What is Crypto Lending?

what is crypto lending

Sometimes crypto owners hold their assets until the value appreciates. However, did you know that you can still turn a profit without selling your assets? Through crypto lending, asset holders can earn profit in the form of loan interest. This concept is the same as Peer-to-Peer Lending, where you can become a borrower or lender on a single platform. No wonder this is an attractive medium for investors to develop their assets. Would you like to learn more on lending? Keep reading!

Understanding Crypto Lending

Crypto lending has gained much attention since the beginning of 2020 as a way to easily grow your crypto assets. Crypto lending is a platform where a company provides lending and borrowing services for crypto assets. This allows lenders to earn interest when the assets are returned and makes it easier for borrowing customers to get the assets they need.

In crypto lending, the lender, also known as the investor. They will open an account and deposit crypto assets to be loaned out. After that, he will earn interest on the deposit in the same currency as the deposited asset. The interest set varies according to the chosen platform, make sure you choose a trusted lending platform with an appropriate interest rate.

The Advantages of Crypto Lending

The decline in interest rates at conventional banks makes an attractive and profitable means to develop assets owned by an investor. In addition to potential profit, crypto lending has other advantages. For example, the system is quite different from the lending system at conventional banks, where the borrower is assessed based on a credit score and there are various specific requirements.

In the crypto lending system, the requirements are simpler, making it accessible to borrowers who may not have a credit score. The process is also much faster than the bank system in general, so borrowers do not have to wait as long to get a loan. The system is also quite open to all investors who own crypto assets. With this ease of access, crypto lending becomes more open to all types of groups. Another advantage for borrowers is that the repayments are quite flexible, making crypto loans easier to pay off.

The Risk of Crypto Lending

Like other investment types, crypto lending also has its own risks. Lending regulations on this platform are not as strict as conventional banks. On one hand, this is an advantage in terms of ease of access, but it also increases risk. The system is also relatively new, so the track record is not quite large and there is no solid foundation to determine how safe this activity is.

So far, the liquidation system in crypto lending has proven to always secure investors’ assets, but no one can guarantee that this will continue. In theory, decentralized platforms and smart contracts that regulate the flow of assets in the system can be attacked by hackers through bugs or exploits. In addition, existing interest rates can change drastically if a large number of assets enter or leave the system.

Tax regulations with regards to crypto lending platforms are still unclear, which poses yet another risk. In many cases, the platforms have been accused of being a means of avoiding taxation. This could become a complicated problem if the crypto lending is found not to be in accordance with Indonesian tax regulations.

Tips for Using the Crypto Lending feature

Now you understand that crypto lending has both advantages and risks. Therefore, if you are interested in doing this, it is very important to be careful and also take into account the risks in order to avoid losses. Here are some tips from Tokenomy that you can follow when using the crypto lending platform.

  • Do your own research

    There are many platforms that you can choose from. Each of them has different regulations, procedures, and terms of interest. Make sure that you find out these things in advance and make sure you choose a secure platform. Is the platform suitable for your needs and how are interest payments obtained? You have to make sure you won’t get stuck or confused when there are problems in the future. Most importantly, make sure that the platform of your choice is not a scam where your assets could potentially be stolen.

  • Find out the standards of crypto lending platforms

    The regulations and systems that you previously had to ensure on every platform are fundamentals that are important to understand. Find out in detail about how the asset lending procedure is carried out and when your assets will be returned. The interest rate also needs to be predetermined — in order to avoid fraud, it is important you know this to ensure that your deposited assets can be returned on time and with appropriate interest return. Prepare a backup plan in case your assets cannot be returned by the borrower. You can do this by ensuring that the platform of your choice has insurance or guarantees that protect your asset rights.

Try Crypto Lending on Tokenomy!

Has this article piqued your interest in becoming a crypto asset lender or borrower? If you are still confused about finding a trusted platform, you can always choose Tokenomy’s Crypto Loan service. To use this service, register and complete our identity verification process. After that, you can immediately go to the Tokenomy Loan page and make a loan!

If you are still unsure about crypto lending, Tokenomy has another service to help you increase your crypto assets: Tokenomy Earn! The Fixed Deposit product offered by Tokenomy is an investment instrument with low risk in which you store assets in. Tokenomy for a certain period of time and earn profits in the form of fixed annual interest. This system is easy to implement and the initial deposit amount can start from as little as IDR 500,000 with an annual yield of up to 6%. This is also easy to do if you are a beginner investor. What are you waiting for? Register now on Tokenomy!

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