Crypto Lending and Borrowing Guide: Everything You Need to Know

Crypto lending allows you to earn interest by lending your cryptocurrency to others through specialized platforms. Borrowing involves using your crypto as collateral to take out a loan. Lenders earn passive income and potentially higher returns. Borrowers can access funds without selling their crypto, sometimes at lower interest rates than traditional loans. Borrowers provide collateral, typically worth more than the loan, to protect against price fluctuations. Interest rates vary based on supply and demand. If a borrower defaults, the platform liquidates the collateral. Risks include crypto price volatility which can lead to collateral liquidation, platform insolvency or technical issues, and smart contract bugs. It's important to research platforms, start with small amounts, understand the terms and conditions, monitor loans and collateral value, and consider using stablecoins for lending due to their price stability. The crypto lending and borrowing space is rapidly evolving with both decentralized platforms (like Aave and Compound) and centralized platforms (like BlockFi) offering services. While offering potential benefits, it's crucial to understand the risks and invest responsibly.