> ## Content Index > Fetch the complete content index at: https://zipmex.com/llms.txt > Use this file to discover other available public pages before exploring further. # Lending crypto: how it works, what it pays and how you can lose it - URL: https://zipmex.com/blog/lend-your-crypto-how-it-works-and-what-can-go-wrong/ - Published: 2026-10-20T09:13:27.000Z - Updated: 2026-10-25T00:41:50.000Z - Description: Crypto lending means earning interest on coins or borrowing against them. How collateral, margin calls and liquidation work, and where losses come from. - Author: ZIPMEX - Tags: Crypto, #zipmex-newsroom Lending crypto can mean two things. You can lend coins out to earn interest. Or you can pledge coins as collateral and borrow against them. Either way, the main risks are the same: the platform may fail or freeze withdrawals, or a price drop can force your collateral to be sold. The newest reminder came on July 20, 2026\. That day the US Federal Trade Commission (FTC) said three Celsius Network founders were ordered to pay a combined $16.5 million. The FTC had alleged that Celsius told users deposits were safe and could be withdrawn at any time. ![Three labelled facts on crypto lending. Typical crypto lending rates fall between 3% and 8%, according to Embroker. Lent stablecoins can make 1% to 11% APY, sometimes more, according to Ledger. A margin call occurs when collateral drops below a lender threshold, according to Experian.](https://storage.ghost.io/c/d4/f3/d4f34881-0300-4bbe-b8df-78a26d28be4d/content/images/2026/10/zipmex-dae9042c17ea49bc.png) Original ZIPMEX key-facts diagram with three facts on crypto lending: typical rates, stablecoin yields and margin calls, from Embroker, Ledger Academy and Experian. · ZIPMEX key-facts diagram; data: embroker.com, ledger.com, experian.com Crypto lending rates and margin calls/ KEY FACTSCrypto lending rates and margin callsTYPICAL CRYPTO RATESEmbroker says lending rates for crypto typically fallbetween 3% and 8%.STABLECOIN YIELDLedger says stablecoins lent out can make 1% to 11% APY,sometimes even more.MARGIN CALLExperian says a margin call occurs when collateral dropsbelow a lender threshold.Source: embroker.com; ledger.com; experian.com ![Three labelled facts on crypto lending. Typical crypto lending rates fall between 3% and 8%, according to Embroker. Lent stablecoins can make 1% to 11% APY, sometimes more, according to Ledger. A margin call occurs when collateral drops below a lender threshold, according to Experian.](https://storage.ghost.io/c/d4/f3/d4f34881-0300-4bbe-b8df-78a26d28be4d/content/images/2026/10/zipmex-dae9042c17ea49bc.png) Original ZIPMEX key-facts diagram with three facts on crypto lending: typical rates, stablecoin yields and margin calls, from Embroker, Ledger Academy and Experian. · ZIPMEX key-facts diagram; data: embroker.com, ledger.com, experian.com ## Two routes: lending to earn or borrowing against coins **Lending to earn.** Ledger Academy says idle crypto can be lent "directly to other crypto users" for interest (page published March 16, 2021, updated May 31, 2023). There are two kinds of platform: - **Centralized platforms.** A company holds your coins. Ledger warns that in this case "you don't really own your crypto," and the platform "may also charge a service fee." - **Decentralized (DeFi) protocols.** "Self-executing contracts called smart contracts" stand in for intermediaries such as banks, according to Ledger. On Compound, lenders receive cTokens as proof of the amount lent. Those cTokens can be redeemed for the original coins plus the interest earned. **Borrowing against coins.** Experian (June 20, 2025) says you "transfer some or all of your crypto to the platform as collateral." It also says you "retain ownership of your cryptocurrencies while you pay down the loan." Finance.gi says that "once the loan is fully repaid, the crypto is returned." Experian adds that crypto loans "typically have terms of 12 months or less (though some may be longer)." ## How much collateral a loan needs Ledger says "most crypto lending platforms work with over-collateralized loans": you pledge more than you borrow. Its example is that Compound required at least 150% collateral in ETH. That example comes from the 2021 page, so check the protocol's current parameters before relying on it. Loan-to-value (LTV) is the loan amount divided by the value of the collateral. - Embroker (published May 26, 2026): at a 50% LTV, "you'll have to stake $10,000 in crypto to get a loan of $5,000." - Experian: some platforms may let you borrow "as much as 97% of your digital asset balance," though many set lower limits. "A lower LTV is safer but gives you access to less cash." The higher your LTV, the smaller the price drop it takes to reach the lender's limit. ## When a margin call or liquidation starts **Centralized lenders.** Experian says "a margin call occurs when the value of your collateral assets drops below a threshold set by the lender." At that point you may have to add funds, or the platform may sell your holdings. Finance.gi says a fall in the coin's price can push "the LTV … above agreed limits." If the borrower does not respond "within the allowed timeframe," then "the lender may sell some or all of the collateral." **DeFi protocols.** There is often no call and no grace period, only code. Aave's documentation says a position whose health factor falls below 1.0 is "eligible for liquidation." Any wallet can act as liquidator: it repays part of the debt and receives the seized collateral, plus a "liquidation bonus." The bonus follows a Dutch auction, so the lower the health factor, the bigger the bonus. That bonus is paid out of the borrower's collateral. Before you pledge anything, find three numbers in the platform's current terms: the LTV limit, the threshold that triggers a call or liquidation, and how long you have to respond. ## How close does a price drop push your loan to the limit? Enter your collateral value, your loan and a fall in the collateral's price to see your loan-to-value (LTV) after the drop. Then compare it with the limit in your platform's terms. Value of the crypto you pledge as collateral ($)Assumption: Your own collateral value. The default is the article's 50% LTV example of $10,000 staked.Amount you borrow ($)Assumption: Your own loan amount. The default is the article's example loan of $5,000.Fall in the collateral's price (%)Assumption: Your own scenario for how far the coin's price falls. No source predicts it. LTV after the price drop**50 %** __Worked examples (LTV after the drop = loan divided by (collateral value × (1 − price drop)), as a percentage)__ | Value of the crypto you pledge as collateral | Amount you borrow | Fall in the collateral's price | LTV after the price drop | | -------------------------------------------- | ----------------- | ------------------------------ | ------------------------ | | 10,000 $ | 5,000 $ | 0 % | **50 %** | | 10,000 $ | 5,000 $ | 10 % | **55.56 %** | | 10,000 $ | 5,000 $ | 50 % | **100 %** | | 10,000 $ | 9,700 $ | 3 % | **100 %** | - All three values are your own inputs. The $10,000 and $5,000 defaults repeat the article's 50% LTV example and are not terms from any platform. - LTV is the loan amount divided by the value of the collateral. When the result goes above your lender's LTV limit or trigger threshold, a margin call or liquidation can start. - The higher the starting LTV, the smaller the price drop it takes to reach a given limit. This is arithmetic on your inputs only. It doesn't know your platform's actual LTV limit, liquidation threshold, response window, interest, fees, liquidation bonus or tax, and it is not investment advice. 1%Ledger says that stablecoins can be lent for between 1% and 11% APY, sometimes more. Source: ledger.com, Mar 16, 2021 · [Read the source](https://www.ledger.com/academy/lend-your-crypto?ref=zipmex.com) ## What lending pays, and how old those figures are Quoted yields vary widely, and many of them are old: - Ledger: stablecoins can be lent for "between 1 to 11% APY, sometimes even more." This is from the 2021 page, updated 2023. - Embroker (May 26, 2026): crypto lending rates "fall somewhere between 3% to 8%," and stablecoin rates "are often in the 10% to 18% range." The two stablecoin ranges barely overlap, and neither is a live rate from any platform. A high advertised yield is not proof of safety. The FTC says Celsius advertised Earn rewards "as high as 18% annual percentage yield." ## What can go wrong ### The platform fails or freezes withdrawals Experian lists "the potential for platform insolvency or hacks" among the risks. It does not say collateral or deposits are insured. The clearest case is Celsius Network. On July 13, 2023, the FTC announced a settlement with the company. It included a $4.7 billion judgment, suspended so that Celsius could return its remaining assets to users through bankruptcy, and a permanent ban on offering products used to deposit, exchange, invest or withdraw assets. The FTC said Celsius had falsely claimed it "maintained a $750 million insurance policy for deposits." It also said Celsius had falsely promised users they could withdraw "at any time." Executives made these claims days before the company froze withdrawals, and Celsius filed for bankruptcy in July 2022\. The July 20, 2026 orders against the founders were: - Alexander Mashinsky: $10 million - Shlomi Daniel Leon: $4.1 million - Hanoch "Nuke" Goldstein: $2.4 million ### Regulators may treat the product as a security On February 14, 2022, the US Securities and Exchange Commission (SEC) said BlockFi's interest accounts were securities that should have been registered. BlockFi agreed to a $50 million penalty to the SEC and another $50 million to 32 states. ### Forced sales and tax Experian says that if you default, the platform "may liquidate your holdings, which could result in a tax bill," especially if the coins have gained value since you bought them. Finance.gi says that "in many jurisdictions, borrowing against crypto does not trigger a taxable event." Rules vary by country, so check your local tax treatment. ## Questions to answer before you lend or pledge - Who holds the coins: a company or a smart contract? Can you withdraw at any time, and what does the agreement say happens in insolvency? - What are the LTV limit, the trigger threshold and the response window? - Is the quoted rate live, or taken from an old page? - What fees apply, and which regulator, if any, supervises the product? Limitations: the yields and collateral figures above come from educational pages, some written in 2021–2023\. None of them is a current rate or term from any platform. This is not investment or tax advice. 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