Crypto lending: too good to be true?

Roy Learner
May 30 · 9 min read
Crypto Lending Annual Interest Rates as of 5/30/19

Crypto Lenders

Because cryptocurrencies are so volatile, almost all crypto loans are over-collateralized. In general, they require collateral ratios of 150%+ to secure a loan, which provides some safe guards for lenders to manage counterparty risk. So a potential borrower would need to put up at least $15,000 worth of crypto (BTC, ETH, etc) as collateral to get a $10,000 loan.

Genesis Capital Q1 2019 Insights Report

Crypto Borrowers

Genesis Capital outlines 3 main use cases for borrowing cryptocurrencies from their clientele:

Genesis Capital’s Q3 2018 Digital Asset Lending Snapshot
Dai in Numbers post from MakerDAO
Dai in Numbers post from MakerDAO
Historical DAI / USDC price on Coinbase
BitMEX average monthly leverage in April was 22x and 30x for Longs and Shorts, respectively.
I promise this is not an ad for Interactive Brokers. But here’s my reflink for 1 month of free trading: …

The Future of Crypto Lending

To answer the question of how sustainable the current crypto lending markets are, it helps to take a step back and look at the aggregate supply and demand. If we indeed assume that the majority of crypto lending borrowers today are speculators, I imagine the “demand side” will continue to grow as crypto continues gaining adoption and remains a volatile asset class.

Wave Financial

Wave Financial offers early-stage investment, asset management, and treasury management to further the growth of the digital asset ecosystem

Roy Learner

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Wave Financial

Wave Financial offers early-stage investment, asset management, and treasury management to further the growth of the digital asset ecosystem