Which Services Offer Crypto Lending or Borrowing Features? Top Platforms, Models, and Risks Explained

Crypto lending and borrowing services let people use their digital assets to either earn interest or get loans without selling their holdings. The top services that offer crypto lending or borrowing features include centralized platforms like Binance Loans, Crypto.com, YouHodler, and Nexo, plus decentralized protocols like Aave and Compound. Each option works a bit differently and comes with its own mix of risks and benefits.

You’ll find these services in two main buckets. Centralized platforms hold your crypto and take care of everything behind the scenes. Decentralized protocols, on the other hand, use smart contracts, so you keep control of your assets—but you’ll need to know your way around blockchain transactions.

Choosing the right service really depends on what you care about most. Some give you bigger loans or better interest rates, while others focus on security or just making things simple. Pick wrong, and you could lose money through liquidation or if a platform goes under, so it’s worth understanding the differences.

Key Takeaways

• Crypto lending platforms include both centralized services like Binance and decentralized protocols like Aave that serve different user needs

  
  

• Borrowers can get loans by putting up crypto as collateral while lenders earn interest on their deposits

  
  

• High loan-to-value ratios increase liquidation risk and both platform types carry specific security and custody concerns

Overview Of Crypto Lending And Borrowing

Crypto lending platforms connect people who want to earn yield on their digital assets with others who need liquidity but don’t want to sell. The whole thing works on collateralized loans—borrowers pledge crypto to get funds, and platforms manage risk with loan-to-value ratios and liquidation rules.

How Crypto Lending Works

Crypto lending runs on two main models: centralized finance (CeFi) and decentralized finance (DeFi). CeFi platforms act as middlemen, holding your assets, verifying your identity, and handling loan agreements. DeFi protocols use smart contracts to automate everything, so there’s no company in the middle.

Lenders put their crypto into lending pools or accounts. The platform then lends out these funds to borrowers. Lenders earn interest, usually somewhere between 4% and 15% APR, depending on the asset and where you’re lending.

Borrowers get loans by depositing more collateral than the loan amount—say, $150 in Bitcoin to borrow $100 in stablecoins. The platform holds this collateral until the borrower pays back the loan and interest.

Interest rates on crypto loans jump around based on demand, loan terms, and platform fees. Some places offer fixed APRs between 8.95% and 18.9%, while others let rates float depending on how much demand there is in the pool.

Lending vs Borrowing: Key Differences

Crypto lending is all about putting your digital assets to work to earn passive income. You hand over your coins to a platform and collect interest over time. The main draw? Earning yield without having to actively trade.

Crypto borrowing means you take out a loan using your crypto as collateral. You still get any price gains on your collateral while unlocking some quick liquidity. Handy if you need cash but don’t want to sell and trigger taxes.

If a platform fails or gets hacked, lenders could lose funds. Borrowers might lose their collateral if the market tanks.

Role of Collateral and LTV

The loan-to-value (LTV) ratio sets how much you can borrow compared to your collateral. For example, a 50% LTV means if you put up $10,000 in Bitcoin, you can borrow $5,000. Higher LTV means more borrowing power, but also more risk of getting liquidated.

Platforms usually accept big-name assets like Bitcoin and Ethereum as collateral. Some let you use hundreds of different coins, while others keep it simple.

Liquidation happens if your collateral value drops and the LTV hits a certain threshold. The platform will automatically sell enough of your crypto to cover the debt and any fees.

Say a platform offers 60% LTV and liquidates at 86%. You deposit $10,000 in ETH and borrow $6,000 USDC. If ETH’s price drops and your LTV hits 86%, the platform sells your ETH to repay the loan. Some platforms give you a heads-up (a margin call) so you can add more collateral or pay down the loan before liquidation hits.

Minimum loan sizes usually start at $100 to $1,000, but some places will go up to $1 million for big borrowers.

Risks and Benefits

Crypto-backed loans let you tap into liquidity without selling your coins, so you can dodge capital gains taxes and stay in the market. You’ll often get funds within a day, no credit checks or long waits. Loan terms range from days to years, depending on where you go.

But there’s a catch: if the market turns against you, your collateral can get liquidated fast. Liquidation fees usually tack on another 2-5% to your loss.

Centralized platforms hold your funds, so there’s always a risk of hacks or the company going under. DeFi gets rid of that custody risk, but smart contract bugs can wipe out funds instantly.

Upsides:

1. No credit checks

   
   

2. Fast approval and funding

   
   

3. Tax-efficient way to get cash

   
   

4. Keep your crypto exposure

   
   

5. APRs that can beat traditional loans

Downsides:

1. Forced liquidation if crypto prices fall

   
   

2. Risk of hacks or insolvency

   
   

3. Interest rates can spike

   
   

4. Regulations might change suddenly

   
   

5. Not much you can do if something goes wrong

Your LTV ratio really shapes your risk and reward. Lower LTV gives you a safety net but less borrowing power. Higher LTV lets you borrow more, but you’re walking a tightrope if prices drop.

Most platforms lend out stablecoins like USDC, USDT, or DAI, since they’re, well, stable. So you’ll usually pledge something volatile (like BTC or ETH) and get a loan in stablecoins. That way, if your collateral goes up, you don’t end up owing more in dollars.

Types Of Crypto Lending Platforms: CeFi vs DeFi

Crypto lending platforms break down into two main types: centralized finance (CeFi) and decentralized finance (DeFi). CeFi works a lot like a normal financial company—they hold your funds and run the show. DeFi runs on smart contracts, so there’s no company in the middle.

Centralized Crypto Lending (CeFi)

CeFi platforms are basically crypto banks. You deposit your coins, and the company manages everything. Nexo and Ledn are good examples—they’ve got customer support, easy-to-use apps, and they try to make borrowing as painless as possible.

With CeFi, you have to trust the platform with your funds. They control your private keys and handle all transactions. You’ll need to verify your identity before you can borrow.

Centralized platforms usually give you steadier interest rates and more predictable terms. They also make it easy to move between fiat and crypto. Most set LTVs between 50% and 90%, depending on what you put up as collateral.

The big draw here is convenience. You get support if something goes wrong, tax reports, and sometimes even insurance on your deposits. Some will give you a grace period before they liquidate your collateral if prices dip.

Decentralized Lending Platforms (DeFi)

DeFi lending runs on smart contracts—no humans, no middlemen. Aave and Compound are the big names. You connect your wallet and interact directly with the protocol.

You keep control of your private keys until you deposit funds. No company holds your assets between transactions. The code lays out every rule for collateral, interest, and liquidation.

DeFi is totally transparent. All transactions are on-chain, and anyone can check the code or watch lending activity in real time. Interest rates shift automatically based on supply and demand in each pool.

Most DeFi loans don’t require KYC or care where you live. You just deposit collateral from your self-custody wallet. If your collateral value drops too much, the smart contract liquidates it—no delays.

Custody Models and Security

Custody is where CeFi and DeFi really differ. CeFi holds your assets in centralized wallets. That means you’re betting on their security and solvency.

If a CeFi company collapses (think Celsius or BlockFi in 2022), your funds could get stuck in bankruptcy limbo. Some platforms now offer things like collaborative custody or segregated accounts to cut down on that risk.

Rehypothecation is another thing to watch out for. Some CeFi lenders use your deposits to make more loans or earn extra yield. If those bets go bad, your collateral might be at risk—even if you did everything right.

DeFi skips the middleman. You only give up custody when you deposit into the protocol, and your main risks are smart contract bugs or blockchain issues. If there’s a bug, funds can vanish instantly. Most DeFi projects get regular audits, but nothing’s 100% safe.

KYC, Transparency, and Regulation

CeFi platforms ask for KYC—ID checks, personal info, the usual drill. That keeps them on the right side of the law, but it’s not great for privacy.

Regulation is a moving target. CeFi platforms have to deal with licensing, especially in the US, and follow securities laws. Some now publish proof-of-reserve reports to show they’re not running on empty.

DeFi usually skips KYC because it’s decentralized. You interact with a wallet address, not a real name. Still, regulators are starting to look harder at DeFi, so things could change.

Transparency is night and day: DeFi is all on-chain and open source, while CeFi relies on audits and what they choose to disclose. DeFi faces regulatory risks too—governments might block access to certain protocols in the future.

Best Crypto Lending And Borrowing Services

Plenty of platforms let you borrow against crypto or earn interest by lending it out. Some are centralized and handle everything for you, others are decentralized and run on smart contracts. A few even focus on specific coins or cater to certain kinds of users.

Top CeFi Platforms

Binance Loans gives you flexible borrowing with support for over 170 assets and minimum loans as low as $1. LTVs hover around 78% for big-name coins, and interest rates shift with the market. You can repay whenever, but Binance holds your collateral.

Nexo runs more like a credit line—you borrow against your crypto, starting at $50 for stablecoins. You get instant liquidity and adjustable LTVs. YouHodler is all about high LTV loans with a $100 minimum, so it’s good for smaller borrowers looking for max leverage.

Crypto.com offers lending through its app and even taps into DeFi protocols like Aave. CoinRabbit is great if you want quick cash with no fixed repayment schedule and $100 minimums. They store collateral in cold multisig wallets.

Popular DeFi Protocols

Aave leads the decentralized lending space with non-custodial borrowing and clear risk parameters set by smart contracts. Connect your wallet, borrow stablecoins like USDC against different collateral, and see live LTVs and liquidation levels for each asset.

Compound works like a money market—you can supply assets to earn interest or borrow against your crypto. Interest rates are algorithmic and shift with supply and demand. Both Aave and Compound require you to manage your own wallet and pay gas fees.

Alchemix does something different: self-repaying loans that pay themselves off over time using yield. Morpho matches lenders and borrowers peer-to-peer, optimizing rates while sticking to the same risk rules as the underlying protocols.

Specialized and Niche Platforms

Unchained Capital sticks to Bitcoin-backed loans with a $150,000 minimum. They use a 2-of-3 multisig collaborative custody setup, which helps cut down on single-party risk. If you’re a high-net-worth BTC holder who cares about security, this one’s probably on your radar. Ledn also zeroes in on BTC-backed loans, but the minimum is much lower at $1,000. They’re pretty clear that they don’t rehypothecate collateral, which is a relief for some folks.

Figure Markets takes a more traditional fintech route for crypto loans, with a $5,000 minimum and availability depending on your US state. SALT Lending is all about longer-term loans, starting at $5,000. Arch Lending caters to institutions that want bigger credit lines and can back them with digital assets.

Key Terms, Features, And Considerations

Interest rates and fees jump around a lot between platforms. Collateral rules directly affect how close you get to liquidation. It’s worth digging into the loan terms, repayment details, and the fine print on fees before you pick a platform.

Interest Rates and APRs

Crypto loan interest rates show up as annual percentage rates (APR), either fixed or variable. Variable rates can shift depending on market moves and how much liquidity is on the platform. For example, Binance Loans might start BTC borrowing at around 0.51% APR, but other coins like SOL can run up to 6.27% APR or more.

CeFi platforms usually show simple APRs, with interest adding up daily. DeFi protocols like Aave and Compound use algorithms that change rates based on how much of their liquidity pool is being used. If everyone’s borrowing, rates shoot up; if things are quiet, they drop.

Some places tack on an origination fee when you take out a loan—usually 0% to 2% of the loan. To figure out the real cost, you’ve got to add up the APR, origination fee, and any early repayment penalties.

Collateral Management and Liquidation

Crypto loans use loan-to-value (LTV) ratios to set how much you can borrow. For example, a 78% LTV means you can borrow $78 for every $100 you put up as collateral. Higher LTVs let you borrow more, but if the price drops, you’re closer to getting liquidated.

Platforms liquidate your collateral if its value falls below a set threshold. DeFi protocols like Aave use a “health factor” to track how safe your position is. If it drops below 1.0, bam—automatic liquidation. CeFi platforms use margin calls and set liquidation levels instead.

Liquidation penalties add insult to injury, usually costing 5% to 15% of what gets liquidated. DeFi does this instantly via smart contracts, while CeFi platforms might let you off a bit easier with partial liquidation or a short grace period—it really depends.

You’ve got to keep an eye on your collateral. Adding more or paying off some of the loan can help you avoid liquidation. Some platforms send out margin-call warnings, but DeFi liquidations happen instantly, and you might not get a heads-up.

Loan Terms, Repayment, and Early Exit

Loan terms aren’t all the same. CeFi services like Binance Loans and YouHodler let you pay back whenever you want—no set date. Others, like Unchained Capital, stick to fixed-term loans with scheduled repayments.

Most platforms let you pay off your loan early with no penalty, but a few charge for early exit, especially on fixed-term loans. DeFi protocols generally let you repay instantly by sending back the borrowed asset and interest (plus gas fees).

Interest piles up daily or even every blockchain block. You pay interest only on what you still owe, and if you pay down the principal, your interest drops right away.

Credit lines, like what Nexo Borrow offers, work more like a revolving tab. You can draw funds up to your limit, and interest only applies to what you actually borrow—not the whole credit line.

Platform Fees, Integration, and Usability

DeFi loans always come with gas fees for borrowing and repayment. You’ll pay these in the native coin (ETH, SOL, etc.), and prices can swing wildly depending on network traffic. Sometimes, gas fees make small loans pointless.

CeFi platforms skip gas fees but add their own costs. You might get hit with withdrawal fees or lose a bit on currency conversion spreads if you’re moving between fiat and stablecoins like USDC or DAI.

If you’re already using an exchange, borrowing can be quick. Binance Loans, for example, gives you instant loans if you’re already verified—no extra hoops. DeFi protocols are “composable,” so you can connect them with other on-chain tools, but you’ll need some wallet skills to avoid messing up.

Stablecoin borrowing is super popular for folks who want liquidity without moving into fiat. You put up crypto, get USDC, DAI, or similar, and can use it right away or cash out elsewhere. It’s faster than waiting on a bank.

Usability is all over the map. CeFi platforms usually have slick dashboards and show you loan quotes before you commit. DeFi protocols? Not so much—you’ll need to approve wallets, enable collateral, and double-check the numbers yourself. Make a mistake in DeFi, and there’s no undo button. That’s why CeFi is often a safer bet for beginners, even if it means giving up custody.

Frequently Asked Questions (FAQs)

Crypto lending and borrowing platforms can be wildly different in what they require for collateral, what they charge, and what risks you’re taking. Knowing how these services operate can help you decide if lending or borrowing makes sense for you.

What platforms allow users to lend or borrow digital assets?

Binance Loans lets you borrow with as little as $1, supporting over 170 assets. It offers flexible repayment and LTVs around 78% for big names like Bitcoin and Ethereum.

Aave is a decentralized protocol where you can lend or borrow crypto without giving up custody. Smart contracts handle everything, and you’ll see asset-specific LTVs and liquidation rules.

YouHodler offers crypto-backed loans from $100 up, with higher LTVs depending on which plan you pick. It’s custodial, so you deposit your crypto and get loans in stablecoins or fiat.

Nexo does a credit-line style loan, starting at $50 for stablecoins or $500 for bank transfers. CoinRabbit and Ledn are other options—Ledn is all about Bitcoin loans with a $1,000 minimum.

Compound is another DeFi protocol where you can supply crypto to earn interest or borrow against it. Interest rates change automatically with supply and demand.

How does collateral work in cryptocurrency lending services?

You’ve got to deposit crypto as collateral to get a loan. The loan-to-value ratio tells you how much you can borrow versus what you put up.

Most places want you to overcollateralize, meaning you put in more than you get out. With a 78% LTV, you’d get $780 in loan funds for every $1,000 of crypto you lock up.

Platforms keep tabs on your collateral in real-time. If prices drop and your LTV creeps up, you’ll get a margin call—add more collateral or pay down the loan, or you could get liquidated.

Liquidation means the platform sells your collateral to recover the loan, and they’ll usually charge a penalty and some fees.

Custodial platforms like Binance and YouHodler hold your collateral directly. DeFi protocols like Aave lock it in smart contracts, so neither you nor a central party can touch it until the loan’s done.

Can you earn interest by lending your cryptocurrency, and which services provide this feature?

Yes, you can lend your crypto and earn interest from borrowers. How much you earn depends on the platform, the asset, and what’s happening in the market.

Centralized platforms like Binance let you deposit crypto into earning accounts. Binance, for example, will auto-subscribe your collateral to their Simple Earn Flexible Products while your loan’s open.

Aave and Compound let you supply crypto to their liquidity pools, earning variable interest paid in the same coin you deposit. Rates change with pool demand.

Nexo has separate interest accounts where you can stash your crypto to earn yield. They’re not super transparent about whether they rehypothecate your funds, though.

Rates are all over the place. In January 2026, Bitcoin rates hovered around 0.51% APR on some platforms, while SOL was up at 6.27% APR.

The UK Financial Conduct Authority warns that crypto lending is risky business. You could lose your deposit if the platform fails or markets tank.

What are the risks associated with borrowing cryptocurrencies through online platforms?

The biggest risk? Liquidation. If you borrow at a high LTV and prices dip just a bit, you could lose all your collateral.

Custodial platforms come with counterparty risk. If a CeFi platform goes bust, freezes withdrawals, or gets hacked, you might lose your collateral—even if you kept up with payments.

Variable interest rates can jump unexpectedly, making your loan more expensive than you planned.

Smart contracts aren’t perfect, either. Bugs or bad price feeds can cause you to lose funds or get liquidated unfairly.

Some platforms rehypothecate collateral, lending it out again to boost returns. That adds extra risk, since your collateral could get caught up in someone else’s default.

Regulations can also shift without warning, cutting off access to platforms and making it tough to manage active loans if you suddenly get locked out.

Which protocols offer decentralized finance (DeFi) lending and borrowing options?

Aave lets you lend and borrow without giving up custody, using smart contracts on several blockchains. You just connect your wallet—no account or KYC needed.

Compound is another money market protocol where you can supply assets for interest or borrow against them. Rates adjust automatically with supply and demand.

Alchemix is a bit different. It offers self-repaying vaults—your collateral earns yield, which pays off your loan over time. LTVs are usually around 50%.

DeFi protocols don’t care where you live—anyone with a wallet can join. The trade-off? You’ll deal with higher technical hurdles and pay gas fees for every move.

Smart contracts handle everything, including liquidations. If your health factor drops too low, the protocol liquidates you instantly—no negotiations or second chances.

Are there any regulatory considerations for using crypto lending services?

Regulations around crypto lending? They’re honestly all over the place. One country might call these products securities and want you to register everything, while somewhere else, you might run into rules meant for consumer loans—or, weirdly, almost no oversight at all.

The UK’s Financial Conduct Authority has put out some pretty blunt warnings. Basically, they say crypto-linked products are risky, and you should only use them if you’re okay with the idea of losing every penny you put in.

Where you live really shapes which platforms you can use. Most crypto lending services have long lists of countries—and even specific US states—where they just can’t operate because of local laws.

Tax rules? Those are a headache too. Some places treat interest from crypto lending like regular income, while others see it as capital gains. And honestly, sometimes it feels like the rules change every year.