Crypto Lending Explained: Earn Interest or Borrow?

Updated 10 September 2026

Crypto lending describes two different decisions: lending assets to earn a return, and pledging crypto to borrow money. Confusing them makes it easy to compare the wrong rate or misunderstand what happens to your assets.

If you hold BTC and need cash, start with Bitcoin-backed loan terms. If you hold stablecoins and want to assess interest-bearing products, review Growth Account terms and eligibility. Neither route is risk-free.

The lender and borrower have different goals

Interest offered to a depositor is not the same as the APR charged to a borrower. A lending business must also cover operations, liquidity and risk; the rates need not match.

How lending for yield works

You transfer assets into an eligible product. The terms determine how the provider can use them, how returns accrue and what your withdrawal rights are. On a protocol, smart contracts and market parameters perform much of that work; on a custodial platform, legal agreements and the provider’s operations also matter.

Ledn currently offers Growth Accounts for USDC and USDT, subject to location and other requirements. Its public disclosures link their funding primarily to BTC-backed retail loans. Ledn’s BTC and ETH Growth Accounts were retired in 2025. Holding Bitcoin in a Transaction Account does not generate BTC Growth interest.

Read stablecoin lending for the depositor-side mechanics and crypto savings accounts for account-selection criteria.

How borrowing against BTC works

You pledge BTC, receive proceeds and repay according to the agreement. Ledn’s standard product page describes a typical initial 50% loan-to-value ratio: roughly $100,000 of collateral value for a $50,000 loan. The collateral value can change while the debt remains due.

If that collateral falls to $75,000, the same $50,000 debt represents about 66.7% LTV before interest and other adjustments. A sufficient further decline can trigger liquidation under the agreement. Keeping market exposure therefore also means retaining market risk.

Ledn’s public standard terms describe a 12-month term, no required monthly payments and no early repayment penalty. Confirm your actual quote, eligibility and maturity obligations. Lack of a conventional credit check does not remove identity verification or the need for collateral.

Custody is a separate question from yield

Do not assume that all assets on a platform are treated identically. Growth assets fund interest-generating activity. Pledged loan collateral is governed by the loan’s custody and funding provisions.

Ledn’s loan collateral may be re-posted to permitted funding partners under the applicable arrangements, but it is not lent out to generate interest. Read the custody-model explanation and your contract rather than reducing this distinction to a blanket no-counterparty-risk claim.

Decide using the downside, not just the rate

For yield, ask whether you can tolerate a withdrawal delay or loss of principal. For borrowing, identify a repayment source and a collateral-management plan before taking the loan. Stablecoin depegging, provider failure and operational errors are different risks and require different checks.

If your goal is liquidity rather than income, read how to borrow against crypto. If your goal is income, begin with lending risks and compare the current product terms. There is no single crypto-lending option suitable for every risk tolerance.

This article is for general information, not financial, investment, tax or legal advice. Digital assets and yield products can lose value or principal and may involve delayed access. Borrowing involves interest, fees and the risk of collateral liquidation. Eligibility and terms vary by jurisdiction and may change; the applicable agreement governs. Consult qualified advisers for your circumstances. Read Ledn’s Risk Disclosure Statement and Disclaimers.