Crypto lending: the highest rates and the hardest questions

How crypto lending actually works

Two people want opposite things. One holds an asset and would like it to produce income. The other wants to use that asset — usually as leverage for a trade, occasionally to access liquidity without selling something else — and is willing to pay for the privilege. A lending platform sits between them, matches the two, manages the collateral, and keeps a spread.

The interesting variable is what secures the loan. In the disciplined version, the borrower posts collateral worth substantially more than they borrow — 150% is a common floor, and the system automatically sells that collateral if its value approaches the loan amount. The lender is protected by arithmetic rather than by trust. This is how Aave, Compound and the better centralised lenders operate, and it is why those books did not blow up in 2022.

In the undisciplined version, the platform lends to large counterparties on relationship terms with thin or no collateral, because those counterparties pay more and volume looks good. When one of them fails, the loss lands on depositors who had no idea the loan existed. That is the precise mechanism by which Genesis's problems became 340,000 Gemini Earn customers' problems.

Centralised and decentralised lending are different products

A centralised lender takes custody. You send coins, they appear as a balance, and the platform makes every lending decision on your behalf. You get a simple interface, customer support, and in some cases a fiat on-ramp. You also get a loan book you cannot inspect and a company that can fail.

A decentralised protocol never takes custody in the ordinary sense. You supply assets to a smart contract, receive a receipt token, and can withdraw whenever pool liquidity permits. Every loan, every collateral ratio and every liquidation is visible on-chain in real time. You get radical transparency and no customer support at all. A mistake is permanent.

Our view is that the transparency advantage of DeFi is larger than most people appreciate and the usability disadvantage is also larger. Being able to verify the loan book at any hour is genuinely valuable — but so is being able to recover an account, and gas costs make positions under a few thousand dollars uneconomic on Ethereum mainnet. Read the full comparison in CeFi versus DeFi earn.

What lenders actually earn

The rate table below shows what the major venues published as of 16 September 2026. The spread between the top and bottom of this list is more than tenfold, and almost all of it is explained by risk rather than by efficiency.

Collateral, loan-to-value and liquidation

Every over-collateralised loan has a loan-to-value ratio. Borrow $5,000 against $10,000 of Bitcoin and your LTV is 50%. Each platform sets a liquidation threshold — often 70% to 85% — and if the collateral falls enough to push LTV above it, the system sells collateral automatically to bring the loan back into line.

From the lender's perspective this is the protection mechanism, and it works well when collateral is liquid and the liquidation engine is competent. It works badly when everything falls at once and liquidations cascade into a thin order book. That tail scenario is the real risk in over-collateralised lending, and it is why protocols maintain safety modules and insurance funds.

From the borrower's perspective it means a crypto-backed loan needs active monitoring. A 50% LTV feels comfortable until the collateral halves in a week, which Bitcoin has done more than once.

The other side: borrowing against your crypto

Plenty of people arrive at lending platforms wanting to borrow rather than lend, usually to avoid a taxable disposal. The pitch is reasonable: keep your Bitcoin, access dollars, repay later. The economics need care.

Ledn publishes an APR of 11.49% on Bitcoin-backed loans, comprising a 9.49% interest rate plus a 2% origination fee, typically at 50% LTV. That is the honest all-in cost, and it is high enough that the strategy only makes sense if you have a specific use for the money that beats it, or if the tax saving from not selling is larger than the interest. For many borrowers it genuinely is. For others it is an expensive way to stay long.

The feature worth valuing is the absence of a credit check and, on the better platforms, of early-repayment penalties. If you can repay in three months, a 11.49% annualised rate costs you under 3% in practice.

What 2022 actually taught us

The standard retelling is that crypto lending failed. That is not quite right, and the distinction matters for anyone deciding what to do now.

Celsius, Voyager and BlockFi all filed for bankruptcy in 2022. Genesis halted withdrawals in November of that year, freezing roughly $940 million belonging to 340,000 Gemini Earn customers in a programme that had advertised up to 7.4% APY. The SEC charged Genesis and Gemini in January 2023 with the unregistered offer and sale of securities through the Earn programme, and Genesis later agreed to a $21 million penalty.

Meanwhile Aave and Compound kept operating. Loans were liquidated on schedule, depositors withdrew when they wanted to, and the protocols did not miss a beat. The difference was not centralised versus decentralised in the abstract — it was over-collateralised versus not, and transparent versus opaque.

The epilogue is instructive too. Gemini Earn customers received $2.18 billion in kind by mid-2024, about 97% of assets owed, and because Bitcoin had risen sharply many recovered more dollar value than they lost. The SEC dismissed its case with prejudice in January 2026 citing full investor recovery, and an arbitrator found in August 2026 that Gemini was not at fault for the collapse. A good outcome — arrived at by market luck and three years of litigation, not by any protection the customers had when they deposited.

A lender's checklist

Before supplying anything to a lending platform, we work through five questions. They take about twenty minutes and they have kept us out of more than one venue that later had problems.

Is the lending over-collateralised, and can you verify it? On DeFi you can check directly. On CeFi, look for proof-of-reserves attestations and a stated collateral policy. Ledn publishes attestations regularly; most of its competitors do not.

Which entity holds the assets, and what is it authorised to do? Find the legal entity name in the terms, then check what its registration actually covers. Remember that a crypto registration rarely covers a lending programme.

What is the rate net of tiers? Model your actual balance against the published tier table. If there is no published tier table, that is information.

What does the withdrawal-suspension clause say? Every platform has one. Read how broadly it is drawn.

What happened here in 2022? Operating history through a real crisis is the only stress test that has actually happened. Platforms that came through it intact, and platforms that did not exist yet, are not in the same category.