Crypto lending platforms connect supplied assets with borrowers or make liquidity available through smart-contract pools. Suppliers may earn a variable rate; borrowers post collateral and pay interest. The rate shown today is not a promise: utilization, incentives, governance, and market conditions can change it. Yield must be weighed against contract, collateral, liquidity, oracle, and counterparty risk.
Borrowing and lending checks
- • Rate: Separate base interest, incentives, fees, and compounding.
- • Collateral: Review loan-to-value, health factor, oracle, and liquidation penalty.
- • Exit: Check available liquidity, withdrawal queues, pauses, and custody.
Understand rates and incentives
Compare supply and borrow annual rates, whether they are variable or fixed for a term, compounding method, reward tokens, caps, and utilization. Promotional rewards can disappear and may be volatile. Net return should include protocol fees, network costs, withdrawal conditions, and the possibility that available liquidity is temporarily insufficient.
Monitor collateral and liquidation
Borrowing capacity depends on collateral factors and asset prices. Review loan-to-value limits, liquidation threshold, penalty, oracle sources, isolation rules, and which collateral can be seized. A position can become unsafe quickly when collateral falls or debt rises. Alerts help, but they can be delayed and do not replace a margin buffer.
Distinguish protocol and custodial risk
Onchain markets expose users to contract, oracle, governance, and asset risks; custodial lenders add dependence on a company’s solvency and withdrawal policy. Check audits, incidents, administrative powers, asset custody, supported networks, regional access, and recovery procedures. Deposits are not automatically equivalent to insured bank savings.
Continue your research
For related checks, review stablecoin tools and yield farming platforms.