Crypto lending and earning interest became a new way to acquire more crypto capital or transform tokens into fiat without a sale. Are you interested in margin trade, increasing your hodling portfolio, or buying a house or car with digital assets? You can do so with CoinLoan. In this review, we will explain how to make it possible.
People who buy crypto often keep their funds in offline wallets for years, preparing to sell once the price hits the targeted highs. However, the crypto market is prone to volatility, which makes the entire process slow and unpredictable. Much like keeping fiat currency in an account with a poor interest rate, holding onto cryptocurrencies while you wait for their value to increase is inefficient at best.
However, what if you can increase your tokens' volume without actually doing much? CoinLoan offers interest accounts and crypto-backed loans for these purposes. An interest account is like a bank savings account - all you need is to deposit crypto and earn interest. Interest account, however, is a more complicated route, yet it has major benefits - you can get a loan in fiat straight away while maintaining your crypto assets.
How exactly does CoinLoan work, and is it really worth it? Keep reading to find out now.
CoinLoan Review: The Basics
CoinLoan is a European crypto management platform, an alternative to more well-known names like YouHodler and BlockFi. It allows crypto users to earn interest on crypto and receive loans in return for crypto collateral. Two options differ in terms of mechanics, returns, and level of risk.
Compared to conventional bank loans, crypto-backed lending generally offers better terms and conditions.
How Crypto Lending Works
Cryptocurrency has experienced an enormous surge in popularity since Bitcoin's creation in 2009. Crypto investors buy tokens hoping their currencies of choice will increase in popularity and value. If the price of crypto rises, tokens can be later sold at a profit.
Bitcoin and other cryptocurrencies are notorious for making early investors millionaires. However, crypto is volatile — as tokens can dramatically surge in value, they can also plummet in the same fashion. For the past several years, volatility has been on the rise - but while crypto tries to find its place in the financial world, new tokens are being released in great numbers.
To profit from cryptocurrency, you either have to hold on to your assets for a long time or discover the coin before it gains traction. It's nearly impossible to predict when tokens will find their fame, thus making hodling practice inefficient and risky for many. Fortunately, there is another way to earn money from cryptocurrency. Instead of keeping a digital asset for years, if not decades, you can deposit your crypto to the interest account for the platform to lend some of your funds out and, in return, receive compound interest credited daily.
You won't get rich overnight with crypto lending, but it's a reliable way to earn passive income from your cryptocurrency. If you have a big stash of crypto in your vault, you may even be able to make a decent living with crypto lending.
For borrowers, crypto lending works differently. If you seek a loan, you have to provide your crypto as collateral. In return, a lending platform lets you borrow money in various currencies, including fiat, and keeps your collateral until you pay back your loan plus interest. Unlike conventional lending, crypto lending does not do lengthy credit or background checks, meaning they can secure a loan quickly.
How CoinLoan Works
CoinLoan supports 21 different assets that include fiat, crypto, and stablecoins. Users who prefer Interest Account to loans can earn daily compound interest of up to 12.3% APY. Like most lending platforms, CoinLoan doesn't perform credit history checks.
The high interest rate comes from borrowers - CoinLoan lends out some portion of funds deposited in the Interest Account in return for crypto collateral provided by loan seekers. CoinLoan then uses the interest paid by the latter to pay account holders interest on their funds.
CoinLoan allows borrowers to take out loans against collateral in cryptocurrencies, stablecoins, and even fiat. Loans get instant approval without paperwork or credit checks of any kind - the only requirement is collateral provision.
However, loan seekers must go through KYC verification - a minor security measure taking a few minutes to complete - before filing a loan application. If a borrower refuses to pay back their loan, CoinLoan will keep the collateral. Сollateral is held securely at CoinLoan's custodian.
Coinloan offers different LTV (loan-to-value) ratios: 20%, 35%, 50%, and 70%. Interest rates for borrowers vary from 4.95% to 11.95%.
CoinLoan: Facts and Features
CoinLoan offers several features to help you manage your crypto portfolio. Let's dive in and go through them.
There are several ways to use CoinLoan. You can deposit funds into an interest account, apply for a loan or buy and swap crypto.
Interest Account is the most straightforward option. To start earning interest, deposit your coins or fiat currencies. You can withdraw your assets anytime - compound interest is credited daily.
When people borrow from a platform like CoinLoan, the desire to get fiat currency for a purchase or investment without losing crypto tends to be the main driving force. Instead of selling off their crypto, they can turn it into collateral in exchange for fiat. The practice allows avoiding digital assets' loss in return for having enough leverage to purchase tangible assets.
Another reason why loan seekers might turn to crypto lending is the simplicity of the entire process. If you turn to a bank for money, you would likely spend hours on paperwork and have to wait for credit history check results before the loan approval. Thus, you save a lot of time and nerves by temporarily giving up some of your crypto assets in return for instant loan approval.
To get a loan on CoinLoan, you will need to go through KYC verification and provide collateral according to the chosen LTV. For example, if you wish to lend $700 under 70% LTV, your collateral must have a value of $1000. Once approved, you will simply pay your loan back with one of CoinLoan's flexible payment plans and then reclaim your crypto.
Compare with CoinLoan alternatives
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CoinLoan: The Pros and Cons
CoinLoan is a strong contender in the crypto lending space. But is it right for you? Compare these pros and cons to find out.
- Fairly high interest rates for lenders;
- Fiat and crypto asset support;
- Instant loan approval;
- Various LTV ratios;
- Flexible payment options for borrowers;
- Global access;
- Multiple fiat transfer options: Wire Transfer, SWIFT, SEPA, AdvCash;
- User-friendly platform;
- Regulated Licensed in Europe.
- A relatively young platform with a limited track record;
- Crypto market volatility can sometimes dramatically affect crypto loans;
- Lower compound interest for assets that are not CoinLoan's native token (CLT);
- Higher interest rates may be available on other crypto lending platforms
No crypto loan platform is perfect, and CoinLoan is no exception. Yet, the features that the platform offers can help you better manage your crypto. Hopefully, these pros and cons can help you make your choice.
Frequently asked questions about CoinLoanNow you know how CoinLoan works. But if you need a quick summary or brief explanation, check out the CoinLoan FAQ.
What Cryptocurrencies Does CoinLoan Support?
CoinLoan supports 21 different types of assets. They include:
- Euro (EUR)
- Pound Sterling (GBP)
- Russian Ruble (RUB)
- Tether (USDT)
- USD Coin (USDC)
- Paxos Standard (PAX)
- Bitcoin (BTC)
- TrueUSD (TUSD)
- Binance USD (BUSD)
- Ethereum (ETH)
- Bitcoin Cash (BCH)
- Litecoin (LTC)
- Monero (XMR)
- Ripple (XRP)
- Stellar Lumens (XLM)
- Chainlink (LINK)
- Dai (DAI)
- Wrapped BTC (WBTC)
- PAX Gold (PAXG)
- Polkadot (DOT)
- UniSwap (UNI)
No matter what kind of asset you like to trade in, CoinLoan probably has you covered.
How Big Are CoinLoan's Fees?
When Does Liquidation Happen?
Is CoinLoan Secure?
CoinLoan is very secure. All funds held by CoinLoan are stored in cold (offline) multi-signature wallets hosted by BitGo and covered by insurance from Lloyds. Private keys are never stored on network-connected devices.
Withdrawals are processed manually, which causes some delay but increases security. Transactions are signed offline and require several people to do so.
CoinLoan is regulated by the Estonian Financial Licence and aims to be transparent regarding its security measures and practices.
Does CoinLoan Offer 24/7 Support?
Where to Go From Here
Now that you've read this CoinLoan review, you should be prepared to start managing your cryptocurrency. And if you ever want to borrow crypto from others, you know how CoinLoan lets you do that, too.
No matter your crypto needs and interests, Bitcompare has you covered with the latest, most user-friendly, up-to-date information. Check out our other cryptocurrency reviews right here to keep learning more.