In recent years, many companies have faced the question of how to benefit from their crypto assets on the balance sheet. Crypto lending is becoming a popular tool for optimizing liquidity.
What Is Crypto Lending and Why Do Businesses Use It?
Crypto lending is a model where companies can lend their digital assets through platforms and earn interest, similar to bank deposits. In the context of market volatility, many firms are looking at crypto lending as a safer, passive investment alternative.
Real-World Business Cases
Here are several real-world examples:
1. A **Web3 company** with $1.2M in investments placed tokens in a lending program, earning a 6% APR and generating around $72K in passive income.
2. A **media company**, receiving payments in $SOL and $ETH, set up automated placements into floating-rate lending pools for diversification and liquidity.
3. A **fintech firm** with idle USDC and USDT earned 8% APY while maintaining full control over the assets, adhering to clear compliance reporting.
How Hedge Funds Use It
Institutional players implement layered strategies using lending and derivatives:
- placing BTC in lending - using the resulting liquidity as collateral - opening positions via options or futures
This approach allows funds to earn yield while maintaining their positions and trading.
Crypto lending is not just an alternative to trading; it's a robust financial instrument for businesses. It addresses real challenges: monetizing idle assets, managing liquidity, and hedging against risks.
