Best Ethereum Lending Platforms February 2023

Live Ethereum lending rates for February 8, 2023

3 results with an average rate of 2.29% APY

Nexo

$83.79

mo earnings

Exact rate for 10 ETH ($16,758.80)

More information

Milk Road calculates your exact lending rate using live data feeds from each lending platform.

We show you exactly what you will earn instead of basic teaser rates which may only apply to smaller lending balances.

ClickRate breakdownto see full details.

6% APY

Rate breakdown

Rate breakdown

  • 0.00 - $100,0006%
  • $100,000+3.5%

Nexo, founded in 2018, is one of the world's leading Ethereum lending platforms. Nexo supports over 5M users in 200+ countries, but does not permit USA customers.

Aave

$19.10

mo earnings

Exact rate for 10 ETH ($16,758.80)

More information

Milk Road calculates your exact lending rate using live data feeds from each lending platform.

We show you exactly what you will earn instead of basic teaser rates which may only apply to smaller lending balances.

ClickRate breakdownto see full details.

1.37% APY

Aave is a DeFi protocol that supports lending of Ethereum-based assets. Users can lend ETH by connecting their wallet and depositing funds, and will instantly begin accruing interest income.

Compound

$0.81

mo earnings

Exact rate for 10 ETH ($16,758.80)

More information

Milk Road calculates your exact lending rate using live data feeds from each lending platform.

We show you exactly what you will earn instead of basic teaser rates which may only apply to smaller lending balances.

ClickRate breakdownto see full details.

0.06% APY

Compound is one of the largest DeFi protocols for lending Ethereum. Users simply connect their wallet to Compound and supply Ethereum to the lending pool to immediately begin accruing interest.

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How to earn interest on Ethereum by lending

  • January 4, 2023
  • 3 Min Read

Key Takeaways

  • Loaning your ETH out is a good way to earn passive income while still retaining ownership of your tokens.
  • ETH lending is just one way of earning from your ETH and has pros and cons when compared to other yield-bearing methods like ETH staking
  • ETH can be loaned out through centralized lending platforms or via DeFi protocols. We cover both methods on this page

What is Ethereum (ETH) Lending?

If you hold Ethereum, you can lend your ETH to earn yield rewards. The ETH you lend is borrowed by anyone looking for crypto loans. Borrowers then pay interest on these loans, which is what makes up the yield you receive for loaning your funds.

  • How Does Ethereum Lending Work?

    Expand to learn more

    Ethereum loans use a peer-to-peer system where lenders on one side lend money to borrowers on the other. Borrowers then pay interest to the lenders, thus compensating them for loaning out their funds. This is in contrast to traditional finance, where fiat currencies are issued by governments and then distributed through banks in the form of loans.

    Crypto lending platforms connect lenders and borrowers, custody assets, ensure both parties hold up their end of the deal and provide additional rewards to incentivize use of their platforms. To make lending easy, these platforms often set fixed lending interest rates.

    The interest earned on lending is known as Annual Percentage Yield (APY). Lending platforms also have different terms, which may include lockup periods that require your funds to stay illiquid while they’re being lent out.

    Another difference between traditional lending and crypto lending is that crypto loans are almost always overcollateralized loans. While traditional lending platforms consider factors like credit score when issuing loans, crypto platforms require that borrowers put up collateral that exceeds the amount they are looking to borrow.

    This allows borrowing without credit and identity checks and gives lenders peace of mind knowing that their loaned funds are secured by collateral from the borrower.

    Ethereum can be loaned out either through centralized (CeFi) companies or through decentralized finance (DeFi) protocols. The centralized companies guarantee a certain base APY and may provide extra features and individualized support, while the DeFi companies simply connect borrowers and lenders and let the market determine APYs in real-time.

Top Ethereum Lending Platforms

Here are our picks for the top Ethereum lending platforms.

Assets SupportedAPY Range for ETHYield Withdrawals TermsYield Payout TermsLockupsUS AvailabilityAbout the CompanyYield Generated Through
Cake DeFiBTC ETH USDC USDT2.5% to 5%* *The Cake DeFi “Earn” product offers yields up to 10% but is riskierYield can be withdrawn at the end of every batch (every 4 weeks)Paid out in the token you lent (in-kind)4 weeksYesCake DeFi was founded in 2019 and is based in SingaporeCharging fees and interest on loans secured through institutional partners Sparrow and Signum Capital
NexoBTC ETH SOL + more4% to 8%Nexo offers daily interest payoutsChoose between earning interest in NEXO tokens or in the token you lent (in-kind)Choose between no lockup, 1 month lockup, or 3 months lockupNoNexo was founded in 2018 and is based in SwitzerlandOriginating overcollateralized loans

Cake DeFi

Lending ETH on Cake DeFi
Assets SupportedAPY RangeYield Withdrawals TermsYield Payout TermsLockupsUS AvailabilityAbout the CompanyYield Generated Through
Cake DeFiBTC ETH USDC USDT2.5% - 5%* *The Cake DeFi “Earn” product offers yields up to 10% but is riskierYield can be withdrawn at the end of every batch (every 4 weeks)Paid out in the token you lent (in-kind)4 weeksYesCake DeFi was founded in 2019 and is based in SingaporeCharging fees and interest on loans secured through institutional partners Sparrow and Signum Capital

Cake DeFi is one of the few crypto lending platforms available to investors in the US. The sign-up process requires you to go through a know-your-customer (KYC) process, and once your identity is verified, you have access to Cake DeFi’s lending, borrowing, earning, and other products.

  • Lending on Cake DeFi

    Expand to learn more

    Batch Lending

    The Cake DeFi platform takes a unique approach to lending by using their “batch” system. All funds lent through the platform go into one of several parallel “batches.” These batches have a fixed term of 4 weeks, during which time the funds in the batch are lent out and cannot be withdrawn. At the end of the batch term, your funds are available to withdraw along with accrued interest.

    New batches are started every week, and you must wait for a batch to start in order to loan out your funds. Each batch guarantees a certain “base APY” that is paid out regardless of how the price of Ethereum performs during the batch period.

    APYs can also be greater than the base APY if ETH goes up in price during the duration of the batch. The bonus APY rewards are 3.75% if ETH appreciates approximately 20% during the batch term and as much as 5% if ETH appreciates significantly more during the batch term.

    Below is a visual of the Cake DeFi lending interface that displays the batch start and end times as well as the quantity of funds committed to the batch. Funds can be added any time up to the starting point of the batch as long as the batch has not reached its funding limit (displayed below).

    Lending ETH

    Cake DeFi Earn

    The platform provides an “Earn” product which offers returns up to 10% on your invested Ethereum funds. According to Cake DeFi, the Earn offering is a combined lending and liquidity mining product that generates higher yields.

    Liquidity mining is a process of providing your ETH as liquidity to traders looking to trade assets for ETH. Keep in mind that this means Cake DeFi’s Earn feature is not purely lending and thus incurs a larger risk for deposited funds.

    Pros

    • Support for traders in the US
    • Earn product provides APYs of up to 10%
    • No extra fees, all costs are included in the APY

    Cons

    • 4 week lockup on your deposited ETH
    • ETH APY is not as high as some other platforms
    • Interest doesn’t start accruing immediately — you have to wait for a batch to start

    Read our full Cake DeFi review.

    How to Lend ETH Via Cake DeFi

    Step 1: Navigate to the Cake DeFi website and log in or sign up if you don’t have an account.

    Lend ETH with Cake DeFi

    Step 2: After entering your account, head over to the “Lending” option under “All Products”. This dashboard will show you the four assets available on the platform as well as their expected APY and batch information.

    Lending ETH with Cake DeFi

    Step 3: To learn more about Cake DeFi’s unique “batch” approach to lending, click the “Details” button. It’s critical you understand how this works before proceeding.

    Lending ETH with Cake DeFi

    Step 4: After you’ve reviewed the lending documents, click the “Enter” button under “ETH Lending” to begin the process of lending your ETH. Specify how much ETH you would like to lend, and after completing the process, your ETH will be lent out.

    Lend ETH with Cake DeFi
    Lend ETH with Cake DeFi

Nexo

Lending ETH with Nexo
Assets SupportedAPY RangeYield Withdrawals TermsYield Payout TermsLockupsUS AvailabilityAbout the CompanyYield Generated Through
NexoBTC ETH SOL + more4% to 8%Nexo offers daily interest payoutsChoose between earning interest in NEXO tokens or in the token you lent (in-kind)Choose between no lockup, 1 month lockup, or 3 months lockupNoNexo was founded in 2018 and is based in SwitzerlandOriginating overcollateralized loans

Nexo is a fully featured crypto platform that maintains an exchange, lending and borrowing capabilities, a card, and a very popular platform-native token called NEXO. In fact, holding the NEXO token is critical to getting the highest APYs available on ETH lending from NEXO, which are between 4% and 8% APY.

  • Lending on Nexo

    Expand to learn more

    The NEXO Token

    The Nexo platform supports a platform-native token called NEXO that is used to provide bonuses across most of the Nexo products. The more NEXO you hold, the better bonuses you receive on products like lending, borrowing, and exchange trading. The platform has several tiers for NEXO holders that are broken down by how much of a trader’s portfolio is made up of NEXO tokens.

    Here is a breakdown of the ETH lending APY by different NEXO tiers.

    Base Loyalty LevelSilver Loyalty LevelGold Loyalty LevelPlatinum Loyalty Level
    NEXO holdings necessaryLess than 1% of your portfolio is in NEXO1% to 5% of your portfolio is in NEXO5% to 10% of your portfolio is in NEXO10% or more of your portfolio is in NEXO
    Base APY for ETH loans4%4.25%4.5%5%
    APY for ETH loans with a 1 month lockup+1%+1%+1%+1%
    APY for ETH loans where interest is paid out in NEXONo bonus+0.25%+1%+2%
    Maximum ETH APY by Level5%5.5%6.5%8%

    As shown in the table above, Nexo’s ETH lending APYs start at 4% and go to 5% if more than 10% of your Nexo portfolio is in NEXO tokens. Opting for a 1 month lockup on your loaned funds, rather than keeping them liquid, also adds a 1% bonus on top of your APYs. Finally, if you choose to take your interest yield in NEXO tokens rather than in ETH, you can earn between 0.25% and 2% more. After all bonuses, your ETH APY can be as high as 8%.

    Please note: Holding NEXO tokens — whether to upgrade your loyalty level or when taking interest payments in NEXO — exposes you to the volatility of the NEXO cryptocurrency. Depending on the price of NEXO, you may or may not be better off than if you had stuck to the base tiers that do not require holding NEXO. It’s important to consider NEXO exposure as a calculated risk rather than viewing boosted APYs as a bonus with no downside.

    Pros

    • NEXO token provides benefits across the entire Nexo ecosystem
    • ETH lending APYs go up to 8%
    • Interest is paid out daily

    Cons

    • Platform not available in the US
    • To get the best APYs, you must hold NEXO which can be a volatile asset
    • Navigating Nexo can be complicated for those newer to crypto

    Read our full Nexo review.

    How to Lend ETH via Nexo

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

    Lending ETH with Nexo

    Step 2: Head to the Assets section of your dashboard and select ETH– you’ll see the specific interest rate that Nexo offers.

    Step 3: Click Top Up on the pop-up menu that comes up after selecting ETH. Select the amount of ETH you want to lend, and you'll start earning interest the next day.

    Lending ETH with Nexo

How to Pick an ETH Lending Platform

Different lending platforms provide different terms and benefits. While most platforms support major crypto assets such as Bitcoin and Ethereum, they often differ in some key ways:

  • Reputation: Using centralized platforms like the ones covered below means that your crypto will be stored in the platform’s crypto wallets. It’s important to pick a platform with a stellar reputation, as you will be entrusting your hard-earned crypto to them for the duration of your lending period.
  • Fees: For providing the lending service, these platforms will need to take a cut. In contrast with other crypto instruments such as borrowing, however, lending platforms will normally have their fees baked into the APY. This means that you won’t be explicitly paying any fees (and many platforms advertise their “zero-fee lending” services), however, the fees are coming out of the APY rewards you receive.
  • Interest Rates (APY): While the demand for crypto assets can be averaged out across the industry, different platforms will provide their own lending interest rates, often providing better APYs than what you can get through DeFi. This is done to encourage users to use particular lending platforms. For many, APY will be the most important consideration when looking to lend.
  • Lockup Requirements: Some crypto lending platforms will freeze your crypto assets while they’re lent out — not allowing them to be withdrawn or used. Many platforms don’t have this restriction, but lockups generally increase APYs, so it’s an important feature to consider.
  • Yield Terms: Different platforms handle yield payouts differently. Some pay out every day, while others only pay yield once a month. Additionally, some platforms will have a schedule of when they allow more money to be deposited for lending, while others allow deposits at any time that are instantly lent out.
  • How to Sign up For an ETH Lending Platform

    Expand to learn more

    Let’s take a look at how to sign up for a lending platform. In this example, we will be signing up for Cake DeFi, which is our pick for a US-friendly ETH lending platform..

    Step 1: Navigate to the Cake DeFi website and log in or sign up if you don’t have an account.

    Lending ETH

    Step 2: After logging in to your account, head over to the “Lending” option under “All Products.” This dashboard will show you the four assets available on the platform as well as their expected APY and batch information.

    Lending ETH

    Step 3: To learn more about Cake DeFi’s unique “batch” approach to lending, click the “Details” button. It’s critical you understand how this works before proceeding.

    Lending ETH

    Step 4: After you’ve reviewed the lending documents, click the “Enter” button under “ETH Lending” to begin the process of lending your ETH. Specify how much ETH you would like to lend, and after completing the process, your ETH will be lent out.

    Lending ETH

  • How to Transfer Your ETH to a Lending Platform

    Expand to learn more

    Step 1: Head to https://cakedefi.com/ and log in or sign up.

    Lending ETH

    Step 2: Search for Ether in the Balances section of your dashboard and click Deposit next to it.

    Lending ETH

    Step 3: Scan the QR code from your mobile phone (if you're transferring from another mobile crypto wallet or exchange) or copy and paste the address displayed on the screen into your exchange or online wallet and transfer Ether to the address.

    Lending ETH

    Step 4: The ETH tokens you transfer will immediately reflect on your Cake DeFi account, and you can deposit it into one of the platform’s yield programs and earn interest of up to 10% APY.

  • What Lending Terms Are Available?

    Expand to learn more

    Your ETH can be lent out for different periods of time. This period of time is known as the loan “term.” Depending on the platform you’re using to lend, this term can be predetermined ahead of time or can be flexible. Some platforms offer lending with no fixed term where ETH can be withdrawn at any time.

    During the loan term, your ETH will normally be subject to a “lockup.” This means that your tokens cannot be withdrawn or used for any other purpose while they are being lent out. During this time, your tokens are earning interest. When your loan term is over, your funds will be released.

    When it comes to interest payments, some platforms will distribute interest earnings that can be withdrawn even while your underlying ETH is locked up. Others will treat your interest and your principal all as one sum that is unlocked at the end of your loan term.

Risks of Lending ETH

Lending Ethereum is a great way to earn a moderate return on your unused ETH funds, however, as with all yield-bearing methods, it is not without risk. Here are some of the major risk factors to consider when loaning out your ETH.

  • Platform Risks: The intermediary platforms used to loan out your ETH are not only there to find willing borrowers for your funds — they also store your funds through their proprietary crypto wallets. This poses a potential security question since, if the platform is exploited through a vulnerability, your funds may be at risk. Additionally, several major crypto platforms have filed for bankruptcy in the past, and some have been unable to return client funds. It’s important to do your research and keep platform risk in mind when picking lending platforms.
  • Volatility of Prices: The crypto markets are always fluctuating in value, sometimes by double-digit percentages in a single day. This amount of volatility poses a price risk to any financial activities — including lending. While you may be earning 5%+ APY on your ETH loan, if, at the end of your loan term, ETH is down by 20%, your loan gains are wiped out by the overall price reduction. For loan platforms that lock up your funds, price volatility is an especially important concern, as you will not be able to sell your ETH if a significant price slide happens during your loan term.
  • Regulatory Uncertainty: Crypto is a nascent space with a lot of open regulatory questions. In the past, there have been landmark regulatory decisions — such as the decision to treat certain tokens as registered securities — that have turned the entire space on its head practically overnight. This existential risk is important to keep in mind when considering lending.

ETH Lending Vs. ETH Staking

Lending and staking are both ways of earning yield on your existing ETH, but that’s about all they have in common. Lending earns yield by loaning out your committed ETH funds to borrowers who pay interest on their loans while staking earns yield by collecting network fees.

Here is a closer comparison of the two earning methods.

ETH LendingETH Staking
Yield Comes FromBorrowers who pay interest on loans that is then passed on to you New token issuance and network fees from the crypto protocol
Leveraged YieldUnavailable ETH that is loaned out earns a fixed yield and cannot be used for anything else while it’s locked upAvailable Methods like liquid staking allow you to double-earn on your staked tokens by combining staking with liquidity mining or lending
Difficulty of Getting StartedLending can take just a few clicksStaking is generally more involved than lending
Associated RisksLoan funds are often custodied by centralized platforms who may be at risk of bankruptcy or have security vulnerabilitiesStaking is most often done by delegating your staked tokens to on-chain validators who have to perform their duties or they risk losing your staked funds
  • ETH Lending Taxes

    Expand to learn more

    The yield you earn from ETH lending is subject to taxes and is treated as income in the eyes of institutions like the IRS. This means that whatever amount you earn in yield is tacked on to your personal income for the year.

    For example, if you lend $10,000 worth of ETH at a 5% APY, your ETH will be worth $10,500 after one year (assuming ETH does not fluctuate in price). This $500 you have earned in interest will be liable to income tax just the same as if you had earned $500 through any other profitable activity.

    While lending yield is taxed as income, crypto gains as a whole are subject to capital gains tax. So if you earn the $500 in yield interest and the price of Ethereum then goes up, your $500 of interest (assuming it was paid out in Ethereum) will appreciate in value. This appreciation is itself subject to capital gains tax.

  • DeFi ETH Lending

    Expand to learn more
    FeesAPYsPlatform TransparencyComplexityPlatform Risks
    CeFiNormally higher and automatically taken out of your APYDetermined by the platform — fixedCentralized, opaque platforms with no insight into internal workingsLow — can be done in a few clicksHacking, Platform Insolvency, Bankruptcy
    DeFiFees are usually lower and are explicitly listed alongside APYDetermined by the market — always fluctuatingDecentralized and transparent platforms whose code is often open sourceHigh — some familiarity with DeFi is necessary to complete the processHacking

    The three platforms covered above are centralized platforms that participate in centralized finance (CeFi). There are also decentralized finance (DeFi) solutions to loaning out your ETH that have their own specific platforms.

    The difference between CeFi and DeFi is essentially that DeFi platforms maintain automated markets that match lenders and borrowers and use code to determine real time lending and borrowing rates which are always fluctuating.

    The advantage of DeFi is that platform fees are much lower and, since DeFi protocols normally use open-source code and are managed by communities of token holders, DeFi protocols are much more transparent than the CeFi lenders.

    DeFi lending can be profitable, however it’s often also more complex so it’s generally more suitable for experienced traders.

  • How do Crypto Lending Companies Make Money?

    Expand to learn more

    There have been multiple notorious bankruptcies and hacks in the history of crypto platforms. While most crypto platforms are totally safe to use 99.9% of the time, it’s generally important to understand where the yield that a platform promises is coming from in order to do your own risk assessments.

    Crypto lenders have become better about disclosing how they generate their yield, however many centralized platforms are still opaque when compared to their DeFi counterparts. Generally, however, centralized platforms earn their yield through originating loans.

    The interest paid on these loans may include some fee that is taken by the platform and the rest is passed on to the lenders who actually put up the funds for the loans. Additionally, these platforms often charge fees on loan origination for borrowers, withdrawal of funds, and for trading crypto on their crypto exchanges.

To Sum it Up

ETH lending is a great way to earn passive income on your tokens that may otherwise be laying around unused. While lending is generally straightforward, it’s important to compare lending platforms to ensure that you are receiving the best terms and the best yield rewards for your funds.

Keep in mind that when lending your ETH, you will often have to lock up your funds for some period of time which leaves you exposed to large price fluctuations — if ETH drops significantly in price, you may not be able to sell immediately. Once you understand the risks of lending, the benefits often make it worth it.

Frequently Asked Questions

  • Can I use Ethereum as collateral?

    Expand to learn more

    Yes. To learn more about taking out a fiat or stablecoin loan using your Ethereum as collateral, check out our borrowing article here.

  • What are the Ethereum lending rates?

    Expand to learn more

    Lending APYs for Ethereum are anywhere between 2% to 8% depending on which platform you use.

  • Should I lend my ETH?

    Expand to learn more

    Lending your ETH can be a great way to earn yield on your idle tokens. Lending is not without risk, however, and you should do your research to find the platforms that provide the best returns with the lowest risk profile.


  • Can you leverage ETH?

    Expand to learn more

    Yes, many crypto exchanges provide leverage for Ethereum trades. To find out more about Ethereum trading, click here.

  • Where can I lend my Ethereum?

    Expand to learn more

    Ethereum can be lent out through most platforms that support crypto lending.

    Our top picks for the best Ethereum lending platforms are:

    • Cake DeFi
    • BlockFi
    • Nexo

Contributors

  • 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 MilkRoad.com. Shannon specializes in cryptocurrency and personal finance. Her work has appeared in publications like The Motley Fool and Insider.