Crypto Lending Platforms Interest Rates for January 2023

  • January 25, 2023
  • 5 Min Read

Editor's Pick

Key Takeaways

  • Lending allows you to earn passive rewards on your existing crypto. Lending rewards are typically paid out “in kind,” meaning you receive more of the tokens you are lending out.
  • Rewards for lending vary depending on tokens, platforms, and market conditions, but are normally between 2% - 10%+ APY.
  • Keep in mind that while your tokens are loaned out, you no longer have custody of them. Major lending platforms have collapsed before, so it’s important to choose carefully.

Lending Crypto in 2023: Industry Insights

2022 proved to be a tumultuous year for crypto lenders. Several crypto lending platforms, including giants like Celsius and BlockFi entered Chapter 11 bankruptcy. Others, like Midas Investments, promise a rise from the ashes with better risk management.

2023 could see a meaningful pivot to decentralized lending as many crypto holders grow reluctant to entrust centralized lending platforms with their digital assets. DeFi smart contracts now represent nearly $40 billion in total locked value (TVL).

A rising interest rate environment could boost crypto lending yields in 2023 as rates parallel traditional finance products. Currently, crypto lending rewards lenders with annual percentage yields (APYs) ranging from 1% to nearly 15%, with DeFi now offering some of the strongest returns.

How to Lend Crypto in 5 Steps

Step 1: Choose a lending platform.

Decide whether a centralized platform or a DeFi platform fits your needs. CeFi platforms tend to be less intimidating to use for beginners, whereas DeFi platforms reduce insolvency risk. However, both platform types are easy to use.

Your choice of platform might also depend on the yield for the asset you want to lend.

Step 2: Connect your wallet.

You’ll need to transfer the asset you’re lending to the platform. You can usually use an Ethereum wallet like MetaMask to transfer the asset.

Step 3: Choose a blockchain network.

High transfer fees on the Ethereum network can take the fun out of lending if you’re working with smaller values. Some platforms, such as Aave, let you use Polygon and other networks that offer lower fees for transfers. MetaMask supports multiple Ethereum-compatible networks.

Step 4: Choose an amount to lend and make your deposit.

Decide how much (and which asset) you want to lend. Then follow the platform instructions to make your deposit from your crypto wallet.

You may also have the option to earn a yield or bonus in tokens, such as the MATIC token. In most cases, you’ll start earning as soon as you make your deposit.

Note: Some platforms may require a lockup period. Lock-up requirements often mean higher yields, but you won’t be able to access your funds during the lock-up period.

Step 5: Earn your yield.

If the platform pays all or some of your yield in tokens, consider whether you want to keep the tokens or trade them for another asset. Staking may also be an option.

Quick Sip

Centralized finance vs. decentralized finance:

Centralized finance (CeFi) - In CeFi, executives drive the decisions and lending criteria. Lenders on the platform may not know which risks exist behind the scenes. On the plus side, centralized lending platforms are often easy for beginners to navigate.

Decentralized finance (DeFi) - In Defi, math and computer programs called smart contracts replace executive decisions. A smart contract is just a series of switches that get triggered when certain conditions are met. These contracts can be hard-coded with requirements (such as over-collateralization) that make lending safer. Open source code also makes smart contracts transparent.

Where to Lend Crypto

Crypto lending is supported by dozens of different platforms. Each platform has different terms, supported assets, and rewards, so it’s important to look through several platforms before choosing one. Below we list our top picks for crypto lending platforms:

CeFi Crypto Lending Platforms

1. Nexo (For non-US users)

Nexo is one of the biggest crypto lending platforms and provides some of the highest APYs on loaned funds. Nexo leans heavily on their native NEXO tokens, which provide additional lending returns for users. If users opt to receive their APY rewards in NEXO tokens rather than in the token they lent out, the platform rewards them with an extra 2% APY bonus.

Quick Sip

Token values can see wild swings. If all or part of the yield is paid in tokens and the token value falls, real-world yields take a hit. Also, check to be sure there’s a market for the tokens.

Why lend with Nexo?

  • Holding NEXO tokens enables the higher tiers of APY earning.
  • The platform offers daily interest payouts.
  • Receiving payouts in NEXO tokens confers a 2% APY boost to loaned funds.
  • Nexo features $775M in insurance for deposited client funds.
Supported TokensInterest Rate RangesUSA Customers?Lockup PeriodWithdrawal FeeGenerates Yield Through
NexoBTC ETH SOL XRP + more1.5% - 16%NoFixed Term loans are either 1 or 3- month lockups FLEX Term loans have no lockup period1 free crypto withdrawal per month + a variable transaction fee for any additional withdrawalsProviding overcollateralized loans.

Learn more about Nexo by reading our full Nexo review, or start lending at Nexo now.

DeFi Lending Platforms

Interest Rate Range0.01% - 1.56%0.01% - 14.98%
Blockchains SupportedEthereumEthereum Polygon Avalanche Fantom Harmony Arbitrum Optimism
LTV WBTC - 70% ETH - 82%WBTC - 70% ETH - 82.5%

1. Compound

Compound is a DeFi platform that allows lenders to loan crypto out directly to borrowers.

As a DeFi platform, Compound is a platform of smart contracts that match up lenders and borrowers. All loans originated through the platform are funded by individual lenders looking to earn yield on their crypto. Compound makes sure the necessary collateral is set aside for each loan, and they pass on interest earnings to the lender.

Why lend with Compound?

  • The decentralized nature of the protocol means they are much less likely to halt withdrawals during market volatility.
  • Compound is community led through the COMP governance token, which allows token holders to vote on the future of the protocol.
  • No identity verification requirements.
  • No restricted countries where the protocol is unavailable.
Supported Collateral AssetsInterest Rate RangeBlockchains SupportedLTV

Learn more about Compound by reading our full Compound review, or start lending at Compound now.

2. Aave

Aave is a DeFi platform that connects buyers and sellers and lenders and borrowers.

Similar to Compound, Aave is a DeFi platform that maintains a series of smart contracts which execute the platform’s functions. These functions include trading, lending, borrowing, staking and more. Aave has a strong ecosystem with a wide range of supported cryptocurrencies and blockchains.

Quick Sip

DeFi without risk? There’s no such thing, actually. But Aave does offer a Safety Module, an investor-funded insurance pool that insures against shortfall events, like smart-contract bugs or slow liquidations that result in a loss.

Why lend with Aave?

  • Lots of supported cryptocurrencies.
  • A wide range of supported blockchains.
  • Highly innovative protocol with features such as flash loans.
  • Strong history with no reported security incidents.
Supported Collateral AssetsInterest Rate RangeBlockchains SupportedLTV

Learn more about Aave by reading our full Aave review, or start lending at Aave now.

  • How Does Crypto Lending Work?

    Expand to learn more

    Crypto lending refers to the process of taking deposited crypto from one party (the lender) and loaning it out to another party (the borrower). Unlike traditional loans, which are usually done by a centralized institution like a bank, crypto loans are typically between individuals on either side of the loan. You can also lend NFTs.

    Lending platforms connect you to borrowers by allowing you to deposit the crypto you would like to lend out and then lending it out on your behalf while providing you with yield over time. This yield is normally fixed and starts accruing immediately, so you don’t need to wait for your money to actually be loaned out to start earning.

    Lending through DeFi (decentralized finance) platforms is also an option for the more advanced user. These platforms allow you to lend tokens out directly to borrowers via smart contracts, and you earn rewards directly when your crypto gets borrowed. Reward rates for DeFi lending typically fluctuate by the second and are much less stable than lending through a centralized platform.

  • What Tokens Can you Lend

    Expand to learn more

    Generally, any cryptocurrency can be lent out as long as there is a borrower for that crypto and an exchange that supports lending of the crypto. As with most financial offerings, the most common tokens are supported for lending throughout most exchanges:

    • BTC
    • ETH
    • USDC
    • USDT
    • SOL
    • ADA
    • XRP
  • Crypto Lending Terms

    Expand to learn more

    When loaning out your crypto, you can set the length of time that you would like your funds to stay loaned out for. During this time, your funds are locked and cannot be withdrawn or used for any other purpose.

    Most platforms allow clients to decide what period of time they would like to loan their funds out for — often, the longer the term, the better interest rate you will receive. Several platforms also provide support for open-term lending where money is not locked up and can be withdrawn at any time — this option, however, may reduce the APY.

    The majority of CeFi platforms use a lock-up term for funds as their default lending option, while almost all DeFi platforms only support open lending.

Quick Sip

Think about price swings and your financial needs before you click the “lend” button. Locked funds don’t seem like a problem until you need to sell (and can’t).

Crypto Lending vs. Staking

Crypto LendingCrypto Staking
Rewards Come from borrowers of your crypto paying interest.Come from the transaction fees of the crypto protocol itself + newly issued tokens.
Leveraged returnsNot available Loaned tokens cannot be used for anything other than earning interest while locked up.Available Use liquid staking to get a derivative token while your underlying tokens remain staked.
Minimums to get startedGenerally lowCan sometimes be high
RisksSince you are often giving your crypto up to centralized platforms to lend out, if these platforms become insolvent or experience liquidity issues, your funds may be at risk. Staked funds are ultimately delegated to chain validators who themselves have to perform well, or they run the risk of having the delegated tokens slashed by the protocol.

Crypto lending is different from crypto staking since lending rewards come from interest paid out on crypto loans. Staking rewards, on the other hand, come from network fees and newly issued tokens from the network.

  • Crypto Lending Taxes

    Expand to learn more

    APY rewards earned from lending out your crypto are subject to taxes. These earnings are treated as income and are taxed based on the value of the cryptocurrency at the time you receive your earnings.

    Remember, any time you sell cryptocurrencies, you are also incurring a tax based on the amount your tokens have appreciated or depreciated since you obtained them. If your APY earnings appreciate over time, you will be subject to a capital gains tax on this appreciation.

    Find out more about crypto taxes here.

  • OTC Crypto Lending

    Expand to learn more

    Over-the-counter (OTC) lending is a special tier of crypto lending that caters to clients deploying large amounts of capital. OTC lending platforms normally work with clients directly through account specialists and provide premium, unadvertised APY rates for corporations, banks, and high-net-worth individuals looking to lend out crypto.

    Here are our top pick for OTC lenders:

Pros and Cons of Lending Crypto


  • Earn a yield well above bank rates in many cases
  • Create additional income streams to build your crypto portfolio
  • Open to anyone, regardless of location (DeFi only)
  • Start small if you prefer


  • Loaned assets could be lost if the platform fails
  • Can’t sell locked assets during market volatility or if news dictates a change
  • A borrower could default on all or part of the loan (risk largely limited to CeFi lending)

Risks of Crypto Lending

CeFi Risks

  • Exchange security: Any money deposited into a centralized exchange will carry with it the risk of security compromises to the platform. This is a rare event for most platforms, and a lot of them have insurance policies set aside which will cover client funds in the event of a breach, however, it is something to keep in mind.
  • Platform insolvency: The volatile nature of crypto markets means that even some of the biggest names in the space are just one big crash away from bankruptcy. In 2022, crypto lender Celsius made headlines when they announced they were halting all client withdrawals from their platform and then filed for bankruptcy, leaving many investors scrambling to recover their funds.
  • Regulatory risk: New crypto regulations from various countries are always coming out, and centralized platforms have to abide by these rules or face getting shut down. New laws may make certain crypto trades limited to accredited investors, which previously were not, or they may re-draw jurisdiction lines, so certain features or even entire platforms are no longer available.

DeFi Risks

  • Vulnerability exploits: The DeFi world is incredibly efficient in processing millions of transactions with no human intervention, however, the code underlying it all is not impervious to hacks. While the biggest DeFi protocols have a strong history of withstanding attacks, it’s important to remember that any time you connect your wallet to a new service, you are opening your wallet up to exploiters if the service gets hacked at some point in the future.
  • Fraud and shady actors: The crypto world is full of scammers looking to steal your hard- earned coins. The more you use different exchanges, the more likely you are to become the target of phishing attacks and other social engineering schemes. It’s important to always be on high alert, always check the URLs of the sites you are visiting, and never give your passwords or seed phrases away.

Should You Lend Crypto?

Every activity that pays a yield suggests risk. That risk could be a simple opportunity cost, meaning that you could use the funds for something else, but they’re locked. The risk could be a default, meaning that part or all of the funds you lend might not be paid back.

Another consideration, especially with fast-moving crypto, is market volatility. Depositing your funds into a lending protocol or platform could make you less nimble when big price swings come along.

While some platforms, such as Aave, offer various types of insurance, there’s no government safety net, like FDIC insurance for bank depositors.

Yields range from less than 1% to over 10%, depending on the asset, platform, and market conditions. In some cases, you can make a meaningful return, but it’s important to weigh the risks and whether lending fits your investment goals.

  • Do you trust the platform or protocol?
  • Is the yield high enough?
  • Is the yield too high, possibly signaling risk?
  • Do you have to lock up your funds?
  • Do you feel comfortable holding the asset you're lending through market swings?
  • Is there a chance you’ll need the funds for another purpose?
  • Has the platform had security issues in the past?
  • Is the platform well-established?
  • Do the loans have enough collateral?

Crypto lending can be a powerful tool to build your portfolio, but it’s not a fit for every financial situation. If you think you want to try lending, consider investing a small amount to become familiar with the process while building real-world experience regarding the risk/reward balance for lending. If it’s a fit for your investment style, you can increase your investment over time.

Frequently Asked Questions

  • What’s the difference between crypto lending vs. staking?

    Expand to learn more

    While they both provide APY, lending and staking are fundamentally different.

    Crypto lending allows you to loan out your tokens to borrowers who then pay interest on these loans. You earn a portion of this interest in the form of APY on your loaned deposits.

    Staking income comes from the transaction fees of the protocol itself. Staking is used to validate the state of the blockchain, and stakers are rewarded with a portion of the protocol’s transaction fees.

  • What are the risks of crypto lending?

    Expand to learn more

    Platform insolvency, vulnerability exploits, regulatory changes, and financial scams are all risks associated with crypto lending.

    Before loaning out your money, always make sure the platform has a large amount of deposited money and state-of-the-art security. It’s also important for platforms to demonstrate that they are able to react to government regulations changing. Finally, beware of scams that may target you with the intent to take your private keys and steal your funds.

  • What crypto tokens can you lend?

    Expand to learn more

    Almost all lending platforms support major tokens like BTC, ETH, SOL, DAI, and USDC. Theoretically, every crypto asset can be loaned out as long as there is a platform connecting lenders and borrowers of that asset.

  • Is crypto lending profitable?

    Expand to learn more

    Most crypto assets earn anywhere between 3% and 10% APY when loaned out. Compared to the yield in traditional bank accounts, lending is a gold mine, but it also comes with a higher risk profile.

  • Which crypto lending platform is best?

    Expand to learn more

    Nexo offers a solid option for international users due to their tiered earnings based on Nexo tokens. If you prefer the decentralized world, Aave provides a vibrant market with support for multiple blockchains to keep transfer costs as low as possible.

  • How do you earn from lending crypto?

    Expand to learn more

    Earning by lending crypto is as simple as depositing your crypto to a lending platform. The platforms themselves lend out your tokens to borrowers and handle repayments. Your money will automatically accrue interest as long as it is loaned out.

  • Can you borrow against your crypto?

    Expand to learn more

    Yes, you can take out a loan in a fiat currency or a cryptocurrency by depositing your existing cryptocurrency as collateral and borrowing against its value.

  • Is crypto lending taxable?

    Expand to learn more

    Interest earned on loaned funds is generally considered income and is taxed as such based on the value of the tokens when they are received. Additionally, as with all cryptocurrencies, when tokens are sold, a capital gains tax is incurred.


  • Avatar of George Hristov

    George is a tech writer interested in web3 startups and communities. In the dynamic world of crypto, he stays plugged in to the day-to-day headlines, deep dives, and industry commentary.

  • Avatar of Shannon Ullman

    Shannon Ullman is a senior editor for Shannon specializes in cryptocurrency and personal finance. Her work has appeared in publications like The Motley Fool and Insider.