With the growth of DeFi applications, crypto lending, margin exchanges, and stakable cryptocurrencies over the last few years, it can be difficult to know where the best yields for your idle capital are. Following on from our guide to crypto yield farming, this survey looks into the major crypto lending platforms and examines the different interest rates offered by them.
First, an understanding of the difference between ‘crypto lending’ and ‘crypto borrowing’ in the context of this article is important. If you are lending in the scenarios below you are loaning your assets to the platforms featured with the expectation that you will earn interest on your crypto assets. Your goal is the return of your original sum, with earned interest. This article does not explore crypto borrowing – where you would borrow assets (or fiat in some cases) from a platform, which you would be required to repay – with additional interest.
The question of which is the best crypto lending platform is open to debate – as each has its own approach and processes – but certainly annual interest rates paid are a good place to start. All interest rates were recorded on 6 July 2020 and are subject to change.
1. DeFi Lending
Demand for borrowing in the DeFi world comes as a result of either margin trading on decentralized exchanges or from borrowing on DeFi applications. The constant fluctuation of demand and supply on DeFi applications results in yields that are fairly volatile. Due to the majority of DeFi applications being on the Ethereum network, borrowing and lending consists mainly of Ethereum, ERC-20 tokens, and wrapped Bitcoin, which is an ERC-20 token that is backed 1:1 with Bitcoin. The business model of the platforms can differ slightly.