How Crypto Lending Work

Instead of money, crypto lending trade on cryptocurrencies via a crypto lending platform.
Lenders on crypto lending receive their assets once the borrower repays the loan. Most of the loans are also backed by physical assets like real estate, while others allow users to take loans backed by intangible assets like cryptocurrencies.

Crypto lending can differ, depending on the platform, but what remains constant is the core concept. A lender makes its assets available to loan at a certain rate.

Users usually lend their cryptocurrencies for two main reasons: first, for personal use and second, for margin lending. With the later, once the lenderʼs funds are available, a borrower who believes a certain coin will increase in value will request to lend a part of the funds availed by the lender. In a few daysʼ time, the borrower will then pay back the borrowed cryptocurrencies along with the interest rate.