How to Choose the Best Decentralized Lending Platform


If you’re looking to invest your money, there’s no doubt that you’ve heard of cryptocurrency and NFTs. These two digital assets are some of the most popular methods of investment available today. 

The price of the first crypto, Bitcoin, has skyrocketed since its inception. Other cryptocurrencies have seen notable growth as well. 

NFTs, which contain digital artwork or images, work a lot like physical artwork as an investment method.

If you want to make a little extra money, you can do so through a decentralized lending platform. There are many platforms to choose from, and each one has different features. Which platform should you choose?

Here are some things to consider before making your choice.

What Is DeFi Lending?

DeFi lending allows investors to deposit their cryptocurrency on a platform and then lend it out. When they lend cryptocurrency to other traders, the traders have to pay interest on the amount, just like traditional loans. The lenders get to generate passive income on the cryptocurrency they distribute.

Decentralized Lending Interest Rates

When lenders are deciding on a crypto lending platform to use, one of the top considerations should be interest rates. Platforms have different interest rates for different cryptocurrencies. The amount of money you stand to make could be far less on one platform than on another.

Interest rates also have ranges for each currency. You may stand to make less than one percent interest at the bare minimum and up to 3.5% at most. Depending on the number of currencies you own, some platforms will have a better range of interest rates than others.

Another consideration is that not all platforms allow you to lend all currencies. If you have coins that you want to use, you may have to make some concessions on the interest rates of your other tokens.

A Simple Process

The process to initiate a loan of your digital assets is incredibly simple. Decentralized networks utilize smart contracts, which signify your mediators and negotiators. All it takes is a few clicks, and your loan is initiated.

The great thing about decentralized platforms is that smart contracts take care of much of the work. 

You can set the parameters for the loan on the platform of your choice. When you find a borrower, the smart contract automates the borrowing and lending agreement. This process requires far less paperwork than a bank loan. 

Some platforms also allow you to make buy, sell, and loan digital assets. If you want a one-stop-shop for your decentralized finance, find out more about Nested.

Generate Money in Bull and Bear Markets

No matter the economic state, people will always need loans. Decentralized lending allows you to generate income, no matter the state of the market. The amount of interest you can earn, and the smart contract process, are important factors to consider when you choose your platform.

If you enjoyed this article, please check out more of our site. We have helpful material to help you get the most out of life. Subscribe to our blog to always stay up-to-date. 

Leave a Reply