Crypto Lending: Here's Everything You Need to Know

Crypto lending is the process of depositing cryptocurrency that is lent out to borrowers in return for regular interest payments called ‘crypto dividends’.

By Radhika Parashar | Updated: 2 August 2022 18:09 IST

Crypto Lending: Here's Everything You Need to Know

Photo Credit: Pexels/ Alesia Kozik

The recent crypto slump negatively impacted several crypto lenders

Highlights

Crypto lending can be explored by investors wanting to hold assets
Crypto lending is a popular DeFi service
Crypto lenders also offer crypto loans

After a major slump that lasted almost a couple of months, the crypto industry is trying to break out of its loss spell. Last month, when the overall market cap of the crypto sector fell from the trillion-dollar mark, one blockchain sector – crypto lending – emerged as one of the worst affected parts of the decentralised finance system. Crypto lending is the process of depositing cryptocurrency that is lent out to borrowers in return for regular interest payments called ‘crypto dividends'. Several crypto lending firms have emerged around the world to facilitate this service.

More often than not, crypto investors choose to hold their assets until they see a hike in the price of their assets. These platforms allow crypto holders to earn yields without having to sell their assets.

Both, centralised and decentralised crypto lending platforms are known to offer interest rates as high as 20 percent annual percentage yield.

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Crypto lenders also offer crypto loans – in the form of collateralised lending products, requiring users to deposit from a minimum of 100 percent in crypto collateral to borrow cash or cryptocurrency.

In recent weeks however, several crypto lending firms encountered rough business days followed by the crash of Terra, and then the prevailing crypto downturn.

Jersey city-based crypto lender Voyager Digital filed for bankruptcy after it suspended withdrawals, trading, and deposits to its platform.

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Crypto lender Celsius Network has been sued on the charges of using customer deposits to rig the price of its own crypto token and failing to properly hedge risk, that led to the freezing of customer assets. The company has filed for bankruptcy.

Vauld, a Singapore-based crypto trading and lending platform with most of its team in India, has become the latest crypto firm to halt customer withdrawals amid the unforgiving market din.

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Further reading: Cryptocurrency, Crypto Lenders, Crypto

Radhika Parashar

Email Radhika

Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More