Bitcoin Lending: Best Platforms & Interest Rates 2025

Key Takeaways for 2025

• Lending Bitcoin is a good way to earn passive income while retaining ownership of your tokens.
• The yield earned when you lend Bitcoin tends to be lower than the yield on lending stablecoins, but it’s still worth it for many BTC holders.
• Centralized exchanges make BTC lending easy, but to lend BTC through DeFi, you can use "Wrapped" Bitcoin (WBTC), which can be traded on smart-contract networks like Ethereum, Arbitrum, Polygon, or Solana.

What Is Bitcoin (BTC) Lending?

Bitcoin lending is when you lend out your BTC and receive interest payments on your loaned funds. Just as in the traditional finance world, some people have assets they want to put to work, and some people want to borrow. Crypto lending platforms act by pairing lenders with borrowers so you can lend your crypto while managing your risk.

How Does Bitcoin Lending Work?

Bitcoin lending, similar to traditional lending, is normally done through centralized institutions that act as intermediaries by finding borrowers for your loaned funds. These platforms will then pass on the interest of these loans to you as yield rewards (after taking an intermediary cut, of course - again, similar to traditional loans).

Any time you lend your Bitcoin out, you will earn interest on it in the form of Annual Percentage Yield (APY). This works similarly to traditional APY savings accounts at banks. However, crypto APYs are normally higher than APYs at traditional banks — largely because of the higher risk profile of crypto.

APY accrues during any period of time when your Bitcoin has been deposited to a lending service. To maximize APY, some crypto lending platforms require that your Bitcoin is locked up for some period of time, during which you will not be able to use or withdraw your BTC tokens.

Your loaned Bitcoin is provided to Bitcoin borrowers. Unlike traditional financial institutions, which determine the creditworthiness of a borrower through factors like a credit score, crypto loans require borrowers to deposit collateral to guarantee that loans can always be repaid.

This means that you won’t have to worry about losing your loaned funds in the case of borrowers defaulting since the crypto loans originated with your funds are almost always entirely secured by collateral.

Next up: How to make money with Bitcoin lending. Let's start by choosing a platform.

How To Pick A Bitcoin Lending Platform

Not all crypto lending platforms are built the same. While they all provide some return on invested tokens, there are major differences in APYs, lockup terms, supported crypto assets, and a host of other factors.

Some of the main things to keep in mind when selecting a Bitcoin lending platform:

• Interest Rates (APY): Each platform will offer a different APY for your loaned crypto. It’s important to compare these rates and weigh them with your other considerations.
• Fees: As intermediaries, lending platforms will take a cut when lending out your funds. These fees are often baked into the interest they pay out and are not always explicitly displayed as fees. It is important to compare any platform costs, however, and be aware that higher APYs may have hidden fees lurking.
• Platform Reputation: When you loan out your crypto, you are entrusting it to a third party to custody it. Any time your funds leave your wallet, it’s important to consider the security of the platform holding your funds. While rare, platform instability can sometimes wipe out deposited client funds.
• Yield Terms: Each platform has its own schedule for paying interest yield and handling new inflows of funds. Some pay interest once a month or once a week, while others process interest payouts daily. Some platforms allow more funds to be added to your crypto lending account at any time, while others only allow this during certain periods.
• Lockup Requirements: Some platforms require you to lock up your crypto for a fixed amount of time while it’s being loaned out. Usually, lockup periods provide a higher APY compared to crypto lending terms, where crypto can be retrieved at any point.

What Bitcoin Lending Terms Are Available?

The Bitcoin lending rates or APY of your loaned Bitcoin will often depend on how long your funds are being loaned out. This length of time is known as the loan “term” and can either be predetermined or freely decided by you, depending on which platform you use to lend your crypto.

On some Bitcoin lending platforms, your loaned funds will be subject to a lockup period during which you will not be able to withdraw or use your BTC for any purpose. At the end of the crypto loan term, your funds will be released. During predetermined loan terms, some platforms will distribute interest yield that is available to withdraw immediately even while the principal of your loan is still locked up.

Crypto Lending platforms that do not require a lockup allow you to deposit or withdraw your BTC at any point. Whenever your tokens are deposited on these platforms, they start earning interest immediately, and whenever you withdraw them, they stop earning.

Risks Of Lending BTC

As with any yield-bearing activity in crypto — or in traditional finance — there is no reward without some risk. The main risks of lending out your crypto are:

• Asset Lockup:Many crypto lending platforms impose a lockup period on your crypto. This means that any time your assets are loaned out, they cannot be withdrawn or sold. Lockups can be a disadvantage during significant market moves when you may be able to sell your crypto to realize gains greater than the crypto lending APY, or — in the case of large negative price moves — when you may need to sell to limit your downside. For this reason, lending digital assets just to receive the APY is not always a good idea, as the unpredictability of the market can quickly erase any projected profits.
• Platform Risk: The crypto space is notorious for platform hacks and insolvencies. There are numerous crypto lenders — even some of the biggest companies in the space — who have experienced severe loss of client funds and temporary insolvencies. There have even been large lenders who have gone bankrupt and taken client funds with them. Unlike traditional finance, where bank account deposits are secured by governments, in crypto, your funds are never fully guaranteed. This is true regardless if you're using a centralize or decentralized lending platform.
• Regulatory Concerns: The regulatory landscape for crypto lending is always evolving. Given how new the space is, there is still a lot of room for sweeping legislation that makes crypto lending unviable or requires traders to be registered as accredited investors. It’s not far-fetched to consider that there may be some situations where the regulatory environment under which you loaned your crypto is different from the one you find yourself in by the time your crypto loan term expires.

Top Bitcoin Lending Platforms

Below are our top 2 picks for the best Bitcoin lending platforms. The table below compares and contrasts these centralized platforms.

Pros And Cons Of Lending BTC With Aave

Aave is the largest crypto lending platform. Forget crypto lending, Aave is the second-largest protocol in DeFi beating Lido (in terms of TVL). If you haven’t heard of Aave, you need to roll your socks up.

That being said, there’s a large chunk of people who have heard of Aave but don't know exactly what they really do. That’s alright, we got you.

Simply put, Aave is the go-to place if you want to lend or borrow crypto.A lot of other crypto lending platforms offer only a few assets but not Aave. From majors (like Bitcoin and Ethereum) to stablecoins (like $USDT or $USDC) to even DeFi coins (like $UNI and $MKR), Aave has got you covered.

How To Lend BTC Via Aave

Step 1: Navigate to the Aave website

Step 2: Click "Open App" in the top-right corner.

Step 3: You will then be redirected to the Aave dashboard.

Here, click “Connect Wallet” (in the middle of the page or top right).

Step 4: A popup will appear displaying all available wallets on your browser.

Choose your preferred wallet. We will go ahead with Coinbase Wallet.

Don’t have a wallet? Select “I don’t have a wallet” to get set up.

Step 5: Click on “Connect” in the pop up prompted by the wallet.

Your wallet is now linked to Aave.

Step 6: Everything before this was just the set-up, we’ve now finally reached the lending bit.

Choose the network you want to lend on. You can do this by clicking on the dropdown next to “Core Instance”.

Here, you can choose the network and the version (v3 or v2).

We will be using “Core” (aka Ethereum main chain) and Version 3 (v3).

💡 Tip: If you hold $WBTC on Arbitrum, use that instead—it’s much cheaper.

Step 7: Under “Assets to supply”, click on “Supply” next to WBTC.

Note the APY it is offering - just 0.03%.

Step 8: Enter the amount of $WBTC you want to lend. You’ll see:

APY: 0.03%

Gas Fees: ~$3.17 (steep because it’s on the Ethereum network)

Step 9:Click “Approve WBTC to continue”. Once approved, hit “Supply WBTC”.

After approving the transaction on your wallet, you have now successfully lent $WBTC on Aave. Congrats!

Read our full review of Aave.

Nexo

Nexo is one of the most forward-thinking companies when it comes to crypto lending and borrowing. Their Bitcoin lending rates start at4% APY and go up to as high as7% for holders of the $NEXO token. These holders take their APY rewards in $NEXO token and lock up their Bitcoin for at least 1 month.

NEXO Token

The core of the Nexo ecosystem is their platform-native $NEXO token. The platform provides several loyalty tiers for NEXO holders depending on how much of their portfolio is in NEXO tokens. These rewards range from higher APYs on lending to better terms when borrowing and a whole host of other platform-specific benefits.

Below is a breakdown of the $BTC lending rates for different tiers of NEXO holders:

As shown in the table above, APYs are higher when $BTC is locked up for a longer period of time and when interest is paid out in NEXO tokens rather than in $BTC. Your Nexo loyalty tier — which is determined by what percent of your Nexo portfolio is in NEXO tokens — also makes a big difference on payouts. After optimizing for all of these factors, your Bitcoin APY can be as high as 7%.

It’s important to note that when choosing to receive your interest payouts in $NEXO rather than in-kind (in $BTC), you are exposing yourself to the price volatility of the $NEXO token. This means that while you net a higher interest rate, your overall earnings may be lower if the $NEXO token price drops significantly. This exposure also applies when you buy NEXO to upgrade your loyalty tiers. As with all financial yield, greater reward comes with greater risk, so keep this in mind when weighing your options.

Pros And Cons Of Lending BTC With Nexo

How To Lend BTC Via Nexo

Step 1:Head to https: //nexo.com/ and sign in or create an account.

Step 2: If you just created your account, you'll need to submit some personal information for KYC (Know Your Customer)

Step 3:Head to theAssets section of your dashboard and select BTC– you’ll see the specific interest rate that Nexo offers.

Step4: In order to lend $BTC on Nexo you need to click on the "Transfer" button.

Read our full Nexo review.

In case Nexo isn't available in your country, here's another centralized lending option that you can consider:

SALT

Visit SALT

On SALT's site

Review

4.4

Tokens Available

$BTC, $ETH, $LTC & MORE

APY Range

Up to 15%

Where Available

Worldwide

Overview

Specialised in Bitcoin-based lending and borrowing, SALT is a platform that lets you lend / borrow cash or other cryptocurrencies using your Bitcoin as collateral. Been in the space since 2016, individuals and business alike have trusted SALT to go about their $BTC lending and borrowing business.

Why Lend with SALT?

• The original provider of Bitcoin-backed loans
• Attractive APYs
• Wide range of assets

BTC Lending And Taxes

Crypto lending is similar to a money market in traditional finance. The interest you receive from lending Bitcoin is taxed as regular income. Many centralized lending platforms will track your profits and provide you with organized tax documents at the end of each year, which will allow you to easily report your income from lending.

To better understand your tax liability when you lend Bitcoin, let’s look at a specific example.

If you lend out$20,000 worth of Bitcoin at a yearly APY of3%, you will end up with$20,600after12 months (ignoring Bitcoin price fluctuations).

In this case, you have earned$600 in interest.

The IRS treats this$600 as income, and it will be tacked on to the rest of your income for the year. Depending on your tax bracket, you will pay a marginal tax rate on this$600, along with the rest of your income accordingly.

Bitcoin appreciation also incurs a capital gains tax when Bitcoin is sold. Keep in mind that you are also liable for taxes on the amount that your crypto lending yield has appreciated in price after you have received it.

DeFi BTC Lending

You can lend your Bitcoin through centralized exchanges (like Nexo) or via decentralized exchanges (like Aave). In DeFi, you are still lending crypto assets to borrowers, however, you are lending more directly and without going through an intermediary.

The only third party you go through is a DeFi platform that finds borrowers for your funds, facilitates the transaction, and ensures each party holds up their part of the deal.

In DeFi BTC lending, Bitcoin lenders lend $BTC through a lending pool, much like a money market. Borrowers borrow crypto assets from the pool as needed, paying interest on the borrowed Bitcoin. You'll earn interest that varies based on borrowing demand relative to the supply.

DeFI platforms are automated and governed by code in the form of smart contracts written on the Ethereum blockchain or another smart-contract blockchain.

It’s important to note that in order to trade $BTC through DeFi, you will need to convert it to “wrapped” Bitcoin (WBTC). WBTC is an Ethereum-compatible token that represents Bitcoin. The price of $WBTC is usually the same as the price of $BTC so its an accurate proxy for the $BTC asset.

As an option, you can buy wrapped Bitcoin on an exchange like Coinbase — or you can swap other cryptos like ETH for WBTC on decentralized exchanges like Uniswap.

Once you have Wrapped BTC, you can lend the WBTC on platforms like Coinbase or Compound if you choose. You're lending Bitcoin as a token rather than BTC itself.

Is Bitcoin Lending Safe?

Lending Bitcoincan be relatively safe, but don't start clicking buttons just yet. There are several considerations to weigh before you lend Bitcoin.

There are also some ways to mitigate potential risks, depending on whether you use a centralized Bitcoin lending platform or choose the DeFi route.

Centralized Bitcoin Lending Platforms

• You don't have custody of your Bitcoin. When your lend $BTC through a centralized lender, you have to send your $BTC to the platform. This means you might not be able to withdraw quickly. Crypto lending platforms often require you to commit to a lending term — and the lender could pause withdrawals (or file for bankruptcy).
• Market volatility can cause a loss. Most centralized Bitcoin lending platforms require collateral for the loan, but if the collateral crashes in price, the lender may be unable to sell the collateral quickly enough. The result: you might get less than 100% of your loaned funds back.

Do your research before you transfer your BTC to a third party. Also, consider how much of your Bitcoin you want to lend. It may be wiser to lend a small portion of your BTC rather than your whole stack.

Decentralized Bitcoin Lending Platforms

• Smart contract exploits can cause a loss. DeFi lending platforms let you lend Bitcoin by committing $WBTC to a smart contract, which is just computer code that runs on the blockchain. Exploits against the code itself or against other smart contracts with which the code interacts can cause losses for lenders in a number of ways.
• Oracles are sometimes slow to report prices. An oracle is a connection with the outside world that brings in price data for crypto lending smart contracts. This price data tells the contract when it's time to liquidate the collateral to pay a crypto loan with a low health factor. If the data is slow, liquidations may not happen on time, and lenders could suffer a loss.

Before you connect your wallet to a DeFi crypto lending platform, check to see if the code has been audited and by whom. You can usually find the information on the app's website itself or on Discord if the app maintains a channel.

As with centralized lenders, it's often best to dip a toe in the DeFi lending water rather than dive in head first. Consider diversifying to earn a yield through multiple sources instead of betting it all on one Bitcoin lending platform.

To Sum It Up

Lending Bitcoin is a great way to earn some passive income on your Bitcoin. It’s not without risks, however, and it’s important to weigh your risk tolerance when considering different lending platforms.

$BTC Lending can be a good idea when you have unused Bitcoin sitting around, and you are confident that the price of it will not fall significantly. Keep in mind that, on some platforms, once you loan out your Bitcoin, you will not be able to move it out until the lending period is over.

Frequently Asked Questions