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Have you ever thought about the hassles of borrowing funds through a bank? Or have you fought yourself at a point of dire need to not sell your crypto for cash? Not to worry; it’s possible to leverage your crypto assets to get the funds you need. You need not worry about your credit history, visit the bank, or sell your crypto for cash because you can borrow funds against your crypto while maintaining your portfolio for future growth and asset appreciation.

A Brief Overview of Borrowing Against Your Crypto Assets

Borrowing against your crypto assets is much easier than you think―easier on average than getting traditional bank loans. Beyond HODLing your assets in a wallet and waiting for them to hit high prices, you may want to put it to work and earn more significant returns.

That’s what necessitates crypto lending, which favors both the lenders and the borrowers. For lenders, it provides good interest rates on the assets they invest for borrowing on crypto lending platforms. In the same vein, borrowers use their digital assets as collateral to access loans, solve immediate needs, buy cars, homes, pay off debts, invest in other assets such as real estate, etc.

The beautiful thing about leveraging your crypto assets or borrowing against them is that you don’t have to sell them for cash to solve your needs. Instead, you can use part (or all) of it as collateral―the amount depending on the lending platform and the value of funds you’re borrowing.

Besides, crypto loans can also provide opportunities for your collateral to accrue interest while you’re still owing the loan. Here’s a popular use case;

An Example Crypto Loan

Hakeem has 10ETH. His landlord is on his tail to pay his rent. But he doesn’t want to sell his ETH because the market is bullish (rising in price), and he will miss out on the appreciating value if he sells now. Hakeem is disturbed because he will lose a lot if he sells his ETH as he’s most likely to rebuy at a higher price.

That’s where crypto lending comes in! In essence, Hakeem will have the chance to use his ETH as collateral and get his loan in stablecoins. Because of cryptocurrency volatility or unstable coin prices, Hakeem will be required to use ETH amount that’s worth more than his loan amount as collateral.

After paying back his loan and interest, he’ll get back all his ETH with an interesting profit―if ETH price increases. Or he’d pay extra from his collateralized crypto to compensate for depreciation in the price of ETH―all in keeping with the loan terms.

Where to Get Crypto Loans

You can borrow against your crypto on platforms like Coinbase, Crypto.com, BlockFi, Celsius, etc. However, you may be required to complete KYC verification. The reason is to prevent fraud and other illegal financial activities. 

The sweet side to crypto loans on centralized exchanges is that your collateral is secure to a great degree. A contributing factor to this security is the use of cold or offline storage, making it virtually impossible to infiltrate your locked assets.

#1. BlockFi

You can borrow USD on BlockFi―the amount depends on the size of your collateral and the Loan-to-Value (LTV) ratio you choose. LTV is obtained by loan amount divided by the collateral value. For LTVs of 50%, 35%, and 20%, you get interest rates of 9.75%, 7.9%, and 4.5%, respectively, plus an origination fee of 2%. Check out the BlockFi rates page for more details.

#2. Nexo.io

Nexo.io also allows you to borrow USD against your assets. The platform offers a competitive base APR of 6.9% and 0.5% cashback for first-time borrowers till Nov 30, 2021. The interesting part is that you can borrow from $50 to $2M with zero originating fees. To qualify for the competitive rate of 6.9% APR, you must have NEXO tokens occupying at least 10% of your portfolio balance.

#3. Cryptocom

Crypto.com exchange lending allows you to instantly borrow USDC, USDT, and other digital currencies and provides 25%, 33%, and  50% LTV options. The lending platform automatically calculates your estimated collateral account in your preferred collateral asset depending on your loan amount and preferred LTV. 

Interests accrue daily at 00:00:00 UTC depending on your unpaid loan principal, while the interest rates depend on the initial loan’s LV and the value of CRO you’ve staked on Crypto.com.

#4. Coinbase

Coinbase also provides crypto loans of up to $1M using Bitcoin as collateral. And the interest begins from as low as 8% APR. Interestingly, you can borrow up to 40% of the value of BTC in your portfolio up to $1M. You can get your funds using a bank or PayPal, plus you’re guaranteed the security of your collateralized BTC.

#5. Celsius

Celsius network crypto loans allow you to borrow at as low as 1% APR (25% LTV). You can also select the 6.95% and 8.95%  corresponding to the 33% LTV and 50% LTV respectively. It also features a loan term of six months to three years. You can also access the loan on the Celsius mobile app.

#6. Coinloan

You can also instantly borrow crypto-backed fiat loans on Coinloan using your crypto assets as collateral and pay between one to 36 months. The platform allows you to enter your collateral amount, and it features LTVs of 20%, 355, 50%, and 70%. Your interest is fixed and depends on your chosen LTV. Find out more about borrowing on Coinloan here.

Wrapping Up

Crypto keeps making things easier for everyone. The unbanked population can now leverage crypto to get loans at competitive interests and solve their needs. Besides, crypto owners can HODL their crypto while leveraging part of their portfolio to get loan funds.