However, that presents another problem – how can you make your ETH work harder for you if you’re simply holding on to them? This is where Ethereum-backed loans come into the picture. If you’re unfamiliar with crypto-backed loans, you might want to check out our primer on what they are first.
On the other hand, if you’re ready to jump in, read on – we’ve prepared a list of the top 5 platforms for you to obtain Ethereum backed loans for your consideration.
CeFi Loans
If you’re just starting out with taking loans out against Ethereum, the best place to learn about them would be through a Centralized Finance (CeFi) platform. These platforms are custodial in nature, meaning that the platform’s operators will ensure the safety of your collateral until the loan term is up.
#1: Nebeus (Developed and operated by Money-4 Limited & Rintral Trading SL)
Instant, flexible, and secure with a $100M insurance!
You can be assured of all of this when you use Nebeus. The platform provides instant, pre-approved, and secure loans directly from the platform’s treasury to users, in the form of USD, EUR, and GBP. Users can also choose from two options – quick loans or flexible loans – based on their needs. Nebeus also uses industry-grade security and insurance to ensure the safety of your crypto assets. When you take a loan through Nebeus, your Ether will be stored in a cold storage vault, insured up to $100m until the end of your loan term!
That said, what truly makes Nebeus stand out is its proprietary Loan Health Monitor System. The Monitor allows customers a direct and live view of the value of their crypto collateral in relation to the loan received. In the event that the value of the collateralized asset dips too low, the user gets an alert to allow them to consider what to do next.
Nebeus ultimately focuses on customer service and empowerment. Whether you’re a beginner to ETH-backed lending sites or someone familiar with them, it is definitely a platform you should consider using.
Nexo has earned a reputation for being an easy-to-use platform that is perfect for someone who is learning about crypto-backed loans for the first time. This hardly comes as a surprise, given its intuitive interface, wallet app, and credit line Nexo Card.
#3: Celsius
Celsius features one of the lowest borrowing rates and supports a wide range of 25 coins, including ETH. Beyond this, it also offers loyalty reward bonuses for holders of its native token, $CEL.
DeFi Loans
If you’re more familiar with the crypto space, you could also consider obtaining a Decentralized Finance (DeFi) crypto loan. Rather than depending on the operator of the platform, these tools rely on smart contracts. The borrower retains control of their assets. Because of this, it is recommended that you only experiment with these protocols after understanding CeFi loans and the crypto landscape in general.
Another key difference is that you cannot obtain fiat currency directly from DeFi platforms. Instead, you will receive stablecoins – digital assets pegged to the value of a fiat currency – which you can either exchange for cash or use for your DeFi transactions.
Beyond its other offerings, the platform is also famous for its lending and borrowing services. The way that borrowing works is simple. Individuals who wish to lend out cryptocurrencies will deposit those into Aave’s liquidity pools. Then, those who wish to borrow must provide another cryptocurrency collateral to borrow from those pools.
The process is trustless, meaning that in the event you are unable to repay your loan in accordance with the term, the smart contract will execute to take your collateral in order to cover the amount you borrowed.
The platform works similarly to Aave’s system of lenders and borrowers. One additional thing to note is that when you deposit cryptocurrency into the protocol and use it as collateral, you effectively are a lender as well. This enables you to accrue an annual percentage yield (APY) that can help offset your loan’s interest rate.
To make things even more exciting for this platform, there are currently plans to allow for cross-chain asset compatibility. If you’ve been around the space, you would know that high gas fees are a problem in Ethereum transactions. This includes DeFi borrowing and lending as well. With Compound’s new blockchain in the works, this allows integration with a larger range of assets and at a lower fee.
Conclusion
With so many options available, we’ll leave it to you to decide on which project has the best ETH lending platform. You can even let us know what you think in the comments! These loan platforms have provided us all with the unprecedented ability to take ownership of our personal finances, and we can’t wait to see how the space continues to develop.