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Crypto lending: a complete guide to understanding, using, and choosing a crypto lending platform in 2025
Crypto lending allows you to lend or borrow cryptocurrencies through specialized platforms, bypassing traditional banks. This system, at the heart of decentralized finance ( DeFi ), opens the door to new uses and opportunities for both novice and experienced investors crypto lending , how to use a decentralized wallet , its advantages and risks, and which are the best lending platforms in 2025.
Table of contents
What is crypto lending?
Crypto lending ( or crypto lending) involves lending digital assets on a lending platform to generate interest, or borrowing cryptocurrencies by depositing other assets as collateral. This mechanism relies on blockchain technology and eliminates traditional intermediaries like banks, making the process faster, more accessible, and more transparent .
- Crypto lending allows asset holders to generate passive income through interest.
- Borrowers can obtain liquidity without selling their crypto assets , by depositing collateral.
- Everything is done automatically thanks to smart contract contracts .
This lending system is one of the pillars of decentralized finance or defi and is aimed at all users wishing to put their cryptocurrencies or access liquidity quickly.
How does crypto lending work?
Crypto lending relies on interaction between lenders and borrowers via decentralized or centralized lending platforms
- A user deposits their assets on a crypto lending platform (often via a decentralized wallet ).
- These digital assets are placed in a liquidity pool, where other users can borrow by depositing collateral.
- Lenders receive interest, paid by borrowers .
- Borrowers must repay the loan (principal + interest) to get their collateral back .
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✔ Transacting via a decentralized wallet – A practical guide to trading cryptocurrencies independently.
✔ Exploring decentralized finance (DeFi) – Discover advanced concepts like staking and NFTs , and optimize your investment strategies.
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The entire process is managed by smart contract that automate each transaction , from granting the loan to distributing interest and repayment. This system allows anyone to become a lender or borrower without intermediaries.
The two models of lending platforms
- Decentralized platforms (DeFi): operate directly on the blockchain via dApp and smart contract . Examples: Aave , Compound, Morpho, Angle Protocol.
- Centralized platforms : managed by a company that acts as an intermediary. Examples: Coinbase , Nexo, Bitvavo, Binance (some platforms offer both models).
The majority of the crypto lending platforms are now decentralized, offering greater transparency and accessibility.
What are the advantages of crypto lending?
- Generate interest on your unused crypto assets without selling them.
- Access liquidity quickly without relinquishing ownership of your crypto assets .
- Automated process, without human intervention, thanks to smart contract contracts .
- No mandatory identity verification on most decentralized platforms .
- Possibility of staking and participation in other lending products on the same platform.
Crypto lending is attracting more and more investors who want to diversify their income in the crypto ecosystem without going through traditional banks .
What are the risks of crypto lending?
Like any financial product, crypto lending carries risks:
- Risk of liquidation if the value of the guarantee falls below a certain threshold.
- Risk of bankruptcy or hacking for some centralized platforms .
- Volatility of deposited or borrowed assets
- Regulatory risks depending on the jurisdiction.
Before using a crypto lending platform , it is recommended to fully understand how it works, the loan conditions, the interest rates and the required guarantees.
How can crypto lending be used in practice?
Step 1: Choose a decentralized wallet
To interact with lending platforms , you need to use a crypto wallet . We recommend Ledger , a cold wallet that allows you to store your assets offline while still interacting with decentralized applications (which is still rare for an offline wallet). Ledger are:
- Physical protection of private keys using a secure chip.
- Compatible with most blockchains and lending dApp
- Control your crypto while using lending services without compromising security.
- Management of multiple assets and direct access to platforms to generate interest .
For more technical details on Ledger , we invite you to read our detailed article on which Ledger to choose.
Step 2: Connect to a lending platform
After setting up your decentralized wallet , connect to a crypto lending platform of your choice. The best lending platforms offer a user-friendly interface and competitive rates.
- Access the dApp lending platform website .
- Connect your crypto wallet .
- Choose the type of loan (lending or borrowing cryptocurrencies ).
Step 3: Lending or borrowing cryptocurrencies
- To lend crypto, select the asset to deposit and the amount.
- To borrow , choose the asset to receive and deposit sufficient collateral (often greater than the value borrowed).
- Confirm the transaction via your decentralized wallet .
Interest rates and loan duration are displayed before confirmation. You can track your positions and repay at any time, according to the terms of the crypto lending platform .
What types of loans are available on crypto lending platforms?
- Over-collateralized loan : the borrower must deposit more value as collateral than the loan amount.
- Sub-collateralized lending : reserved for certain users or protocols, riskier.
- Flash loan : This is a cryptocurrency loan made via a smart contract , where the borrowed amount must be repaid within the same blockchain transaction. In practice, all the steps (borrowing, using the funds for operations such as arbitrage, and then repayment with fees) are programmed to execute sequentially, within a few seconds. If the repayment does not occur within this same transaction, the entire operation is automatically canceled by the blockchain, as if nothing had happened. This mechanism, which requires no prior collateral, is primarily used by advanced traders capable of coding these sequences of actions .
Most crypto lending platforms operate with over-collateralized loans to limit the risk of default.
How do lending platforms set interest rates?
Interest rates are generally dynamic, determined by supply and demand for each asset :
- If many lenders deposit an asset , the rate falls.
- If the demand for borrowing increases, the rate rises.
- Some protocols offer fixed rates , but most are variable.
The best crypto lending platforms display real-time interest rates for each asset and automatically adjust according to market conditions.
What are the best crypto lending platforms in 2025?
Here is a selection of the most recognized and used lending platforms in the crypto ecosystem :
- Aave : leader in crypto lending , offers loans and borrowings on many assets (ETH, stablecoin , LTC ltc ) with competitive rates and a clear interface.
- Compound : one of the first lending protocols stablecoin Ethereum , Ethereum used for crypto lending and stablecoin borrowing .
- Morpho : a new generation of lending platform , optimizing rates for lenders and borrowers .
- Angle Protocol : specializing in lending euro stablecoins , allows lending stablecoin borrowing EURC or agEUR.
When choosing a lending platform , always compare rates, reputation, security, the diversity of assets offered, and compatibility with your decentralized portfolio .
How to choose a reliable crypto lending platform?
Here are the criteria to consider when selecting a reliable lending platform :
- Reputation and security audits of the protocol .
- Transparency regarding rates , fees and loan conditions.
- Diversity of available assets BTC , ETH, stablecoin , altcoins ltc .
- Liquidity volume and number of users .
- Option for staking or other integrated DeFi products.
- Customer support and clear documentation.
The best crypto lending platforms regularly publish audits and transparency reports. Some lending platforms also include insurance against smart contract vulnerabilities or fund losses.
What are the fees and conditions on crypto lending platforms?
Lending platforms typically charge a commission on the interest earned or on each transaction . Fees vary depending on the protocol and the type of loan :
- Deposit or withdrawal fees on certain assets .
- Commission on interest received by lenders .
- Liquidation fees if the guarantee is no longer sufficient.
Before lending or borrowing , always check the fees and conditions of the crypto loan on the chosen lending platform
Crypto lending FAQ
Is crypto lending risky?
Yes, there are risks associated with asset and collateral management. Favor lending platforms and diversify your investments.
Can the loan be repaid before the scheduled date?
Most crypto lending platforms allow you to repay the loan at any time, but check the specific conditions of each crypto lending platform .
What is the difference between lending and staking ?
Staking involves locking up assets to secure a blockchain and receive rewards, while crypto lending involves lending cryptocurrencies staking other users via a lending platform .
What are the best lending sites?
The best lending platforms in 2025 are Aave , Compound, Morpho, Angle Protocol, Bitvavo.
Conclusion
Crypto lending is transforming how we manage our digital assets by allowing us to lend or borrow cryptocurrencies without going through traditional banks . Thanks to blockchain and decentralized finance , anyone can access lending services , earn interest, or obtain cash quickly. To fully benefit from crypto lending , choose a reliable lending platform , use a decentralized wallet like Ledger , and be sure to understand the risks and fees.
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Yoann
Training engineer, I quickly became interested in the field of finance. Convinced that decentralized finance has a bright future ahead of it, I participate in its democratization by developing Crypternon.
