4 Best Crypto Lending Platforms for Uncollateralized Loans

Over the last few years, the rise of DeFi (decentralized finance) has been quite extensive, as it offers a ton of incredible benefits over its counterpart, TradFi (traditional finance). In addition to allowing holders to earn money on their existing crypto by staking, users can also borrow crypto without collateral, and even lend their assets to other users.

These uncollateralized loans are also called flash loans, and they can be taken by anyone, as long as the loan is returned within the same transaction. The benefit of borrowing crypto this way is that you can make easy profits by trading the loaned money. If your starting capital is $1,000, a 1% profit from a trade is only $10. On the other hand, with a $100,000 flash loan, which anyone can get, a 1% profit amounts to $1,000.

With the basics of flash loans out of the way, let's go over the best crypto lending platforms for flash loans.

1. AAVE

AAVE is a DeFi protocol on the Ethereum chain that offers different types of lending, including both flash loans and collateralized loans. Namely, the benefit of using AAVE is that the network is incredibly vast and extensive. In addition to being on the ETH blockchain, AAVE is also connected to other chains, like Avalanche and Fantom. The benefit of this is that you're not limited to getting flash loans only on ERC20 tokens—you can get flash loans on tokens from other blockchains too.

Moreover, it's widely thought that AAVE is the most popular DeFi platform at the moment. The reason behind this is that it offers an all-in-one solution for decentralized finance, including AAVE lending, borrowing, and staking. Moreover, it's an incredibly beginner-friendly platform, as it has an intuitive interface that anyone can adapt to. Its only downside is that it has slightly higher fees than some of its competitors.

» Want to learn more about AAVE? Read our AAVE review.

2. dYdx

Similarly to AAVE, dYdX is a decentralized protocol on Ethereum that's been around for quite some time. It was one of the first to offer crypto margin trading and it still continues to be one of the best platforms in the DeFi space. Moreover, getting a dYdX flash loan is relatively easy, as the entire process is described in their documentation.

Usually, people choose dYdX over other DeFi protocols primarily because of its low fees. In fact, many believe that dYdX has the lowest fees in the DeFi space, simultaneously for lending, borrowing, and withdrawing. However, the user experience of the platform is not as intuitive as with other platforms, so we would recommend it to those who have at least some experience in the DeFi space.

3. Uniswap

Just like the two platforms above, Uniswap is a decentralized protocol primarily used for swapping ERC20 tokens. However, unlike the other platforms we've described above, Uniswap doesn't have traditional lending or borrowing features. Still, you can take out a flash loan on Uniswap by using the "flash swaps" feature. All you have to do is create a smart contract and issue the terms of the loan.

The primary reason why users go to Uniswap is its relatively low fees and its wide variety of assets. However, we would only recommend using it if you intend on using flash loans and no other DeFi feature. Since the platform doesn't offer lending and staking, your crypto holdings won't be earning you any interest here. So, if you're looking for an all-in-one solution for DeFi, then Uniswap probably isn't the right choice for you.

» Need help creating a smart contract? Read our guide to starting a smart contract.

4. PancakeSwap

Unlike the other protocols on this list, which run on the Ethereum Blockchain, PancakeSwap is a decentralized protocol that works on the Binance Smart Chain (BSC). So, if you'd like to work with BEP20 tokens, like BUSD, CAKE, and WBNB, PancakeSwap is the right platform to use.

Unfortunately, PancakeSwap being on BSC has a downside, too. Since the protocol is on the Binance Chain, you won't be able to take out flash loans for ERC20 tokens, like USDT, SHIB, and LINK. So, we would only recommend PancakeSwap to those who are interested in borrowing BEP20 tokens. Other than that, the platform is truly one of the best in the DeFi space, offering an intuitive interface for beginners, fixed-term staking, lending, and borrowing.

Conclusion

Now that we've covered the best crypto lending platforms, make sure you choose the right one based on your needs. Also, keep in mind that flash loans are not risk-free, as, in some cases, you could end up losing more money than you earn. So, if you're a beginner in the DeFi space, consider doing a bit more research on how flash loans work before you dive right in.