The best crypto lending platforms in 2023
Bogdan LashchenkoAfter we discussed what crypto lending is in the world of cryptocurrencies and how you can make money with it, you may be wondering where exactly you can send your coins for staking to earn passive income. If you are not afraid of various risks, then we will show you a few resources where you can do staking.
First of all, it is worth remembering that after the October events related to FTX, many DeFi platforms that stored practically all of their funds on the American cryptocurrency exchange found themselves in a difficult position and now have to stop their activities to some extent. This is why the list of crypto lending platforms will be significantly shorter than it could have been initially.
Essentially, the list boils down to two platforms. We will explain why later.
Compound
The crypto lending platform Compound is perfect for those who would like to give some of their money to earn passive income. It also works well for another part of the audience who, for one reason or another, wants to borrow digital assets. According to one of the largest and most popular cryptocurrency aggregators, CoinMarketCap, Compound is in the top 2 crypto lending platforms, accounting for about 11,25% of the market. This refers not specifically to loans and sending tokens for staking, but to trading the Compound token, but it still reflects the popularity of the platform and people's trust in the project, which is important.
At the time of writing, the total daily volume of transactions with the Compound token exceeds the mark of $15,500,000, which is not a lot but not very little either. The platform was launched in May 2019 and can confidently be called one of the oldest and most reliable platforms of its kind.
Compound supports major, largest, and most popular cryptocurrency platforms, including Binance, OKEx, and Crypto.com. It also supports other less popular resources, including Argent, Pool Together, imToken, Ankr, Eidoo, and others. It is also worth mentioning that the main cryptocurrency exchanges are not the end of the story. Compound also collaborates with Ledger, a cryptocurrency wallet manufacturer, and is a partner of Coinbase Custody and BitGo.
As for functionality, there are two main directions available on Compound: USDC and Ethereum. Each of them can be considered stable enough, as USD Coin is a cryptocurrency token that is one of the top 2 stablecoins with a total capitalization of $41,800,000,000, and Ethereum is a top-2 digital asset in terms of market capitalization. In the case of ETH, it exceeds the mark of $207,000,000,000, making it the second coin on the cryptocurrency market to surpass the threshold of $200,000,000,000.
If you decide to stake USDC, you will have access to assets such as Chainlink, Compound, Ether, Uniswap, and even Wrapped Bitcoin (BTC analog). In the case of Ethereum, there will be only two assets available: Coinbase Wrapped Staked ETH and Lido Staked ETH. It is worth noting that in the case of all the aforementioned assets, the APY will be only 1-2%.
An individual menu in the blockchain selection tab, Compound V2, can help. The list offers a wider range of options up to 12 assets, with the most profitable one potentially yielding almost 5% annually.
The platform's representatives offer the possibility to stake digital assets such as Aave Token, Compound Governance, Dai, Ethereum, ChainLink Token, SushiToken, TrueUSD, Uniswap, USD Coin, Pax Dollar, Tether, and Wrapped BTC. The most profitable asset on this list is AAVE, which can yield 4,8% APY. The reasons for this will be explained later in the section about AAVE.
Compound reports that the total amount of coins in circulation on Compound V2 using all types of coins exceeds $2,240,000,000, $715,650,000 of which are in a loan state. The three most popular assets with the highest levels of popularity are USD Coin, Dai, and Ethereum with values of $550,590,000, $545,570,000, and $482,920,000, respectively.
As we could see in all the data, Compound is a well-known project that has been in operation for almost four years and is fully trustworthy for investing money. If you are looking for a DeFi platform to invest your money in for passive income, then Compound is an excellent option. Especially if you are accustomed to working with USDC and Ethereum, since these two are the main digital assets supported by Compound.
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AAVE
Although Compound is an excellent option for investing your money, it is still quite difficult to call it the best. This is due to the Aave platform. While Compound holds ~11,25% of the crypto lending market and has a daily trading volume of tokens exceeding $15,500,000, Aave's numbers are much higher. This crypto lending service holds 88,75% of the market and has a daily trading volume of AAVE tokens that has almost reached $124,000,000, which is 8,25 times more than Compound's. Needless to say, these figures are enough to call Aave the best platform in its niche.
Nevertheless, let's review the Aave platform's functionality and why it is so appealing to cryptocurrency enthusiasts who prefer to earn passively. Do you remember how we mentioned that the total amount of funds fixed on the Compound exceeded the mark of $2,240,000,000? Well, Aave's fixed fund amount exceeds $7,000,000,000, which is quite a significant number, given that there are very few projects that have such numbers in the world of cryptocurrencies. It is worth noting the biggest DeFi projects like PancakeSwap, SushiSwap, and others. Aave deserves the title of the leader among all crypto lending projects.
The project deserves to be the leader of crypto lending platforms, especially considering the situation that occurred in October of last year. With the fall of the FTX cryptocurrency exchange, many platforms in the decentralized finance (DeFi) sector reported that their funds were on FTX, leaving them with no savings to support their activity. Many platforms faced incredible difficulties, and now their operations are either close to completion or have already ended. As a result, many DeFi platforms have reported bankruptcy.
BlockFi, Gemini Earn, Voyager Digital, Three Arrows Capital, and many other companies related to the DeFi industry, as well as those unrelated to DeFi, have announced bankruptcy, significantly narrowing the options for investors in terms of where to invest their funds.
Returning to the topic of Aave and the functionality of this platform, it is worth noting that in this case, there is only one choice for investments. It is unlikely to be profitable but we could not ignore Aave. At the moment, the platform administration allows crypto investors to invest their money in Ethereum and several other networks. In the Ethereum network, investments can only be made in ETH. The annual income from such an event will be only 1,51%.
A more profitable option could be using the less famous and used Avalanche blockchain. There, more than 10 coins are available to choose from but only FRAX, MAI, and USDT will be the most interesting options. In the case of MAI and USDT, the income can be 1,84% APY and 3,06% APY, respectively, but the stablecoin FRAX has a more attractive figure. At the time of writing, FRAX can bring its investors almost 78% per year. If the percentage does not decrease significantly over the year and the stablecoin continues to hold at the US dollar level without any unexpected problems, crypto enthusiasts can easily earn good percentages over the year.
There are several options on the Polygon blockchain, which is gaining more and more popularity and recognition lately. Users can consider investing their funds in DAI and MATIC, and the annual income from these coins can be 1.53% and 2.33%, respectively. If the token grows well over time, in addition to the annual income, investors can also earn passive income.
At the moment, Aave is already operating on the third version of its staking platform. If we talk about the second iteration of their platform implementation, there is also one option here. If you have Binance USD, sitting idle, you will have the opportunity to send them to the Aave platform and get a 2,4% APY.
Conclusion
If we look at the conditions under which the administration of crypto lending platforms offers investment opportunities, the indicators are not particularly high. Perhaps, you can find meaning not only in investing through staking but also in taking out loans to be able to realize coins differently. When it comes to staking, many other options can bring more benefits and profits. For example, PancakeSwap offers users the opportunity to invest their funds at 20% annual interest, which is much higher than the options we previously mentioned.
The majority of users have heard of crypto lending but did not have a clear understanding of this sector of digital assets. Now, you know more and can decide whether to invest in such resources or not. Since many DeFi platforms and crypto lending platforms have closed during bearish trends and FTX crashes, many users have decided to abandon the idea of using such resources, and there is some sense to this.
We can say that with the advent of a full bull phase, things may change and crypto lending platforms may regain their former popularity and bring money to creditors again. Why can't we call what is happening in the crypto market a full bull phase yet, even though digital assets have been showing active growth for almost 2 months? Because there is a high probability that Bitcoin and other cryptocurrencies will go down in the coming months, and everything we have been observing since January 1st is an artificial pump made by whales to collect liquidity and go to the new lows.
We will provide one last piece of advice. If you like the crypto lending theme and would like to invest through staking in such platforms rather than other DeFi platforms, then you should wait until the digital asset market stabilizes a bit. Otherwise, it is better to focus on other decentralized platforms where you can also have passive income and earn annual interest.
Bogdan Lashchenko – content manager at EgamersWorld.Bogdan has been working at EGamersWorld since 2023. Joining the company, he began fillin the site with information, news and events.