Peer-to-peer (P2P) lending services have grown in popularity alongside the rise of cryptocurrency. On many platforms, customers can take out loans to re-invest into crypto markets; other customers can loan their holdings and gain interest from their crypto. For loaners, some of the APYs are quite high, but you should be questioning how safe the loans are. We mainly consider what rates we can get on stablecoins, as we do not want to take on risk in asset fluctuations. Feel free to click on any of the titles to sign up for that company, and let’s take a look at a few services.
Binance
Though Binance does not offer a crypto lending program in the US, it is still worth mentioning for their low exchange fees. If there are any other lending services that do not support ACH free transfers or have an exchange, Binance is a great choice to purchase coins and transfer into external wallets. To avoid high gas fees, purchasing Solana is a good idea. You can swap for whatever coin you want once it gets to the desired platform—assuming they have a token swap. It’s worth mentioning that Binance has been under investigation by the DOJ for money laundering activities. As a user trying to get money off of the platform, there should not be any concern for your money’s safety. One larger concern may be that Binance is not available in your state—you can check here to see if that includes you.
Pros:
- Max of 0.1% trading fee when using a limit order
- No ACH fee
Cons:
- Funds take up to 10 days to be available for transfer
- Not available in 5 states
- No ability to earn interest through loaning
Celsius
Celsius advertises very high rates, but upon closer inspection, they are misleading. They can only offer their highest tier of interest to accredited investors—net worth of $1MM or 2+ consecutive years making $200K—or international investors. This means they can only offer 7.1% interest on stablecoins to non-accredited US investors. 7.1% APY is not a bad return, but we would still be behind on inflation rates. Other coins offer higher rates: Synthetix (SNX) yields a whopping 14.05% and Polkadot (DOT) earns 9.02%. With any coin, though, price volatility can quickly eat away at any earned interest.
Pros:
- A few projects offer > 8% interest
- All stable coins offer 7.1% APY
Cons:
- Manual bank transfer subject to 0.5% fee vs. a 0.1% ACH fee
- Vague about how they securitize loans
Nexo
Similarly to Celsius, Nexo also advertises high interest rates up front; however, you need to earn interest in their native coin to get higher rates. Again, this is not available to US based customers, so we’re stuck with the lower interest rates. Nexo does not offer ACH deposits, so you must use expensive wire transfers or fund from an external wallet. It is difficult to fully assess Nexo at the moment as they are restructuring their Earn program. We do believe, however, there are better returns to be found on other platforms.
Pros:
- 300+ pairs to swap between
Cons:
- Ongoing restructuring of Earn
- Only way to deposit USD is through wire transfer
CoinLoan
CoinLoan has some interesting perks as a loaner. Firstly, their collateral requirements range from 140% up to 500%, as seen here. The borrower is incentivized to post more collateral through decreased interest rates, which means your money is fairly well protected. They also do not charge any deposit or transfer fees, and their payout interest rates are some of the highest around. In addition, Stablecoins have a solid 12.3% APY, and many other coins—Bitcoin, Ethereum, Cardano—pay 7.2% APY. Their offerings can all be found here. Unfortunately, it appears as though they do not support exchanging USD for crypto on their platform. This may change in the future, but in the meantime, it could be worth funding with USDC from a different exchange.
Pros:
- High APY on both stablecoins and traditional coins
- Very high collateral requirements
Cons:
- No USD exchange ability; no ACH
Gemini
Gemini would be one of our top selections due to their ease of use and moderate interest payments. Customers can transfer money for free using ACH deposits. Once funded, you can purchase Gemini USD coins (GUSD) with no exchange fee. Placing these coins into Gemini Earn can earn a solid 8.05% APY, which surpasses the ever important inflation threshold. The downside to Gemini is their loan collateral requirements. We prefer to mitigate our risk, and it does seem to be a riskier place to park some cash. The terms and conditions of Gemini Earn read as follows:
All lending by you through our Program will be on an unsecured basis. We will not collect or hold collateral from Borrowers, nor maintain any collateral account for your benefit.
Gemini Earn legal agreement
In other words, Gemini does not guarantee your loaned money is protected from default risk. Though other exchanges have higher collateral requirements for more secure loans, Gemini excels with its $0 GUSD fees.
Pros:
- Up to 10 free transfers per month
- GUSD free to purchase; earn 8.05% APY
Cons:
- Do not require extensive collateral on loans
- Expensive trading fees if not purchasing GUSD
MyConstant
Our number one choice for asset protection would be MyConstant. All loans are backed by 150% collateral, where they allow 70+ coins to be used. If a loan’s collateral drops to 110% of the loan’s value, the entire position is liquidated. Their interest rates on USDC are also incredible: they just recently increased them from 12% to 14% APY on up to $20K. This is by far the highest stablecoin rate that we’ve come across. The only caveat is that MyConstant does not have an exchange, but they do have a token swap. For instance, you can purchase Solana on Binance, send it to MyConstant, and swap Solana for USDC. If this is a hassle for you, their USD interest rates are also very attractive. Just depositing money into the account can yield 4% interest, and you can withdraw at any time. If you agree for them to lock up your money for increasing periods of time, the interest rate scales. 30 day lockup yields 6% APY, 90 days at 6.5% APY, and 180 days gains 7% APY. MyConstant also offers a robust secondary market where you can sell out of loans early.
Pros:
- 14% APY on USDC; 7% APY on USD
- Highly secured loans; lower default risk
Cons:
- No crypto exchange
Summary
We believe the best two platforms are MyConstant and Gemini, though both have different risks and returns. It is important to fully understand them before investing. In addition, CoinLoan seems to be an interesting platform, though we do not currently hold any money on there. P2P lending offers useful diversification to anyone’s investment portfolio, and we are happy to include it in ours.
Disclaimer
Investing in any platform comes with inherit risks, and we at FinTreks are not responsible for any incurred losses. In addition, links to platforms may contain referral codes, which can add benefits to your new account as well as ours.
