Today we are reviewing and comparing two of the most popular crypto lending services available. If you are looking for ways to earn interest on your crypto, see which network works best for you.
According to a large poll conducted by CoinDesk, over 40% of crypto holders were interested in taking out a loan against their crypto holdings at some point during 2018 . This number has grown much larger in 2021 , as more and more people moving their assets into this digital space. Over 60% of crypto holders are currently considering taking out a loan, which is due in part by the convenience that crypto lending offers.
Crypto lending started with centralized exchanges offering peer-to-peer (P2P) loans with in-house developed lending protocols. Because these exchanges acted as a decentralized and borderless banks, they were able to provide crypto asset holders liquidity in exchange for interest payments. This created an extremely risky environment that was ripe for theft due to the nature of irreversible cryptocurrency transactions.
To combat this risk, new lending protocols have been developed that are much more secure for both lenders and borrowers. These P2P loans are completed directly on the blockchain through smart contracts that allow both parties to safely transact without ever needing to interact with a third party lender or exchange service. When you lend money through one of these decentralized lending protocols , you are no longer trading the security of your own funds for access to liquidity. There are no fees associated with lending directly through these protocols, only interest rates that vary based on the volatility of the cryptocurrency you wish to lend.
Hodlnaut and Celsius Network are decentralized crypto-to-crypto lending platforms that allows users to securely lend their cryptocurrencies without ever needing to trust a third party or relinquish control of their assets. These companies’ peer-to-peer lending protocols are free and open source projects that has been developed by dedicated teams of cryptocurrency enthusiasts with the goal of making borrowing and lending as safe and accessible as possible for everyone in the crypto space.
Let’s dive into both of these networks to see which is the better fit for you.
Celsius Network vs. Hodlnaut
Celsius Network and Hodlnaut are platforms that allow you to buy, borrow and pay in dozens of cryptocurrencies. Investors buy crypto and earn interest on their holdings. This is comparable to having a dividend-paying stock. Long-term investors may earn interest by lending their cryptocurrency assets to buyers utilizing margin trading.
From a user perspective, it acts as something in-between a savings account and an investment portfolio.
Celsius Network allows its members to earn interest on their crypto holdings via the Celsius Wallet. The platform also enables borrowing of up to 30x leverage so you can short the market, all this gives users more trading power than they would have had by just having their crypto assets alone.
Hodlnaut lets you take out cryptocurrency loans with complete simplicity. The platform lets you use your crypto as collateral and offers a range of different loan terms for your consideration.
Overall, both these companies offer a lower risk, less complicated way for both beginners and HODLers to buy and hold crypto while earning steady returns on their investments.
Investors can withdraw funds at any time. Keep reading to learn how both Celsius network and Holdnaut work.
Who started these companies?
Celsius is a blockchain-based lending firm that was established in the summer of 2017 and first distributed coins (CEL) in March 2018. Alex Mashinsky, Nuke Goldstein, and S. Daniel Leon are the founders of Celsius. The company’s headquarters are in London, U.K.
Based out of Singapore and founded in 2019, the founders, two bitcoin maximalists, Juntao Zhu and Simon Lee, aim to offer an alternative solution for hodlers where they can grow the productivity of their digital assets.
The project is backed by some of Asia’s leading companies such as Three Arrows Capital, Sparrow, Singapore Management University, and BitGo. In addition, Hodlnaut is part of Antler’s portfolio company, a global VC firm backing early-stage startups.
The main benefit of Celsius is the weekly earnings distribution paid out to users who maintain their coins in their Celsius wallet. It also provides low-interest loans and a pay function for sending funds to friends and family without incurring charges.
Celsius utilizes a four-tier loyalty program. Your tier determines your interest rates and other perks. The four loyalty levels are defined by how much of your portfolio is comprised of CEL tokens:
- Bronze Tier: Less than 5% of your portfolio is in CEL tokens
- Silver Tier: 5%-10% of your portfolio is in CEL tokens
- Gold Tier: 10%-15% of your portfolio is in CEL tokens
- Platinum Tier: 15% or more of your portfolio is in CEL tokens
The extra perks associated with each tier are as follows:
- Bronze: No bonuses; you earn standard interest and get standard loan interest rates
- Silver: 10% bonus on your earnings and a 10% discount on loan interest rates
- Gold: 20% bonus on your earnings and a 10% discount on loan interest rates
- Platinum: 35% bonus on your earnings and a 30% discount on loan interest rates
Users also earn a 2 percent cash back bonus if they use the CelPay function in the app to transmit CEL tokens. You may send any of the available cryptocurrencies via the app, but you won’t receive the cashback benefit when you do.
There are two main products that Hodlnaut offers. The Hodlnaut Interest Account and Institutional Loans, let’s have a look at each of the products.
Through its straightforward product offerings and dedicated support, Hodlnaut is on a mission to help hodl-ers get more yield on their digital assets easily.
Interest is earned and paid out in-kind weekly every Monday. The amount of interest earned is determined by a coin’s performance in the previous month and demand. Interest is paid out every day and is automatically deposited into user accounts on Mondays.
The annual compounded interest rates that Hodlnaut pays ranges from 1.0% – 12.73%. Here are the current rates for each of the platform’s supported coins:
Bitcoin (BTC): 1.00% to 7.46%
Ethereum (ETH): 2.02% to 7.46%
Dai (DAI): 2.02% to 8.32%
USD Coin (USDC): 2.84% to 12.73%
Tether (USDT): 3.04% to 12.73%
Wrapped Bitcoin (WBTC): 1.00% to 7.46%
Users simply need to create an account on the site, deposit their favorite cryptocurrencies, and the system will begin paying weekly crypto interest dividends automatically.
Institutional investors can borrow money for digital assets through Hodlnaut. Institutional Loans have a maximum borrowing size of $50,000. Institutional Loans are secured by the borrower’s cryptocurrency holdings. The lender is the counter-party to Institutional Loans. Open-ended or at least three months are required for terms. Loan-to-value range below 70%.
It’s not unusual to experience some growing pains, and as a result, customer service has been slower to respond. Customer support, on the other hand, is very responsive on social media—particularly Twitter and Reddit. It is also making efforts to increase its customer care staff, so the quality of service will likely rise.
If you’re not receiving an immediate response from the app’s customer support channels, we recommend contacting it through its social media platforms.
The only method to reach Hodlnaut is through email at email@example.com or via live chat on their website. If you reside in the United States, you may have to wait a few hours for a response because Holdnaut’s business hours are Singapore Time, Mon – Fri 10:00 AM – 7:00 PM.
Celsius Network is one of the most user-friendly cryptocurrency options available, with no minimum account and no hidden costs. Because Celsius makes its money through lending operations, they don’t need to charge unnecessary fees you find with most lenders.
There are no fees on deposits. However, Hodlnaut does charge withdrawal fees which vary based on the type of currency you withdraw.
What are the risks?
Loaning and borrowing
Lenders can take into account not just their own credit risk, but also the risk that the borrower won’t pay back the loan. On most European P2P lending platforms, you have a binding legal contract with each borrower (or loan originator), which isn’t the case on crypto lending platforms.
Every loan is secured by crypto assets, which means the borrower must deposit at least $2,000 in crypto to receive a $1,000 loan.
Loans secured with cryptocurrency are an excellent way to borrow money without selling your assets (which hopefully will grow in value).
Holdnaut, like every other company that relies on Amazon Web Services (AWS), is protected by AWS’s security measures. All traffic is secured using SSL. Furthermore, all cryptocurrencies held in custody with Hodlnaut are transferred to self-custodied cold wallets or given as loans to borrowers. It doesn’t use any hot wallets. They also have a whitelist option to prevent withdrawals from going to fraudulent accounts.
Legal and Safety:
Celsius Network deposits are not FDIC-insured or SIPC-protected. The Celsius Network has applied for an exemption with the SEC in the United States. Celsius Network is not aware of any rules or limitations that apply to it.
Hodlnaut is a Certified Fintech business in Singapore, according to the Singapore Fintech Association (a recognized rdg by the Monetary Authority of Singapore). Furthermore, all required paperwork has been submitted and the company is currently in the approval procedure for the Standard Payment Institution License in Singapore.
Users of Celsius must download the mobile app. The app is simple and user-friendly since all their engineering and design efforts are focused there. All of Celsius’s services and capabilities may be accessed right from your phone. They do have a web-app, but you can only access it after you’ve passed KYC and AML on the app.
The interface of the Celsius app is user-friendly and concise. Your total account balance and earnings are shown at the top, with easy-to-understand graphs illustrating the growth of each cryptocurrency in your wallet.
Hodlnaut is all browser based with no support for mobile as of yet. There is plans to release an iOS app which will give you full access to your account and the ability to manage your portfolio and loans.
In order to start using Celsius, you need to download the Celsius app. There is a minimum of $400 to get started and when you do, you will get a $50 BTC bonus.
You will need to submit your KYC documents and be verified before you can fund your account.
See the Celsius network review
Go here to download Celsius app.
You can visit the Hodlnaut website to open an account. Like other cryptocurrency exchanges, users must complete KYC (know your customer) verification to access all account features.
Readers of CryptoWhat can also get up to $20 free when opening a new account with Holdnaut and depositing at least $1,000.
Crypto lending is exploding and Celsius and Hodlnaut are quickly becoming the leaders. Celsius has grown to become one of the world’s largest cryptocurrency earning and borrowing platforms. These companies have a trusted reputation and out of the many crypto lending programs available, these are two of the ones I would choose.
Keep an eye on crypto lending rip-offs that appear to be beneficial. BitcoLoan, a recent scam that has caught the attention of many people, allegedly steals money from individuals by luring them with promises of big profits before confiscating their money.
As more people adopt crypto, lose faith and trust in banks, and start trading more frequently, you can expect cryptocurrency lending platforms to continue climbing up usage.