Here at Token Metrics, we understand that our most valuable asset is you, our audience.
With your help, we have put together a guide to the Top 3 Crypto Lending Projects of 2021, as voted upon by you.
So sit back, relax, and enjoy the Moon Awards.
What is a Lending Project?
With Blockchain technology being one of the most exciting innovations of our time, the cryptocurrency market has grown exponentially. More and more people are putting their money to work in this field as they see crypto’s potential.
With more money piling into the crypto market, it became time for the basic concept of lending money to enter the crypto ecosystem.
Crypto lending works like any other peer-to-peer lending service as it connects borrowers with lenders through an online platform. At its core, crypto lending allows users to borrow stablecoins or fiat money through crypto-based collateral. The reverse is also true as borrowers can use stablecoins or fiat to borrow crypto assets.
In general, cryptocurrency lending divides into two main categories, personal saving and margin trading.
The first use is easy to understand, as it is just like a savings account at a bank. The main difference is that you earn less than a 1% return with most US savings accounts. With crypto lending platforms, though, you receive an interest rate of roughly 8% for lending stablecoins.
Margin trading involves borrowing and using the borrowed crypto to speculate on the rise of a particular coin. After a short period, the borrower will have to pay back the borrowed cryptocurrencies and the associated interest.
Top 3 Crypto Lending Projects of 2021
1) Aave (AAVE)
“Aave is the blue-chip of crypto borrowing/lending platforms. You simply deposit your ERC20 asset and borrow up to 50% LTV. Aave helped Kick start Defi in summer 2020. It has a smooth interface and works extremely well.” – Ugo Nduagaba, Partner, Token Metrics Ventures
Arriving in 1st place with over 35% of the total vote is the crypto lending project, Aave. This result comes as no surprise as it is nearly impossible to discuss crypto lending projects without the name of Aave coming up. Aave also earned a feature in our previous Moon Awards category of Best DeFi Projects of 2021.
Launched initially as ETHLend in 2017, the project raised $16.2 million in their Initial Coin Offering as a decentralized peer-to-peer lending platform. In 2018, the project rebranded to Aave as they switched to a liquidity pool model. Then in 2020, Aave launched the Aave Protocol, which created an open-source and non-custodial liquidity pool where users can earn interest on deposits and borrow assets.
Currently, Aave is the highest valued DeFi lending project due to its perceived level of innovation and adaptability. Beyond regular DeFi loans, Aave also offers flash loans (an offering the project pioneered) and fixed interest rate loans. Aave also boasts a higher Loan-to-Value (LTV) ratio than other large competitors and very low borrowing rates.
Aave also accepts 24 different cryptocurrencies as collateral compared to Maker’s 18 and Compounds 9. There is currently over $28 billion deposited into Aave’s liquidity protocol.
Token Metrics’ Analysis of Aave
2) Celsius (CEL)
“Celsius is one of the most well-known lending projects in the space. Alex Mashinsky is a great leader and evangelist for the company, with a proven track record. They recently raised $20M through Bnk to the Future, which should strengthen their position in the market space for the long term.” – Ian Balina, Founder and CEO of Token Metrics
The crypto lending project Celsius comes in a strong 2nd place with around 30% of the total vote. Celsius Network launched in 2017, intending to harness blockchain technology to provide “unprecedented financial freedom, economic opportunity, and income equality for the 99%.”
Celsius Network is a democratized interest income and lending platform built on the belief that financial services should only do what is in the community’s best interests. The platform functions as a global peer-to-peer financial platform that seamlessly connects holders of crypto-assets with borrowers.
Currently, Celsius has over $22.6 billion assets, 1.5 million users, and over $1 billion paid to users in yield and rewards.
With Celsius, users can borrow USD against their crypto collateral with interest rates as low as 4.95% APR. You can also earn interest on your crypto with Celsius, with interest rates as high as 17% for select tokens. The interest is available to be paid in-kind or with the native CEL token.
Just recently, Celsius completed a $750 million Series B funding round and is currently giving out free in-app swaps to their 1.5 million users along with free loans in qualified areas.
Celsius network is available only on the App Store and Google Play and is available for download from the following link.
Token Metrics’ Analysis of Celsius
3) Compound (COMP)
“Compound is an algorithmic money market protocol on Ethereum that lets users earn interest or borrow assets against collateral. Currently, there are nine assets listed on the compound platform available for lending and borrowing, with direct competitors leading the race in terms of total value locked and the number of assets listed. Compound is in a crucial phase to speed up development and integrations.”– Diego Lara, Partner, Token Metrics Ventures
In a distant 3rd place with around 12% of the total vote is the crypto lending project Compound. Launched in 2017, Compound was one of the first DeFi projects to gain mass attention in the current DeFi cycle. As a result, Compound’s native token COMP skyrocketed in value before correcting to its current levels.
Compound operates as a decentralized finance lending protocol built on Ethereum that enables users to borrow or lend from a pool of assets. With Compound, users can earn interest on their holdings, short assets they believe are overvalued, and obtain assets they need without purchasing them.
With Compound, you can obtain various crypto loans for interest rates as low as 2.28% APY. The interest you earn on different cryptocurrencies can also reach as high as 4.28%.
Surprisingly, Compound surpassed MakerDAO in terms of assets with the recent DeFi surge as they have over $16.7 billion in committed assets.
The native token of Compound, COMP, functions as a governance token that allows holders to participate in protocol governance. Stakeholders who possess at least 1% of COMP tokens in circulation can submit governance proposals. In contrast, stakeholders with fewer coins can vote on proposals or delegate their votes to other community members.
The COMP token is crucial in maintaining the DeFi nature of the project as Compound is currently turning over the development and control of the protocol to its users.
Token Metrics’ Analysis of Compound
Honorable Mention:
MakerDAO (MKR)
“MakerDAO offers a transparent stablecoin system that anyone can inspect on the Ethereum blockchain. Its Stablecoin DAI is simple to use, and I believe it will increase in popularity. I received my first DAI transaction in 2018 at a Harvard University crypto event. Since then, it has been my favorite stablecoin.” – Sam Monac, Chief Culture Officer, Token Metrics
In an exceptionally rare Moon Awards occurrence, we have two crypto lending projects worthy of an honorable mention as they were both edged out by Compound by the same number of votes. The first crypto lending project listed as an honorable mention is MakerDAO.
MakerDAO was also honored with a 3rd place finish in the category of Best Stablecoins of 2021 for their stablecoin DAI.
MakerDAO first formed in 2015, but they did not launch their stablecoin DAI until 2017. The platform itself builds on Ethereum’s network as a decentralized organization that allows the lending and borrowing of cryptocurrencies without the need for a middleman.
The platform can function this way through smart contracts that manage the borrowing and lending along with MakerDAO’s two cryptocurrencies’ DAI and MKR. DAI and MKR are used to regulate the value of the loans.
With MakerDAO, anyone can borrow DAI against their Ethereum if their collateral is 1.5 times the amount of DAI requested. The platform has become so popular that there is now roughly 3.5 million ETH locked into their ecosystem, which amounts to nearly 2.5% of the total ETH supply.
Token Metrics’ Analysis of MakerDAO
Nexo (NEXO)
“Nexo is one of the largest and most trusted lending institutions in the finance industry. Leveraging 13 years of experience in fintech, the team has processed $3 billion for 800k clients in 200+ countries. They currently seem poised to disrupt the financial system one bit at a time.” – Ugo Nduaguba, Partner, Token Metrics Ventures
The other half of our crypto lending project honorable mention is Nexo. Backed by one of the leading European FinTech groups, Credissimo, Nexo launched in 2018 as the world’s first instantly crypto-backed loan platform.
Nexo’s launch dramatically altered the crypto landscape as the platform allows investors and businesses to access instant cash while retaining ownership of their cryptocurrency holdings. In their launch year alone, Nexo raised over $50 million.
As Nexo is a crypto-backed loan service, the platform primarily exists for instant crypto overdrafts. This statement means that with Nexo, you can overdraft your account to get cash to spend while keeping your crypto, including the profits. One of Nexo’s most appealing aspects is that it is a licensed and regulated financial institution in the European Union.
When using Nexo, the loan amounts can vary from $1,000 to $2,000,000, with the current APR starting at 5.9% at the time of this article. You can also earn interest up to 10% annually when depositing with Nexo. The interest payments deposit into your account daily and can be earned on your crypto, stablecoins, and fiat money.
However, it is essential to note that the only fiat currencies that can earn interest on Nexo’s platform are the EUR, GBP, and USD.
The native token, NEXO, serves as a compliance token backed by Nexo’s loan portfolio’s underlying assets. The NEXO token provides holders with regular passive income in the form of 30% of the company’s profits. The first dividend payout using the NEXO token was in 2018 and reportedly totaled $912,071.
The native token also allows for discounted interest rates on Nexo’s instant loan service, amounting to 50% off while also being used as collateral on the platform.
Token Metrics’ Analysis of Nexo
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