With this new lending experience, you’re just a few taps away from putting your money to work. Pick a coin to lend, pick a smart contract, and enter the amount you wish to lend. Your crypto is then deployed directly to the smart contract to start earning interest.
Once you’ve loaned out your crypto through the DeFi app(s) you can watch your interest grow right from your Wallet app.
And you can cash out by withdrawing the crypto from the smart contract back to your Wallet.
Best of all, this feature is available to users around the world on day one. We’re rolling out on iOS this week, and Android will follow in the coming weeks.
DeFi borrowing and lending apps are “smart contracts” or programs that run on the Ethereum blockchain.
After you deposit your crypto into the DeFi contract, the contract then loans your crypto out to borrowers who pay interest. The contract dynamically manages interest rates based on the supply and demand for loans.
DeFi loans are backed by collateral from the borrower. So, for example, if a borrower wants to borrow $50, they might need to lock up at least $100 of crypto on the blockchain as collateral first (exact requirements vary by contract).
If the borrower does not repay or if the collateral value falls below a certain level, the contract attempts to sell the collateral to recover the debt and repay lenders.
At the time of publication, you can lend out Ethereum and a variety of Ethereum-based tokens such as USDC, DAI, BAT, REP, WBTC and ZRX. Interest rates currently vary from 0.03% to 4.17% APR depending on the coin and contract you choose. Interest rates are floating and can change frequently.
Before you get started, please be aware that DeFi lending apps are relatively nascent and come with risks. DeFi apps are programs running on the blockchain, and like any computer code they can potentially have bugs that cause you to lose money. Returns are not guaranteed and your deposits are not insured.