In 2013, a (possibly) drunk Bitcoin investor spoke his mind on the BitcoinTalk forum, saying “I AM HODLING”. Clearly a misspelled version of “hold”, the term “hodl” soon went viral and everyone was “hodling’ their crypto. But in reality, that is not the best way to do with your assets.

We must make the same analogy - banking - as we did in our last two articles about staking and liquid staking: traditional banks always take our deposits and lend them to other individuals or institutions for interest - this is also where our deposit interests come from. As blockchains and cryptocurrencies make finance more and more accessible, anyone can now be a bank and lend their assets to other people.

Crypto lending is the process of taking crypto assets from one account and providing it to another at a fee, typically known as interest. Both centralized and decentralized platforms offer crypto lending services. On these platforms, borrowers and lenders are automatically matched and interest calculation, liquidation, and other processes will be executed either by centralized servers or smart contracts.

Most decentralized crypto lending platforms do not require a credit score or vesting process. As long as you put up enough collateral, you will get an approval instantly. And unlike traditional banks, these platforms operate 24/7 and eliminate the middlemen - although most platforms will still earn a tiny difference between lending and borrowing interest rates.

While the appeal of crypto lending is obvious - you earn yield on your dormant assets - crypto borrowing may only be appreciated by a handful of crypto veterans.

Picture this: you went all in on BNB and it did go up. But at the same time, you spotted a hidden gem and wanted to make an investment. If you sell your BNB, you lose out on its potential appreciation. If you miss out on this investment, you know you’re going to regret it. What do you do?

The answer is simple. Use your BNB as collateral to borrow out stablecoins, then invest in that hidden gem with these stablecoins. This way, you get access to liquidity without selling your assets. And when you take your profit on the hidden gem, just pay back your loans plus a small amount of interest and you will get your BNB back.

In the real world, this is also what “people in the know” do. They hold stocks, bonds, or other assets and borrow money against them. This way, they don’t need to risk losing out on investment by selling these assets to get liquidity.

If you only wish to earn some income on your idle assets, lending is the place to be. You can simply deposit your assets into lending pools or vaults and the smart contract will start finding borrowers. When a borrower (or several borrowers) is found, you will start earning a portion of the interest they are paying.

Currently, lenders can deposit a wide range of assets and earn interest, including:

• Stablecoins like USDT, USDC, USD1, or U

• Major cryptocurrencies and their derivatives like BTC (BTCB, SolvBTC, etc.), ETH (wBETH, wstETH, etc.), or BNB (slisBNB, etc.)

Some protocols may include novel cryptocurrencies listed on major crypto exchanges, with more stringent risk management.

The interest rate lenders can earn depends on the interest borrowers are paying. And most lending protocols will offer a dynamic interest rate based on the supply and demand of a market. Put simply, when most assets in a pool are borrowed out, the interest rate will hike dramatically to remind borrowers to repay their loans. When most of the assets are sitting idle, interest rates will be very low to encourage borrowing activities. Typical interest rates for major cryptocurrencies (including stablecoins) can range from 2% to 15%, whereas novel assets tend to offer higher returns to encourage lending.

While lenders can enjoy a relatively steady return on their assets, borrowers often take on higher risks and chase higher returns. For instance, they can get access to leverage very easily with borrowed crypto: if they are bullish on BNB, they can deposit BNB as collateral to borrow out USDT, then buy more BNB with these USDT, then deposit their newly-bought BNB to borrow out even more USDT, and so on.

This way, even if they start with just 1 BNB, they may end up having an exposure of as high as 5 BNB, and when BNB’s price goes up by 10%, they will get 50% profit (minus a few percents of interest they are paying) because they achieved a 500% leverage ratio with borrowing.

With higher returns comes higher risks and more requirements. For starters, most borrowers must deposit enough assets as their collateral for loans, and most protocols will require at most a 80% loan-to-value (LTV) ratio - the ratio between the value of your loan and your collateral - to protect lenders from price volatility. If this value goes above a preset threshold - the liquidation loan-to-value (LLTV) ratio, a liquidation will be triggered.

The liquidation process is an integral part of the entire DeFi landscape. In crypto lending, liquidation is triggered when the LTV ratio goes above the LLTV ratio. When it happens, the smart contract will take over a portion or all of the collateral and attempt to sell it into the loan asset to repay the outstanding loan. Liquidations are typically triggered by price fluctuations and accruing interest. This means if you deposited 1000 USDT as collateral to borrow out 1 BNB when BNB was at 800 USDT, and BNB goes up to 900 USDT, you will lose your collateral if you fail to deposit more collateral to drive the LTV ratio up.

If you wish to open up an income stream for your crypto assets, Lista is a good place to start.

To open up an income stream on your idle assets, head to Lista’s Earn section and deposit your assets into Lista’s vaults. Our smart contract will automatically match your assets with borrowers and your assets will start working for you.

To maximize your capital efficiency and borrow assets against your crypto, head to Lista’s Borrow section. Do pay attention to your interest rates and LTV ratio to avoid unexpected liquidation.

Refer to Lista Lending Tutorial for a more detailed guide.

In our next article, we will cover more advanced concepts and strategies. Stay tuned.

In 2013, a (possibly) drunk Bitcoin investor spoke his mind on the BitcoinTalk forum, saying “I AM HODLING”. Clearly a misspelled version of “hold”, the term “hodl” soon went viral and everyone was “hodling’ their crypto. But in reality, that is not the best way to do with your assets.

We must make the same analogy - banking - as we did in our last two articles about staking and liquid staking: traditional banks always take our deposits and lend them to other individuals or institutions for interest - this is also where our deposit interests come from. As blockchains and cryptocurrencies make finance more and more accessible, anyone can now be a bank and lend their assets to other people.

Crypto lending is the process of taking crypto assets from one account and providing it to another at a fee, typically known as interest. Both centralized and decentralized platforms offer crypto lending services. On these platforms, borrowers and lenders are automatically matched and interest calculation, liquidation, and other processes will be executed either by centralized servers or smart contracts.

Most decentralized crypto lending platforms do not require a credit score or vesting process. As long as you put up enough collateral, you will get an approval instantly. And unlike traditional banks, these platforms operate 24/7 and eliminate the middlemen - although most platforms will still earn a tiny difference between lending and borrowing interest rates.

While the appeal of crypto lending is obvious - you earn yield on your dormant assets - crypto borrowing may only be appreciated by a handful of crypto veterans.

Picture this: you went all in on BNB and it did go up. But at the same time, you spotted a hidden gem and wanted to make an investment. If you sell your BNB, you lose out on its potential appreciation. If you miss out on this investment, you know you’re going to regret it. What do you do?

The answer is simple. Use your BNB as collateral to borrow out stablecoins, then invest in that hidden gem with these stablecoins. This way, you get access to liquidity without selling your assets. And when you take your profit on the hidden gem, just pay back your loans plus a small amount of interest and you will get your BNB back.

In the real world, this is also what “people in the know” do. They hold stocks, bonds, or other assets and borrow money against them. This way, they don’t need to risk losing out on investment by selling these assets to get liquidity.

If you only wish to earn some income on your idle assets, lending is the place to be. You can simply deposit your assets into lending pools or vaults and the smart contract will start finding borrowers. When a borrower (or several borrowers) is found, you will start earning a portion of the interest they are paying.

Currently, lenders can deposit a wide range of assets and earn interest, including:

• Stablecoins like USDT, USDC, USD1, or U

• Major cryptocurrencies and their derivatives like BTC (BTCB, SolvBTC, etc.), ETH (wBETH, wstETH, etc.), or BNB (slisBNB, etc.)

Some protocols may include novel cryptocurrencies listed on major crypto exchanges, with more stringent risk management.

The interest rate lenders can earn depends on the interest borrowers are paying. And most lending protocols will offer a dynamic interest rate based on the supply and demand of a market. Put simply, when most assets in a pool are borrowed out, the interest rate will hike dramatically to remind borrowers to repay their loans. When most of the assets are sitting idle, interest rates will be very low to encourage borrowing activities. Typical interest rates for major cryptocurrencies (including stablecoins) can range from 2% to 15%, whereas novel assets tend to offer higher returns to encourage lending.

While lenders can enjoy a relatively steady return on their assets, borrowers often take on higher risks and chase higher returns. For instance, they can get access to leverage very easily with borrowed crypto: if they are bullish on BNB, they can deposit BNB as collateral to borrow out USDT, then buy more BNB with these USDT, then deposit their newly-bought BNB to borrow out even more USDT, and so on.

This way, even if they start with just 1 BNB, they may end up having an exposure of as high as 5 BNB, and when BNB’s price goes up by 10%, they will get 50% profit (minus a few percents of interest they are paying) because they achieved a 500% leverage ratio with borrowing.

With higher returns comes higher risks and more requirements. For starters, most borrowers must deposit enough assets as their collateral for loans, and most protocols will require at most a 80% loan-to-value (LTV) ratio - the ratio between the value of your loan and your collateral - to protect lenders from price volatility. If this value goes above a preset threshold - the liquidation loan-to-value (LLTV) ratio, a liquidation will be triggered.

The liquidation process is an integral part of the entire DeFi landscape. In crypto lending, liquidation is triggered when the LTV ratio goes above the LLTV ratio. When it happens, the smart contract will take over a portion or all of the collateral and attempt to sell it into the loan asset to repay the outstanding loan. Liquidations are typically triggered by price fluctuations and accruing interest. This means if you deposited 1000 USDT as collateral to borrow out 1 BNB when BNB was at 800 USDT, and BNB goes up to 900 USDT, you will lose your collateral if you fail to deposit more collateral to drive the LTV ratio up.

If you wish to open up an income stream for your crypto assets, Lista is a good place to start.

To open up an income stream on your idle assets, head to Lista’s Earn section and deposit your assets into Lista’s vaults. Our smart contract will automatically match your assets with borrowers and your assets will start working for you.

To maximize your capital efficiency and borrow assets against your crypto, head to Lista’s Borrow section. Do pay attention to your interest rates and LTV ratio to avoid unexpected liquidation.

Refer to Lista Lending Tutorial for a more detailed guide.

In our next article, we will cover more advanced concepts and strategies. Stay tuned.