What Are Crypto Loans?

Crypto loans let you borrow money (like USDT) using cryptocurrency (like Bitcoin or Ethereum) as collateral, so you don’t have to sell your crypto. DeFi platforms like Aave use smart contracts for loans, which are automated and trustless. Trustless are preferred. Centralized platforms like Nexo are easier for beginners and offer customer support.

Key Terms

• APR: Yearly cost of the loan, including interest and fees (e.g., 10% APR = 10 per 100 borrowed annually).
• LTV: Loan amount compared to collateral value (e.g., 5,000 loan with 10,000 collateral = 50% LTV).
• Loan Term: How long you can keep the loan. Flexible or unlimited means repay anytime.
• Price Down Limit: The price at which collateral is sold if its value drops (e.g., BTC at 65,000 limit when price is 118,000).

Fair Terms (July 2025)

Fair terms for crypto loans, especially in DeFi, balance cost and risk. Here’s what to look for:

• APR: 3-12% (e.g., Aave: 5-10%, Nexo: 3-12%). Higher rates like 21% are costly.
• LTV: 50-70%, allowing decent loan size with low liquidation risk.
• Loan Term: Flexible or unlimited, common in DeFi (e.g., Aave) and platforms like CoinRabbit.
• Price Drop Buffer: 30-50% (e.g., safe until BTC drops 50% from 8,000 to ~59,000).
• Processing: Instant or same-day, no credit checks.

Good Examples

• Aave (DeFi): Borrow 6,000 USDT with 10,000 BTC collateral (60% LTV) at 6% APR, flexible term, liquidation at 59,000 BTC (50% buffer).
• Nexo: Borrow 5,000 USDT with 10,000 ETH collateral (50% LTV) at 3% APR, unlimited term, liquidation at 70,800 BTC (40% buffer).
• YouHodler: Borrow 7,000 USDT with 10,000 BTC collateral (70% LTV) at 8% APR, 180-day term, liquidation at 65,000 BTC (45% buffer).

Bad Examples

• High APR Loan: Borrow 5,000 USDT with 9,000 BTC collateral (55.6% LTV) at 21% APR, unlimited term. The high APR makes it costly (1,050/year for 5,000 loan).
• Tight Buffer: Borrow 8,000 USDT with 10,000 BTC collateral (80% LTV) at 10% APR, with liquidation at 94,400 BTC (20% buffer). Small price drops trigger liquidation.
• Hidden Fees: Borrow 6,000 USDT at 5% APR, but with 2% origination fee and unclear terms, increasing effective cost to ~7% APR.

Top Platforms

DeFi platforms use smart contracts for trustless lending, while centralized platforms offer simpler interfaces. Examples:

• Aave (DeFi): 5-10% APR, 70-85% LTV, instant loans via smart contracts. Needs wallet knowledge.
• Rocko (DeFi): 0-13% APR, up to 85% LTV, flexible terms, non-custodial.
• Nexo (Centralized): 3-12% APR, 50% LTV, user-friendly, cold storage.
• YouHodler (Centralized): 3-12% APR, up to 90% LTV, instant loans, customizable terms.
• CoinRabbit (Centralized): 17-19% APR, flexible LTV, unlimited term, fast processing.

Risks to Know

Crypto loans carry risks: if collateral value drops (e.g., BTC to 65,000), it may be sold. DeFi platforms risk smart contract bugs, while centralized platforms may have custody issues (e.g., past failures like Celsius in 2022). Check platform security, monitor crypto prices, and verify no hidden fees.