlockFi Interest Account as a savings account or brokerage account that is insured by FDIC or SIPC.

BlockFi allows crypto owners from all over the world to open their accounts and deposit funds to their interest accounts which are hosted by an institutional custodian Gemini, which is a New York trust company, licensed by the NY State Department of Financial Services.

BlockFi's Pros

  • Earn interest on your cryptocurrency
  • Open an account within two minutes
  • BlockFi’s management is listed on the website

BlockFi's Cons

  • It’s unknown what your funds are being used for


MyConstant, one of the newest bitcoin lending platforms, was launched in 2019. Investors on this California-based platform can deposit fiat money such as USD (subject to passing the Know-Your-Customer requirements) as well as Bitcoin and Ether. It’s worth noting that the currency you choose to invest with has an impact on the annual return of your investments.

MyConstant offers investors instant liquidity by investing in one of the following four products:

  1. Crypto loans on behalf of Constant; you can expect to earn a fixed annual interest of 4% by and have instant access to your money
  2. Crypto loans with loan terms of 30 - 80 days; you can expect to earn 7% - 7.5%
  3. Lenders with a buyback guarantee; you can expect to earn up to 11% interest
  4. Depositing your crypto (BTC, BNB, ETH); you can expect to earn 10% interest and will have with instant withdrawal options

Products one, two and three can be used with fiat money as deposits, while the fourth product is specifically designed for crypto holders.

One interesting fact is that if you choose to lend money to lenders, you’ll be funding loans from loan originators such as Cubefunder and Dozarplati. Dozarplati also funds loans from Mintos, which is the leading P2P marketplace in Europe. (This service has been temporarily suspended.)

Constant's Pros

  • Flexible platform for crypto and non-crypto holders
  • Your investments are mostly secured by crypto-currencies
  • Free withdrawals

Constant's Cons

  • Only operating since 2019
  • No information about the custodian
  • No presentation of lending or trading licenses

When reaching out to Constant with questions regarding their management team, the crypto lending platform informed us that they have removed the BIO page as they believed that it "sent the wrong message to the team, that somehow certain people were more deserving of recognition than others".

You have to do your own Google research to find out more about the CEO and most likely you will bump into many paid promotions rather than any biographies.

By now, you should have an idea about the best bitcoin lending platforms. But before you invest, you should be aware of the risks when it comes to crypto lending.

Is Crypto Lending Safe?

Many crypto lending platforms make investors believe that they can’t lose.

But remember, if it looks too good to be true: it often is.

There’s a severe lack of transparency when it comes to information that crypto lending platforms share; this is evident with platforms like Constant, Nexo and CoinLoan, which either don't introduce their CEOs, don't list their corporate address or referr to "made up" licenses.

The investments are secured by overcollateralized assets (cryptos worth more than the loan) which means that the collateral is worth more than the amount you’re lending to the borrower.

If the borrower doesn’t repay their debt, the assets will be sold and your loan principal repaid.

There’s always enough collateral to cover the outstanding debt. If the value of the collateral drops, the borrower will need to repay their debt or increase the amount of crypto-assets to maintain the loan to value ratio, given by the P2P crypto platform.

This is good protection against defaulting borrowers as your investment is secured by collateral which can be liquidated.

If you’re familiar with P2P lending, you’ll know by now that the risk of defaulting borrowers is just one piece of the intricate puzzle. There are different risks that you should certainly keep in mind when investing on crypto lending platforms.

You can learn more about the safety and risks of P2P lending in our comprehensive guide.

Risk Levels Compared with Traditional P2P Lending

One risk that you should keep in mind when investing in crypto loans is the risk that the crypto lending platform will default and vanish with your money. In short, the risk that a crypto lending platform is a scam.

This is especially the case with newly launched and not yet established crypto lending platforms. Would you ever sent your crypto to a crypto lending platform which just pays for PR rather than educating their investors and provide transparency about it's business model? We hope not.

We have encountered scams within the P2P lending industry before and have created a list of red flags that can potentially expose fraudulent platforms.

Even simple due diligence questions aren’t being addressed by the best crypto lending platforms.

If you want to find out who’s behind the bitcoin lending platform, and what jurisdiction the platform is operating under, you will need to dig really deep.

In fact, some of the platforms won’t actually give you an answer at all.

Crypto lending platforms often operate from countries where there’s no regulation (notably the Cayman Islands and Estonia), which allows some of them to do whatever they wish.

All you’ll find on the crypto lending platform is marketing copy and a few claims about licenses and collaboration with prominent companies that aren’t backed by any official data.

Fortunately, investors can see through this - missing basic company information and a meaningful about us page won’t cut it in 2021.

We have seen significant improvements regarding the transparency within the P2P lending industry in the last few months.

Traditional P2P lending platforms, P2P marketplaces, and lenders started publishing statistics and audited financial reports in order to gain trust with their investors. Some even applied for financial brokerage licenses.

When it comes to crypto lending platforms, it’s like sending money into a black box.

The worst part about it is the fact that most investors don’t fact-check any claims and invest blindly, which exposes their money to unnecessary risks. Those investors are often called "dumb money".

What’s our Opinion on P2P Crypto Lending Platforms?

The idea of investing in crypto-backed loans with high yields and high liquidity is brilliant and we understand the value of cryptocurrencies as we hold some ourselves.

The benefit of using these digital assets as collateral is certainly a good argument, why someone would take a loan and deposit its cryptos as a safety net. You can use the loan to leverage digital assets.

On the other hand, borrowers might as well lose their collateral if the value of their crypto-assets drops and they don’t repay its debt or increase the value of cryptocurrencies.

In short, crypto loans aren't risk-free.

Let us explain...

Investment opportunities that seem too good to be true should be approached with extreme cautiousness.


There’s a high risk that the platform follows a Ponzi scheme.

What’s a Ponzi scheme?

“A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for early investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors' funds to pay the earlier backers.”
- Investopedia

Why do we think that there’s a high risk of fraud with Crypto Lending?

Because crypto lending platforms fail to educate investors how it works and avoid answering basic due diligence questions.

We have seen similar behavior by platforms like Envestio, Kuetzal, Monethera and Grupeer which have turned out to be fraudulent.

By investing on crypto lending platforms, investors have no idea where they’re putting their money.

Don’t you think it’s suspicious when the “world’s largest and most trusted crypto lender” isn’t even able to provide company information or introduce the team behind the business?

If you have such an amazing platform, wouldn’t you like to stand behind it and promote it?

Think about it for a second.

If a bitcoin lending platform can’t explain who’s behind it, you should be asking yourself why they can’t provide this basic information.

Our advice: you shouldn’t invest.

Final Verdict & Why You Should NOT Invest in Crypto Loans

We don’t invest on crypto lending platforms at the moment. The hype around crypto lending is driven by high yields and high liquidity.

The lack of transparency within the crypto lending niche is a clear sign of why retail investors like you should think twice before depositing funds to a crypto P2P lending site.

While crypto lending platforms might work for you, there’s no guarantee that the platform won’t vanish with your money or just change the terms and conditions. Your investments aren’t protected by any regulations and by using the platform you willingly agree to lose your money.

At the end of the day, you alone are responsible for your investment decisions. We encourage you to do your own due diligence and conclude your own verdict based on the information you have available.

As for us, we stay away from crypto lending platforms as there’s no need to take the risk and invest in crypto loans as there’s much more transparency among the already-established P2P lending platforms in Europe that we currently invest in.

You can achieve similar or even higher yields by investing in property-backed loans on EstateGuru or in short-term loans by profitable lenders on PeerBerry. This is, however, only possible for investors with a bank account from the European Economic Area.

Investors from the U.S. don't have as many options to invest on European P2P platforms, which is why crypto lending platforms are gaining traction amongst investors from the U.S.

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