How does crypto lending works?

Crypto lending: let your stored crypto work for you

Crypto investors regularly hold their assets for long periods of time, hoping the prices would skyrocket. However, if you keep your funds on hold, you aren’t making any money.

One of the reasons why crypto lending has seen massive growth in 2021 is exactly the above.

In fact, the Total Value Locked (TVL) of the lending ecosystem has grown five times as much as before and has reached a staggering peak of $53 billion this year.

The key benefit for the investor is obvious: when you lend your assets, you get interest just as traditional banks do.

But there’s more to it:

➢ The interest you get generates passive income while you’re waiting for the perfect time to sell your assets.

➢ Decentralized finance (DeFi) protocols allow lending and borrowing without intermediaries: this means easier access and lower fees.

➢ There’s no need for human intervention: smart contracts manage liquidity pools used to deposit and distribute the funds.

➢ It’s a win-win situation as lenders profit and provide liquidity to the crypto market.

Like the idea of lending your crypto? There are a few more things to know.

Learn more about how it works, major lending platforms and their pros and cons, risks and regulations here

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