Crypto Loans are easy with Crypto Owl

How do crypto loans work?

Crypto loans are typically collateralised. The borrower deposits a certain amount of cryptocurrency (such as Bitcoin or Ethereum) as collateral on a lending platform. Based on the value of this collateral and platform-specific loan-to-value (LTV) ratios, the borrower can borrow funds. If the loan is not repaid, the platform can liquidate the collateral to cover the loan amount, protecting the lender. Interest rates and loan terms vary by platform and loan type.

The process generally includes:

1. Depositing collateral cryptocurrency
2. Borrowing funds against the collateral
3. Repaying the loan plus interest within agreed terms
4. Retrieving collateral upon full repayment

What are crypto flash loans?

Flash loans are a novel and unique type of crypto loan available only in decentralised finance (DeFi). Unlike traditional loans, flash loans do not require any collateral upfront. Instead, the borrower must repay the entire borrowed amount, plus a small fee, within the same blockchain transaction. If the repayment is not completed instantly, the entire transaction is reverted, meaning the loan never actually happened.

Flash loans harness smart contracts to enable this instant borrowing and repayment process. Because flash loans execute in a single transaction, the lender faces no risk of default, as the smart contract ensures the loan is repaid instantly or cancelled.

Crypto lending in 2025

Crypto loan businesses have surged in popularity in 2025, with both centralised (CeFi) and decentralised (DeFi) platforms facilitating billions in outstanding loans. The total value of crypto-backed loans (DeFi and CeFi combined) reached about $44.25 billion at the end of Q2 2025, with DeFi loans accounting for $26.47 billion—an all-time high for decentralised lending.

Crypto lending is now an entrenched part of the digital asset ecosystem, with billions in loans outstanding and wide-ranging options for institutional and retail borrowers, offering attractive alternatives to traditional finance and increasing overall market liquidity.

Top crypto loan platforms in 2025

A summary of the top crypto loan businesses and their loan values in 2025:

• Tether (CeFi): Outstanding loans approximately $10.14 billion, maximum loan-to-value (LTV) around 70%, interest rates vary. It is the largest centralised crypto lender.
• Nexo (CeFi/DeFi): Outstanding loans about $1.96 billion, maximum LTV between 50-70%, interest rates ranging from 5% to 18.9%. Nexo operates in both centralised and decentralised finance markets.
• Figure (CeFi): Offers home equity line of credit (HELOC) with outstanding loans around $11.1 billion, max LTV up to 75%, and an interest rate of about 8.91%. Known for fast funding and advanced custody techniques.
• Aave (DeFi): Holds over $23 billion in liquidity, max LTV typically 50-70%, with variable interest rates based on liquidity pools. It is the largest decentralised lending platform.
• Compound (DeFi): Manages billions in loans, with similar LTV ranges (50-70%) and interest rate variation, providing a flexible asset borrowing environment.

These platforms facilitate a wide spectrum of loan values and terms, supporting both institutional and retail borrowers in today's crypto lending market.

Things to consider

Crypto loans can give you access to liquidity without selling your holdings, but they come with risks: volatility can trigger liquidation, and not all providers are regulated. Understand the terms, collateral ratios, and fees before you commit. Always do your own research and never borrow more than you can afford to repay.