Cryptocurrency Lending for Users
Similar to the underlying blockchain technology, decentralization is a foundational pillar for cryptocurrency lending. Proponents of Decentralized Finance or DeFi intend to build open, distributed, and peer-to-peer financial systems that are transparent, secure, immutable, and also versatile. In turn, this will allow value transactions — sending, receiving, lending, borrowing, and so on — to occur without involving third-party intermediaries.
Presently, cryptocurrencies are the most popular use-case of DeFi. However, for several reasons including a substantial learning curve, most average users simply hold their crypto-assets. Commonly known as HODLing, this has two repercussions — it’s non-profitable and decreases the market circulation of cryptos that mostly have limited supply.
HODLing vs Crypto Lending
As opposed to HODLing, cryptocurrency lending allows owners to generate passive income from their assets as interest paid by borrowers. In general, cryptocurrency lending platforms offer solutions to both yield generation and market circulation, without the need for selling/liquidating digital assets.
Furthermore, most lending platforms also accept fiat money as loans, as long as the lender accepts cryptocurrency in return. This is a lucrative future-goal for investors as the potential of digital assets reaches sky-high.
Benefits of Cryptocurrency Lending
According to a study, while traditional banks offer 1% interest rates, cryptocurrency lending platforms offer interest rates as high as 8%. By showcasing investing incentives as profitable as these, cryptocurrency lending platforms have become an important part of the blockchain ecosystem, with a current net worth of over $5 billion.
In decentralized crypto lending systems, the asset collateral is sent directly to the lender without involving third-parties. The benefit for lenders also rests on the fact that the Loan-to-Value (LtV) rates for cryptocurrency lending platforms are relatively low, thus guaranteeing higher value returns. Besides, cryptocurrency lending is a sure-shot way for investors to earn yields from their digital assets while being protected against the price downside of cryptocurrency.
To enhance the user’s ease-of-action, crypto lending platforms often offer Application Programming Interfaces or APIs. These play the role of decentralized gateways between lending platforms and crypto exchanges, enabling users to seamlessly move funds without signing-up on multiple platforms. APIs are especially handy for traders who participate in margin lending and borrowing activities.
Lastly, being blockchain-based, crypto lending ensures global access to lending-borrowing services, even for the unbanked populations. In doing so, it fosters financial inclusion which is a fundamental goal of DeFi.
Hybrid Bank — Innovating Solutions in Crypto Lending
As a part of its diverse portfolio of lending services for lenders, mining companies, and exchanges, Hybrid Bank combines agility and value to enhance the gains obtained from underlying assets. It offers lenders a range of lending options with selectable tenure and competitive interest rates on Loan-to-Value.
Hybrid Bank acknowledges the value of a trustworthy financing ecosystem when it comes to lending, and therefore, has developed and perfected its decentralized credit information disclosure system for the blockchain. Hybrid Bank’s blockchain contracts are notarized by global law firms and have the consular certification of the embassy so that it has effect as an international contract. Combining security with seamlessness, the company is opening new avenues in crypto lending for average crypto users.
