The development and popularity of crypto lending are continuing at full force, with new projects coming to fruition. Existing mostly in the decentralized finance (DeFi) space, these projects allow users to acquire loans without the need to fight intermediaries and put up with counterparty risk.


Acting in collaboration with asset issuance, insurance, payments, and governance, crypto lending is helping to build a new blockchain-based financial system. Never before has borrowing against one’s crypto holdings been this simple. Moreover, the difficulty of obtaining a bank loan only emphasizes the value of lending protocols that are secured by smart contracts. In this sense, it is unsurprising that many are flocking to this new type of lending.


Industry expansion


Proof regarding the strength of crypto lending is not hard to find. In late 2020, DeFi project, Aave, was successful in raising $25 million from two major venture capital firms: Blockchain Capital and Moreover, its native token, AAVE, has become a runaway success, effectively propelling the protocol’s Total Value Locked (TVL) beyond $5 billion. Maker, a collateralized lending platform, has distributed roughly $2 billion worth of USD-backed DAI stablecoin loans since its launch during the 2017 bull run of Bitcoin.


One of the driving forces behind the adoption of digital currencies is users being able to earn yield via lending crypto assets. Alternatively, they can obtain loans in their favoured cryptocurrency without supplying credit history and labour through a meddlesome application process. Protocols of crypto lending match borrowers with lenders, with agreeable interest rates, flexible repayment durations, and diverse assets all being accepted as collateral. Furthermore, borrowers get to choose their preference of either fiat currency, cryptocurrency, or stablecoins.




Cryptocurrency lending holds a great amount of potential. If it plays its cards right, it could dominate the entire loan industry. It essentially makes the process of receiving a loan much easier and there are fewer requirements involved than conventional lending strategies.


The practice of cryptocurrency lending is still new to the loan market, but it is making an impression and gaining traction. As of January 2020, this type of lending has experienced a spike in popularity which is likely to continue. The accessibility of crypto loans provides many with financial freedom, which could completely transform the financial industry forever.