Which lending platform is better? We analyzed 8 DeFi platforms for you

Written in front: The authors of this article are luboremo and Ambroid. They compare several common centralized and decentralized lending platforms and do not constitute investment advice.


TLDR (too long to read):

  • Nearly all centralized platforms have opaque jurisdiction / legal structures
  • It's unclear whether the lender's assets are actually guaranteed by the centralized platform
  • Centralized lending platforms are not transparent in setting yields
  • Decentralized platforms have great security risks (management of key management, possible bugs, dependence on MakerDAO and USDC)


The purpose of this article is to dig deeper into some popular lending platforms that provide attractive yields.

As part of a balanced portfolio strategy, we want to leverage the yields of various lending platforms within a specific asset range.

The goals are as follows:

  • Earn interest on stablecoins that have not been allocated to investment instruments by lending out some stablecoins
  • Earn part of the interest through long-term holding, and these long-held coins can be used as loan collateral or liquidity supply (BTC, ETH, etc.)

Before investing money into crypto lending, we took a closer look at most lending platforms. As readers will see, there is an obvious hidden standard in many ways. Their products usually have similar structures, with slightly different custodians, income stability, and similarities in jurisdiction and legal structure.

These platforms are first divided into centralized and decentralized. This distinction is convenient because the main issues to consider for different types of platforms are very different. For a decentralized lending platform, it is a trust in well-written, documented, and audited code. For a centralized platform, behind the brand is trust in the entity. The centralized platforms we analyzed are: NEXO, Celsius, BlockFi, and Crypto.com; the decentralized platforms include Compound, Nuo, and Ethlend (Aave protocol).

Centralized platform


NEXO is a "by-product" of Credissimo, a retail lending company from Bulgaria. NEXO submitted a token sale application to a company registered in the Cayman Islands that complies with the requirements of the Securities and Exchange Commission.

Credissimo, which focuses on short-term retail lending in Southern and Eastern Europe, appears to be registered in Malta. We guess that they launched the NEXO platform to get more liquidity and penetrate the crypto lending market. To this end, they conducted an ICO of NEXO tokens-which can be used for both borrowing and dividends of company profits. Obviously, the NEXO token is a security, and the company raised $ 52 million in March 2018. As of press time, NEXO has a market value of $ 62 million.

NEXO lacks a regulated market, which is typical of most security tokens.

NEXO is obviously everywhere, but at the same time it doesn't seem to exist. We can assume that once something happens, Delaware (a company named NEXO Inc. registered here in 2018), Bulgaria or the Cayman Islands (perhaps Malta?) Will be the targets of all legal actions. Really helpful :).

registration message

(NEXO registration information)

Nonetheless, NEXO is backed by an established company and faces the challenge of regulators from different countries, which really give us more confidence in the platform-which means they are unlikely to suddenly " Bankruptcy "and fraudulent users.

The security of platform funds is another matter. This is a problem common to all centralized platforms.

Centralized lenders use third-party insurers (usually BitGo) who only provide insurance for funds placed in cold storage and held by BitGo as custodian. NEXO claims to put 95% of its funds in cold storage. This may slow down the process for users to withdraw funds, but it is a price worth paying for security. Whether this insurance policy applies to those who lend crypto assets or only to those who use crypto assets as collateral has not yet been answered.

As of the time of publication, if users are using NEXO tokens to repay or withdraw loans, the annual interest rate on the loans is 5.9%. The borrower's annual interest rate is 11.9%. Interest on stablecoin lenders is 8%. How does NEXO profit from a -2.1% profit margin? This is beyond our current knowledge. One assumption is that the company actively accepts such losses in order to increase users and raise the price of tokens.

NEXO likes to give vague answers. If a company should pay dividends based on profits, they should publish regular reports on the company's operations (which is normal for a typical public company). The problem is that both NEXO and Credissimo are private entities, and apart from pressure from NEXO holders, they are not obliged to disclose their earnings.

Token holders should have "rights" to dividends, however, this is not performed through the blockchain. Therefore, their only way to defend their rights is to sue-after that, they can only face the muddy waters of the shell company NEXOs web and the Bulgarian parent company. good luck.


(The picture shows a question post on Reddit by NEXO investors who did not pay dividends on time)

On the positive side, NEXO does issue dividends, but the timing is never clear. The most recent was issued in August 2019 with a yield of less than 3%. From the short history of dividends, the transaction volume seems to be increasing, while the number of pledged tokens has stagnated. Dividends are profit-based, however, they do not show the income statement to the public. Therefore, the value of dividends can only be calculated at the surface value.

It should be noted that the difference in prices when buying NEXO will lead to large differences in personal income. Second, NEXO has added "loyalty dividends" to reward users who insist on holding tokens.

If you want to borrow with Nexo and use it as collateral, then the yield will play an important role, because not only can you get a discount on the loan, but you can also get a dividend on that collateral.

NEXO summary:


  • Higher yields (also applicable to fiat currencies)
  • Credissimo is a legitimate lender, ensuring NEXO always has customers
  • NEXO tokens can receive dividends when used as loan collateral


  • Jurisdictions and Shell Companies
  • No explicit announcement of NEXO earnings / dividends
  • No explicit announcement of NEXO token revenue arbitrage
  • Who is the borrower?


Celsius started in ICO in February 2018. Its published token applications are:

  • Enjoy discounts on interest and expenses
  • If lenders choose to receive loans in the form of CEL, they can earn higher interest rates. The more CELs you have in your wallet, the more you will earn

The $ 50 million financing opened this lending ecosystem, and Celsius is now a successful lending platform.

The token itself has a weaker decline rate (pledged tokens earn higher interest), however, there seems to be no application, and the application can bring basic buying pressure.

Therefore, all bullish momentum will be purely speculative. If someone chooses to win their interest in CEL, they are exposed to a highly volatile asset that has no legal market. For CEL, the only regulated market is IDEX, which has long been plagued by insufficient liquidity.

Celsius is registered with the US Securities and Exchange Commission (IRS No. 824381219; SEC CIK # 0001739052). The company is based in London. They offer very competitive interest rates and give asset interest that other platforms (such as 0x and orb) cannot provide. Their guarantee policy is similar to NEXO, so there is no guarantee that borrowed assets will be insured.

No insurance provided

(Celsius currently does not provide insurance for deposited funds)

Celsius automatic withdrawal limit is $ 20,000. Exceeding this amount requires confirmation from the authority inside the company. With regard to the security of funds, the only guarantee is a "final stage" audit with unspecified entities. They promised to publish the results on their website. Seems great Yazi.

The only way to use the Celsius platform is through their smartphone app, and if someone plans to borrow a lot of money on this platform, this operation can be a bit cumbersome.

Celsius concluded:


  • Good yield
  • Unique loan collateral options
  • Registered with the SEC
  • Withdrawal Policy


  • Who is the borrower?
  • Only accessible via mobile app
  • Inadequate explanation of high yield

Salt Lending

Salt Lending conducted an ICO in the summer of 2017.

The application of SALT is simple:

  • Discounted tokens-better monthly loan payment rates
  • Member tokens-users need to pay at least 1 SALT per year to be eligible for a loan

Needless to say, the market has considered this coin almost worthless. SALT raised $ 48.5 million for their lending platform. At press time, its market capitalization was $ 4.21 million. The largest trading venue is Huobi.

The SEC investigated Salt Lending in 2018. The platform has stood up to review. Since then, Salt has imposed strict restrictions on users who use its platform, so check the user's jurisdiction before registering.

The company website no longer even mentions SALT tokens. We are convinced that ICO investors are happy about this. At least this is not another predatory behavior that has no effect.

Ironically, you can't borrow anything at Salt Lending. They let you borrow money through some interesting services, such as borrowing dollars with the Dash masternode as collateral (this masternode is still earning staking rewards for you during this time). In addition, Dogecoin can also be used as collateral.

The future of finance

(This may be the future of finance)

They have good insurance policies, but who doesn't?

Summary of Salt Lending:


  • Exempted to some degree from SEC review
  • Interesting borrowing options


  • Cannot be lender
  • Users have very limited permissions
  • SALT token, ICO history missing application


In the field of lending, BlockFi is a relatively new player with a strong backing. They are a company incubated by Gemini, and Gemini is their guarantee company, or better yet, a security provider. This gives the platform a good social status, because any failure of BlockFi will directly hurt Gemini's reputation, after all, this exchange has a good reputation in the industry.

In terms of assets, they are closely related to Gemini itself and are very conservative. The only stablecoin supported by the platform is GUSD. This means that not only are you lending your funds to Gemini, your base collateral is entirely dependent on Gemini's stability.

Interest rates are good compared to industry standards, but no one knows how interest rates are calculated. It looks like the company doesn't even know it. well.

Revenue calculation formula

(BlockFi indicates that there is no fixed formula for calculating returns)

Based on the above explanation, we speculate that interest rates depend on whether BlockFi customers slept well the night before. Not all platforms are transparent.

Overall, they are crypto standards when it comes to interest rates (completely opaque) and financial security-in this case, you trust the Winklevoss twins.

According to BlockFi, they make money by lending your money / cryptocurrency to other "strategic partners", which is basically the same marketing rhetoric used by all other platforms.

BlockFi summary:


  • Winklewoss twins block attempts to steal BlockFi funds
  • Good yield
  • No historical red flags (ie no useless ICOs)


  • Interest rates are too random
  • Stablecoin collateral is limited to GUSD and is directly related to Gemini (increase system risk)
  • Who is the borrower?


Although we have researched a lot of centralized platforms, the last thing worth looking at in this article is Crypto.com-or the former Monaco.

Monaco conducted an ICO in the summer of 2017, raising $ 27 million, and the current market value is $ 79.58 million.

They operate under more entities, so they also set up companies in Hong Kong. Of all the platforms we surveyed, Monaco / Crypto.com received the most complex legal entity award. They are also registered through an entity registered exclusively in Switzerland (STAX AG). This may be for token sale.

All in cold storage

(All users' cryptocurrencies are in cold storage)

The security of user funds looks more like a marketing gimmick than a reality-this business model requires that funds have at least a certain percentage of liquidity, and that they be transferred from lenders to borrowers, and then from the platform back to lenders. In this regard, Crypto.com seems to have its own statement:

Belongs to company

(All funds in the hot wallet belong to the company)

Similarly, they are guaranteed by BitGo.

Crypto.com summary:


  • If the company only uses its internal funds as working capital, it means that it provides users with good deposit security
  • Flexible loan lock-up period


  • Unclear legal structure
  • Token manipulation history (hence the name change)
  • Funds only accessible via smartphone app
  • Lack of business focus-offering multiple products at once (credit cards, lending, cryptocurrency exchange, quantitative transactions)

Decentralized platform


DeFi's biggest player is Compound, a San Francisco-based startup.

Unlike the previously mentioned platforms, Compound is financed through multiple rounds of equity transactions.

Compound obviously has some common sense, so there are no unnecessary tokens.

The best security due diligence for Compound is an article by Ameen Soleimani and samczsun https://medium.com/@ameensol/what-you-should-know-before-putting-half-a-million- dai-in-compound-fafdb2645f77.

Our dissatisfaction with decentralized solutions is simple. You have to trust the code, or better yet, the people who write and audit the code. Soleimani's research shows that although Compound is decentralized and open source, the private (management) key is centralized and creates a single point of failure for the entire platform. If it is compromised, all the funds in the borrowing pool may be drained or even destroyed.

Similarly, it provides price data (oracles) for all real-time markets through the same administrator account.

All decentralized solutions are likely to have the same capabilities, so this must be considered in the design.

Although the founder claims that various security measures have been taken to prevent this from happening, no security model is perfect. Since Compound is a decentralized project, are they really responsible for potential losses?

Compound has passed four security reviews by OpenZeppelin and Trail of Bits. Each audit identified issues of at least moderate severity, but the frequency and severity were decreasing.

Compound summary:


  • Established as the largest decentralized participant
  • Relatively good liquidity
  • Repeated reviews show low frequency and severity of vulnerabilities
  • Clear jurisdiction


  • Managing the private key is a single point of failure
  • Difficult oracle (price data) vulnerability


Ethlend (Aave agreement) conducted an ICO in the fall of 2017 and raised $ 18 million. The market value has not been found on CoinMarketCap. The situation for this token is exactly the same as SALT (almost non-existent).

Ethlend supports more assets than Compound. If you find that the current supply of assets on Ethlend is low, you may get a much higher return than Compound. This is only a theoretical conclusion, because we have not tested this arbitrage method ourselves. Ethlend's liquidity may be too low for a large number of transactions, and the volume of transactions on the platform is very low.

As a p2p lending platform, its loan terms are set by the loan creator.

Information about their price predictors is very limited, and the latest information we can find is 2017. The team uses a smart contract from Oraclized, which uses only Kraken API price data.

Security audits are fine, but rough. Only one audit was completed (from Trail on Bits), and one audit by OpenZeppelin is ongoing.

Ethlend concluded:


  • Aave supports fiat currency-linked loans
  • P2P lending


  • Low liquidity / transactions
  • Price prediction machine information is outdated
  • Need more audits

Nuo network

Nuo network is an open source, unmanaged lending agreement, supported by ConsenSys. The project transfers tokens into a shared flow pool and provides a certain percentage of interest to its users. The pool of funds ensures that borrowers have immediate liquidity. Nuo is currently unique in that it offers 3x margin trading on Kyber and Uniswap. Nuo provides instant liquidity for long or short positions in Bitcoin, Ethereum and some ERC20 tokens. This makes Nuo a contract across DeFi products. The platform seems to be growing rapidly in Asia.

Nuo uses their own centralized oracles, which are closed source. It can be seen that they highlight another pain point of decentralized trading, that is, congestion on the chain during periods of sharp price fluctuations. At the expense of your earnings, you can get a portion of the insurance money, but it is not clear how much assets it can cover if this happens.

On the Nuo network, in some cases, the annual interest rate on loans may be higher than the borrowing rate, but this can only happen when the transaction volume is low.

This is because: "Every Nuo loan has a fixed interest rate, and no matter when you repay it, you have to pay it. This interest rate depends entirely on the currency's reserve utilization at the time of the loan."

The project's smart contract was audited by Quantstamp, but lacked details.

Lack of details in audit reports

(Lack of details in the audit report)

Nuo concluded:


  • Insurance funds can protect you by sacrificing profits and reducing risk
  • Showing potential benefits through market imbalances
  • Margin trading on Kyber and Uniswap
  • Instant liquidity (untested)


  • Lack of proper audit reports
  • Centralized source prediction oracle can empty your account during network congestion
  • Low liquidity in active loans and reserve pools

Lending app

Here, the loan app is also worth mentioning. They have greatly reduced the barriers to entry for crypto lending.

Linen and Dharma generate interest through Compound.

Outlet uses a combination of multiple DeFi platforms, and users don't even need to know that they are using cryptocurrencies. Just bind the app to their credit card.

It's because these apps are so easy to use that the companies behind them will get a share of the revenue.

in conclusion

What is the best practice for lending your valuable crypto assets? After our research, this issue is still pending. For a centralized platform, people have to believe in a group of opaque entities. Most of them start with ICOs for making money (there are many similar ICOs on the market that we don't think are worth analyzing).

For decentralized platforms, one must believe that these relatively young projects, their auditors are comprehensive enough, and developers will not introduce more vulnerabilities in the code. In addition, efforts must be made to eliminate single points of failure for these platforms.

Most of the options we discussed above do more harm than good. Every investor is responsible for accepting their inherent risks when depositing their hard-earned cryptocurrencies into these platforms.

Further risks

When using a centralized solution, the KYC process is inevitable. Using a third-party application introduces another relying party, further increasing system risk.

The decentralized platform is closely related to the dominance of MakerDAO and USDC.

Outstanding loan

(Unpaid loan)

USDC accounts for 99% of DeFi fiat liquidity. If USDC's reputation changes (because the connection is based entirely on trust), DeFi will face problems.

SAI / DAI is directly related to the potential vulnerability of MakerDAO. Finding and exploiting vulnerabilities is not so simple, but for any platform that accepts SAI / DAI, this risk should be considered.

Some see lending as a threat to PoS. All in all, in the yield market, there is fierce competition in staking, and PoS-based systems will have to keep monetary policy open to remain competitive.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!


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