Top Three (CeFi) Lending Platforms 2021

Perhaps one of the most undervalued potential for cryptocurrency is lending, at least among newcomers. Why I believe many overlook the opportunities offered here is that the yields don’t match our expectations when crypto is the topic. Many get into crypto for those +100% earnings in a couple of weeks rather than earning 10% a year. However, remember that traditionally the stock market was viewed as the asset class with highest returns at 7-9 % a year. That’s why we shouldn’t overlook the potential crypto earnings just lying around.

In this article I’ll go through the top three centralized lending platforms. I know some of you prefer DeFi platforms but seriously these CeFi platforms are great and there are many benefits these platforms offer. Plus, I know some might appreciate the feeling of a more secure environment (not saying it is).

Celsius 

Founded in 2017 by Alex Mashinsky (check the link – he has an extremely impressive background) Celsius is perhaps one of the best-known lending platforms with over $22 billion in funds and over 1.4 million users. The Celsius platform offers lending, borrowing, and payments. They are also working on a credit card and swap feature. Celsius also has features aimed specifically for businesses but in this piece, we’ll be focusing on retail use cases. And on top of all that Celsius has its own token called CEL, but we’ll get to that a bit later.

When lending coins with Celsius they will pay you interest based on how much they can earn by “re-lending” your coins to institutions. When Celsius does this, they give 80% back to you in form of interest and keep the rest (I think that’s fair and that’s how all of these CeFi platforms work).

Naturally, the interest you receive therefore depends on the demand for certain assets, as well as the supply. Typically, some the highest interest rate is paid on stablecoins. From Celsius you can earn up to 10.73% on your USDC if you’re not based in the US and take your interest in the CEL token (I’ll use this rate going forward). If you’re in the US the rate is 8.50%. Other high interest coins currently are SNX at 14.05%, MATIC at 9.10%, and DOT at 9.02%. For the big boys Bitcoin and Ether, the rates are 6.20% up to 0.25 BTC and 3.05% for over 0.25 BTC, and for ETH 5.35% up to 100 ETH and 3.52% over 100 ETH.

If you’re looking to borrow cryptocurrency you can easily do that using the Celsius app. When borrowing you can choose the loan term and the interest rate too. The more you provide as collateral the lower the interest rate, and you’ll also get an additional interest rate discount if you pay in CEL. Celsius also has a calculator where you can check everything before borrowing. For example, if I wanted to borrow 1000 USDC one option would be to do it like this: I could borrow it with a 1-year loan term and 0.75% interest rate by paying the interest in CEL and putting 0.9841 ETH as collateral (not bad if you ask me). Celsius also has a similar calculator for lending so make sure to check that one out too.

Nexo 

Nexo is a subsidiary of Credissimo that was founded all the way back in 2007. The Nexo platform was deployed in 2018. To date Nexo has paid over $200 million in interest, gathered over 2.5 million users in over 200 jurisdictions, and they support 27 different cryptocurrencies. Nexo offers both lending and borrowing as well as a payment card, which is one feature that differentiates it from Celsius. Nexo also has its own native token called NEXO, and that has the highest market cap of those mentioned here.

Starting with lending, Nexo has extremely good rates and for almost all tokens they’re higher than what Celsius offers. For example, the interest on your Bitcoin and Ether can be as high as 8% if you opt for a fixed term and get paid in Nexo tokens. Other interest rates are also extremely high, DOT at up to 15%, and then AVAX and MATIC have limited time boosted rates 17% and 20% respectively. For stablecoins the rates are up to 12% but what really differentiates Nexo is that you can lend fiat money too. Currently it’s possible to lend USD, EUR, and GBP, the rates are the same as for stablecoins. What’s also different with Nexo is that the interest earned is paid daily while Celsius only pays weekly. However, while some might enjoy this depending on where you live, I would not since it would be a huge burden to keep up with the taxes, so make sure to check what the reporting requirements in your country are and be sure to follow them.

When it comes to borrowing, you’ll be happy to know that interest rates can be as low as 0% in certain situations, and they never exceed 13.9%. I couldn’t find exactly what the interest rates for different situations look like even though they have a calculator, therefore I prefer Celsius when doing calculations before committing to anything. What caught my eye in borrowing with Nexo is that they’ve deployed the possibility to apply for a loan against your NFTs. Currently they support two collections, Crypto Punks and Bored Ape Yacht Club. When applying you can get up to 20% of the floor price. This is something many platforms haven’t yet done and I’m sure there will be good demand for this, especially now that the prices have gone sky high. Still, when talking about NFTs be careful when lending against them since we have yet to see them tested in case of a bear market and even that 80% buffer might not be enough.

Swissborg 

As with YouHodler, Swissborg is vastly different from the previous platforms. This is the only place I could consider using as my exchange and the yield earning possibilities are an extra bonus to use in earning additional rewards on my portfolio. Swissborg was founded in 2017 and has since gathered over 500k users with over $1.6 billion on the platform. Different from the other platforms Swissborg doesn’t offer borrowing, but how are the yields? 

Well, I have good news and bad news. The yields are great IF you have the genesis premium plan which boosts your earnings by 2x, I’ll get to the plans later. If you have the genesis premium, you’ll be earning almost 9% on stablecoins and for big boys BTC and ETH roughly 1% and 5.6% respectively. Now you might be wondering what else you can earn interest on and sadly there’s not much to wonder about since including those mentioned above Swissborg only supports earning on 9 different cryptocurrencies. The highest yield here is that of the Swissborg native token CHSB and currently the rate is sitting at 24%.

Why I said I might be open to using Swissborg as my exchange is because with the genesis premium you get low fees of only 0-0.25%. On top of that Swissborg offers some analytics tools as well as good portfolio statistics. They also allow trading with many more cryptocurrencies than they offer yields on, so you don’t need to be worried about that.

Bottom Line

Before getting to the actual conclusion, I just wanted to quickly add that all of these platforms are available as mobile applications and some of them are even mobile first built. This includes Celsius and Swissborg. Therefore, if you can’t seem to have access to some features you should check if it’s available in their mobile app. Another thing I want to remind everyone about is that the rates stated here do fluctuate based on supply/demand. Those high rates for DOT might quickly fade if more people lend them. Also, the total amount you receive does take a hit if the underlying asset falls in value so don’t trust all the calculations you do to a full 100% since your earnings will fluctuate.

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