There are different lending platforms in the decentralized finance (DeFi) market. All of them are offering users with the possibility to lend their assets and earn some rewards. However, each of these apps has different lending rates and digital assets supported. This is why it is definitely important to know which are the best lending DeFi platforms currently available.
In this guide, we will share with you some of the best lending DeFi platforms that you can use to lend your digital assets.
Disclaimer: this post should not be considered investment advice. This is only for educational purposes only. Never invest more than what you are able to lose and always ask for information to your professional financial advisors. We are not financial advisors.
Maker is one of the largest decentralized credit platforms that is based on top of Ethereum (ETH). This DeFi services provider works with the Dai stablecoin. Users can lock in collateral in tokens such as ETH or BAT and create Dai, which is going to be backed by the collateral they have deposited.
When users borrow Dai, there is a “stability fee” they have to pay once they repay the borrowed Dai. Users can borrow Dai up to 66% of their collateral’s value. The collateral should remain at 150%. If users’ vaults fall below that level, they will have a 13% penalty and get liquidated.
You can be part of the Maker ecosystem in just a few simple steps and start borrowing funds. You will not have to sell your crypto funds to get Dai and start using it for the things you want.
The second platform that we are sharing with you is Compound. This is also considered one of the best lending DeFi platforms in the world. Compound is an algorithmic money market protocol that runs on Ethereum and allows users to borrow assets and use collateral to back these loans. This is very similar to what Maker is already offering.
However, users can easily provide liquidity to the pools handled by Compound and earn compounding interest. The interest rates will be adjusting automatically based on the supply in these liquidity pools and the demand for borrowing the assets.
It is worth taking into consideration that 10% of interest paid goes to reserves. After being launched in 2018, the platform is now among the largest in the DeFi market. According to DeFi Pulse, Compound has $1.6 billion USD locked (in crypto).
Another lending and borrowing protocol in the DeFi market is Aave. This open-source DeFi protocol is also allowing users to earn interest on deposits. Individuals can also borrow assets and return them for a small fee.
At the time of writing this post, users can lend a wide range of virtual currencies, including the largest stablecoins in the world (USDT, Dai, TUSD, SUSD, BUSD and USDC). They can receive as much as 17% interest for their tokens on an annual basis.
Individuals can also deposit other coins and make some money. For example, it is possible to deposit a wide range of altcoins such as Decentraland (MANA), Chainlink (LINK), or Basic Attention Token (BAT), among others.
Aave is also offering users with the “first uncollateralized loans” option for users that perform arbitrage trading or that need funds as collateral swapping. There is a 0.9% fee on these loans and they should be returned in just one transaction block.
The last one of the best DeFi lending platforms we are covering today is Cream Finance. This firm is a decentralized peer-to-peer lending platform that has been created as a fork of Compound finance. The goal is to bridge liquidity across assets that have been underserved.
Users can supply the coins that are needed and borrow any other asset. This network has been released on top of Ethereum but it is planning to move into the Binance Chain. Some of the coins that they are currently offering to users include most of the stablecoins and other coins such as yCRV, yyCRV and many others.
Currently, there are $145 million in tokens and funds deposited on this platform. There are exactly 37.8k ETH locked on Cream Finance, showing that there is a large user base for this platform. However, the total value locked in Cream Finance has been falling since September this year with the expansion of the DeFi market and other DeFi platforms such as Sushi or Yearn.Finance.
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