Today’s focus will be aimed at cryptocurrency lending platforms. Several high profile cryptocurrency lending platforms like BitConnect and USI Tech have collapsed as nothing more than blatant Ponzi schemes, a scam which basically pays the legacy investors, with the capital of new investors, until the scam becomes unsustainable and collapses.

Some of the more popular lending platforms out there inspired legions of investors to bring other people in via the affiliate program and rewards structure of the scam, engineered to constantly bring in new money, until the house of cards implodes, bankrupting everyone involved. This produced some of the most hated crypto personalities of 2017.

Some lending platforms claim to be legitimate businesses and operating lawfully, so I will have to dig in and see if there is any substance to them. Today I will be diving into the world of lending platforms, and calling out the scams, and trying to find the serious decentralized lending platforms. (Pro tip, HYIP, means Ponzi scheme. Any guaranteed profit or returns mean it’s a scam).

A closer look at lending platforms

1. Salt

  • Salt is based in Denver, Colorado, so they are a US-based business, which means US laws for regulatory compliance, and consumer protection.
  • They have been featured in Forbes, so you know they are being taken seriously by the lending industry.
  • Salt has a new and industry-wide disruptive business model.
  • They are actually processing Bitcoin and Ethereum collateralized loans as we speak.
  • They are rolling out support for Altcoin collateralized loans, very soon.
  • Borrowers can receive USD, GBP, YEN, EUR, RMB, CHF, fiat currency funding.
  • Currently available in New Zealand, the United Kingdom, and select states in the United States.

Salt, in my opinion, is the most legitimate lending platform. They are already making loans collateralized in cryptocurrency, to actual living breathing customers. Salt doesn’t care if you have good or bad credit, they will give you the loan, because you need to put up an equivalent (or more) amount of cryptocurrency as collateral. They are not harmed if you don’t pay back the loan, because they have your BTC, or ETH (other Alts will have support soon). You can also earn by being a lender through Salt, although you must be an accredited investor.

2. Ethlend

  • Ethlend is a peer to peer crypto loaning platform
  • It has a similar model to Salt, in that borrowers post collateral to cover the loaned amount
  • Ethlend has support for ERC-20 tokens as well as the native LEND token
  • The LEND token grants users discounts on fees when using Ethlend
  • They offer fiat based loans and will offer support for Altcoins soon (other than ERC-20 tokens)

Ethlend is another lending platform that doesn’t seem to be an outright scam. They are live now, and actually facilitating peer to peer loans for Ethereum and ERC-20 tokens. They will be adding support for other Altcoins soon. Ethlend allows users to either lend and gain interest, or to receive funding with collateral. You do not have to be an accredited investor to make loans either.

3. Cryptolend

  • Uses bots to automate the margin lending process on cryptocurrency trading exchanges
  • Users lend through the APIs of Bitfinex, Poloniex, and Quione exchanges
  • Margin lending provides liquidity for traders and charges high short-term compounding interest
  • You can lend all cryptocurrencies listed on Poloniex, Bitfinex, and Quione
  • Has been a functioning platform since 2016

Cryptolend is an online bot which allows you to automate margin lending on 3 different cryptocurrency exchanges. Your money stays in your account at all time so you never face risk from Cryptolend in regards to your funds. You create an account, link to the API of your Poloniex, Bitfinex and Quoine accounts, and the bot makes loan offers to traders seeking margin funding. The only risk you face is from the market itself, which is unavoidable, but low in my opinion. This option is much more efficient than manually margin lending and less technical than creating a bot of your own to stay on top of your loans. Unlike Bitconnect, the Cryptolend bot exists, and it only offers loans for you, in terms you set in advance, it is not a fabled trading bot. While different than the other “platforms”, Cryptolend is a way to generate decent interest on short-term loans in fiat and crypto.

4. PayPie

  • Credit risk assessment platform, and lending on the blockchain
  • PayPie is trying to be a legitimate fintech company disrupting the industry
  • The PayPie platform is live in beta as we speak.
  • Paypie has an invoice marketplace which matches lenders and borrowers

PayPie is another lending platform on Ethereum that aims to disrupt the risk assessment and lending industries using blockchain technology for immutable data storage and record keeping. It plans to offer real-time risk assessment and auditing as well as matching qualified borrowers with lenders. PayPie allows you to earn interest through making loans on the platform but also aims to do much more than this, with a variety of additional services. PayPie just launched its live platform in a beta release, that allows users to make and receive loans now, however, I don’t think it’s been live long enough to see much adoption or volume.

Possible Scams

1. Monetize Coin

  • Monetize Coin exhibits all the warning signs of an obvious Ponzi scheme
  • They promise returns with a Bitconnect style business model with an affiliate program to bring in fresh victims.
  • The claim to have an “enterprise level, automated, machine learning, traffic arbitrage platform outperforms any so-called “volatility trading bots” for investor returns”
  • I would not invest a single penny with this platform, due to its obvious scam characteristics

Monetize coin is a brand new lending platform on the Ethereum network. It’s an ERC-20 token that you can supposedly stake with an “enterprise level, automated, machine learning, traffic arbitrage platform outperforms any so-called “volatility trading bots” for investor returns”. Simply put, it’s a Ponzi scheme promising unsustainable returns like 40 percent monthly with a 0.1-0.25 percent daily bonus depending on how much you “invest”. I would recommend you stay clear of this one unless you are prepared for Bitconnect style risk.

2. NovaChain

  • NovaChain exhibits all the warning signs of an obvious Ponzi scheme
  • They promise returns with a Bitconnect style business model with an affiliate program to bring in fresh victims.
  • They claim to have a financial management service “offering an increase in your initial investment of up to 52% on a monthly basis using our financial management service on the NovaChain platform”
  • I would not invest a single penny with this platform, due to its obvious scam characteristics

NovaChain is another terribly obvious scam. It seems to be a classic Ponzi scheme like Bitconnect, and even has similar lockup periods and profit guarantees and daily bonuses. NovaChain claims to offer 30-40 percent returns depending on the kind of “staking” you decide to do.  NovaChain offers 0.03-0.42 percent daily bonus interest, which is another identifying mark of a scam, promising unrealistic returns.

3. Etherlink

  • Etherlink is actually the next scam from the scammers who brought you Lendconnect, the now-defunct Ponzi scheme which collapsed in March.
  • The Etherlink website contains no info about the people actually behind the “project”
  • They have the same scam model as Bitconnect, Monetize, and NovaChain, promising outsize returns daily, and bonuses, as well as an affiliate program to bring in fresh victims
  • I would not invest a single penny with this platform, due to its obvious scam characteristics

Etherlink is another Ponzi in the lending platform market. Most of these lending platforms follow a Bitconnect style model promising ridiculous returns, lockup period, affiliate program and unsustainable daily bonuses. Another hallmark of these scams is that their exchange is the only exchange trading their scam token. Etherlink is no different. Stay away unless you’re a gambler and don’t care about investing in scams. The people behind Etherlink have already cleaned out a bunch of naive people trying to get rich quick with their other scam Lendconnect. I expect this Ponzi to finish exactly the same.

Final Thoughts on Lending Platforms

I will throw out the disclaimer that personally I have never used any lending platforms because I am a hodler. Lending out my Bitcoin is not for me, I would rather just keep it in my ledger in cold storage. That being said, the lending platform market is pretty schizophrenic. It almost has multiple personalities, in a sense.

On one hand, we have companies that really are trying to try out a new business model, that has the potential to be very disruptive to the incumbent loans industry. We have opportunities for people who can’t get traditional financing to benefit from a peer to peer market that also benefits the lenders who can earn income on their loans.

On the other hand, we have a never-ending sea of obvious Bitconnect style Ponzis that only exist to enrich the people behind the scheme, at the expense of those who invest. The Ponzis keep imploding taking everyone’s wealth with them and new ones keep springing up in their place, to do it all over again.

In order for cryptocurrency lending platforms to be taken seriously by the community, there needs to be a clear division between scam lending sites, and legitimate fintech companies trying to use crypto to collateralize peer to peer loans and disrupt the legacy lending industry.


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