In November-December of 2017, the majority of late crypto adopters found themselves on the very top of the crypto hype that seemed, back then, like an easy opportunity for anyone to multiply one’s capital.
The hype went down, and those who invested at the peak of the hype had to face the inevitable consequences. Some sold Bitcoin shortly after the price went down. Others decided not to give up, and they continued to HODL up until this very moment.
What to do if you need cash but don’t want to give up on your crypto?
The demand for instant cash sparked the need for a new type of financial services – “crypto loans.” Crypto loan platforms are a type of service that allows one to put his/her crypto down as collateral and borrow fiat at a ratio.
Below are some of the most notable crypto loan services that currently exist on the market.
SALT Lending is a blockchain-backed loan platform that allows you to get cash deposited directly into your bank account. The company has over $50M in loans serviced, 30 lendable jurisdictions worldwide, and over 64,000 platform users.
On the downside, SALT is limited to a low number of cryptocurrencies that can be used as collateral. Additionally, the loan-to-value ratio is relatively low (up to 60%).
Nexo calls its services “The World’s First Instant Crypto-backed Loans.” Loan amounts are from $1,000 to $2,000,000. Nexo uses Onfido (trusted by Coinbase and others) for its regulatory compliance. Moreover, the platform has over $1 billion in instant crypto-backed loan requests.
On the downside, Nexo is known for its hidden fees, a limited number of collateral crypto wallets, and limitations when it comes to cash withdrawals. As of writing this, the rates now start at 5.9% APR and can go up to 11.9% APR.
Bankera Loans is a global-crypto backed lender that offers the lowest minimum in the market: $25/€25. The maximum is 1,000,000 Euro, and an option for a very high loan-to-value ratio of 75%. There are no hidden fees, while the APR starts from 6.95% and is typically around 10%. Loans can be withdrawn in Euros or the most popular cryptocurrencies (BTC, USDT, etc.).
On the downside, Bankera Loans does not offer services to US clients, and interest-bearing deposits are not yet introduced.
Lendroid was created back in 2017 by Vignesh Sundaresan. The platform aims to address the need for global and unopinionated credit on the blockchain. Some of the current issues that it aims to handle include the inefficient risk handling where collateral risk is either overlooked or hidden, lack of transparency, high loan maintenances, and so forth.
Lendroid aims to become an anti-fragile, predictable, and transparent platform where liabilities are not carried forward. So far, the project held a successful TGE back in February 2018 which was capped at 50,000 ETH. It has launched a proof-of-concept decentralized application called Reloanr, and has shifted to vyper as its smart contract language. Lendroid also launched its mainnet (Version 1) in August 2019.
Unchained Capital is a service that offers dedicated collateral addresses on blockchain for easy monitoring. The site offers 12-18% APR over a length of 3-60 months. The website does not perform hard credit checks. Interest rates will vary by state.
On the downside, the site offers BTC/ETH loans only. Also, the company’s loan to value ratio is pretty low – 35-50%.
ETHLend is a platform for digital asset-backed loans, allowing the LEND token to be used as the medium of exchange where fees can be reduced to 0.
The digital assets that are used as loan collateral are stored in a public Ethereum blockchain to obtain high network security with the use of a non-custodian depository smart contract. Because the transactions are broadcasted on a public Ethereum blockchain ledger, the transactions are transparent and auditable by the public.
On the downside, ETHLend is limited to 1 crypto collateral only – ETH.
Perhaps one of the youngest and most promising crypto-backed loan platforms, YouHodler is a service platform with bank accounts in Switzerland.
The platform allows for someone to lend crypto as collateral with a high loan-to-value ratio of up to 90%, for up to $30,000 in fiat/cash (bigger loans are offered to selected borrowers).
YouHodler has its own fund and accepts all major cryptocurrencies as collateral (BTC, ETH, LTC, BCH, XRP, etc.). Besides, the platform accepts all major Cards (Visa, MasterCard, Maestro, American Express, etc.) and all major types of web payments (Qiwi, PayPal, Apple Pay, Skrill, etc.).
Unlike the majority of other crypto-backed platforms, YouHodler offers transparency and absolutely no hidden fees. No credit checks are required. YouHodler’s interface is simple and sexy.
On the downside, YouHodler does NOT serve U.S. citizens, as well as citizens of China and Korea.
Today, we live in a time after the crypto market fell. The demand by crypto investors for instant cash has built the foundation for the crypto loan industry.
It seems that crypto HODL-ing is an ongoing trend, and one of its symptoms is the rise of crypto loan service platforms. Will we see investors still HODL-ing in 2018 and 2019? Only patience and time will tell.