As the global cryptocurrency community expands, an increasing number of coin investors are starting to actively use crypto lending platforms as part of their day-to-day investment activities.
This makes sense, as it isn’t difficult to see the benefits of platforms that offer lending services, typically together with interest earning accounts, especially if the providers have reasonable fees, fair repayment terms, and excellent returns on investments.
Today, we will be reviewing one such platform that is largely focused on stablecoins and has managed to establish a good track record over the past couple of years: CoinRabbit.
What is CoinRabbit?
CoinRabbit is a decentralized finance platform offering cryptocurrency holders the option to take out crypto-backed loans, but also generate profit through interest on deposited stablecoins. Although a relatively new system, CoinRabbit has become well known since its launch in 2020 for its combination of easy-to-use lending tools, a straightforward registration process with no KYC (i.e. identity verification) requirements, and a competitive annual percentage yield of 10% on stablecoins.
Although this crypto lending platform supports a limited number of cryptocurrencies that can be used as collateral, their zero-fee system, ease and speed of use, as well as excellent customer service are sure to appeal to beginner users and experienced investors alike.
For the TL;DR crowd, here are some of CoinRabbit’s main pros and cons.
|✔️ User-friendly interface and navigation system suited for beginners|
✔️ No KYC requirements
✔️ No fees when withdrawing or depositing funds
✔️ No time restrictions for loans or interest earning
✔️ Competitive 10% APY on stablecoins
✔️ 24/7 customer service
✔️ Fixed interest rates on loans
|❌ Fiat currencies are not supported (no crypto-fiat or fiat-crypto conversions)|
❌ Comparatively high interest rates on loans
❌ Limited number of cryptocurrencies accepted as collateral
❌ Main focus on stablecoins
❌ No mobile app
How Does CoinRabbit Lending Work?
Let’s kick off the review with CoinRabbit’s flagship feature: crypto-backed lending. Just like with other similar platforms, customers can use CoinRabbit to take out loans after depositing a certain amount of their crypto assets as collateral. The loan amount gets charged interest, and the collateral can be returned at any time as long as the repayments are made (including interest).
CoinRabbit interests have an annual percentage rate (APR) between 14% and 16% depending on the loan currency you select. APR is calculated on a monthly basis starting from when the loan funds get approved, and you repay the APR once you close the loan, meaning there are no monthly repayments.
Getting a Loan on CoinRabbit
The process of taking out a loan on CoinRabbit is quite straightforward and takes 5 to 10 minutes to complete.
Once you’re on the website, the first step is to calculate the loan amount by inputting your preferred collateral option using their built-in calculation tool. You will then be shown what the monthly interest rate will be and the liquidation price. After you’ve reviewed these details, all you need to do is specify the payout address to which the funds should be transferred, and then confirm the transaction using your phone number or email address.
For risk-management purposes, the borrowed assets get transmitted via CoinRabbit’s partner, ChangeNOW, once your collateral has been deposited. The loan is delivered to the designated wallet if the security check is successful, and the APR starts accumulating from that point onwards, whereas the cut-off point for accumulated APR is the moment you choose to close it and make your repayment.
The minimum deposit amount is $100. However, users who deposit Bitcoin can borrow as low as 80 USDT/USDC, whereas Ethereum and Bitcoin Cash users can borrow as little as 30 USDT/USDC. CoinRabbit, like most other crypto lending platforms, does not have a loan cap, which means you have the option of borrowing as much as you want as long as you have the necessary collateral to secure the loan.
Users who wish to take out several loans at once can do so by using their current collateral amount or depositing more of their assets. Each loan can be individually monitored, whereas repayment details and interest rates all remain unique for each separate loan.
The duration of the loan on CoinRabbit is unlimited, but be aware that there is a $100 prepayment fee if you choose to pay off the loan within 30 days. Therefore, we do not think that this platform is well-suited for users needing a short-term loan period.
At the time of writing, CoinRabbit offers the following cryptocurrency options for loans:
- Tether (USDT ERC-20)
- Tether (USDT TRC-20)
- USD Coin (USDC)
Why Does CoinRabbit Primarily Deal With Stablecoins?
Although some people might consider the lack of altcoin or fiat options on CoinRabbit a disadvantage, the developers are firm in their stance that stablecoins are safer and more reliable to use due to their inherent non-volatility. Given that their price is pegged to a fiat or “real-world” currency, it can never dramatically increase or decrease over a short period of time, which is the case with all other digital coins, even the most dominant ones such as Bitcoin or Ethereum.
Stablecoins are also accessible across a range of different blockchain networks, including Ethereum, Bitcoin, EOS and TRON, making it easy to exchange between them. Additionally, stablecoin transactions tend to be much faster because of the blockchains they are based on.
Stablecoins also have an added advantage of having the consistency and reliability of a fiat currency, but none of the associated costs that go with fiat transactions. Transactions done in fiat involve (sometimes multiple) intermediaries that charge their own fees, but these intermediaries or “middlemen” do not exist when dealing with stablecoins like USDT or USDC. Stablecoin transactions only involve a network fee which is normally much lower.
Finally, if you own an online store and offer crypto as a payment method, you could benefit from fixing your prices in USDT without ever having to worry about price volatility in case of depreciation.
Using Stablecoin Loans
Here are some of the ways you could take advantage of a loan in a stablecoin currency:
- Purchase other cryptocurrencies. If you’ve researched the market and wish to make an investment on a different cryptocurrency that could generate good returns in the future, you could use stablecoins to make that purchase. (Always consider all potential risks and do your own research before making any sort of crypto investment, especially with borrowed funds.)
- Real-world purchases. Stablecoins can be used to pay for goods and services in places that accept payments in currencies such as USDT or USDC. Due to the reasons we have already discussed, paying in stablecoins could be much faster and more convenient than using alternative digital coins.
- Staking purposes. By being smart about it, you can use your newly acquired stablecoins to stake them on reliable staking platforms and generate income through that. Once you’ve accumulated enough revenue, you can use part of it to repay your loan with interest and keep the rest for yourself, to either use up or reinvest.
- Crypto-fiat conversions. Stablecoins are frequently used to buy traditional / fiat money which you can use to cover utility bills or every-day purchases.
How Does CoinRabbit Calculate Collateral?
In order to qualify for a loan from CoinRabbit, you will need to provide double the equivalent amount in deposited collateral because the platform has a loan-to-value (LTV) ratio of 50%.
As an example, let’s say you would like to deposit 1 BTC as collateral in order to take out a loan in USDT. If 1 BTC is worth $30,000, you would get $15,000 worth of USDT.
The rationale behind this low LTV margin is explained as a risk-minimization strategy and a way to protect the end user from the high volatility of their collateral’s value. The 50% LTV ensures that CoinRabbit does not sell off the deposited collateral before its value drops to 50%, effectively securing it from liquidation.
At any rate, users should keep track of their crypto collateral’s price throughout the duration of the loan to ensure they don’t miss it nearing the 50% LTV threshold.
Currently, the following coins can be used as collateral on CoinRabbit:
- Bitcoin (BTC)
- Ethereum (ETH)
- Bitcoin Cash (BCH)
- Nano (XNO)
- DogeCoin (DOGE)
- Ripple (XRP)
- Firo (FIRO)
- Monero (XMR)
- Ravencoin (RVN)
- Shiba Inu (SHIB)
- DigiByte (DGB)
- Zilliqa (ZIL)
How Does Interest Earning on CoinRabbit Work?
CoinRabbit’s second major feature is interest earning. The platform offers users the opportunity to increase their coin holdings over time by hosting savings accounts that pay interest on the users’ deposited virtual assets. This is especially beneficial during periods of market dip or volatility, as investors can be assured that their assets will continue to accumulate income over time.
Currently, interest accounts can make 10% APY on deposited stablecoins like Tether and USDC. Interest gets accumulated daily and is calculated based on the entire deposit amount, which means that it does not compound over time.
How to Start Earning Interest on CoinRabbit
The process of opening a savings account is basically the same as applying for a loan on CoinRabbit. To begin, select your deposit amount as well as the type of stablecoin you want to use. The platform will ask you to enter your phone number for verification purposes, but you will also need it to monitor the status of your deposit and the amount of interest you’ve accumulated. Then, confirm and submit your deposit.
The funds are processed through the AML security level, and the platform’s risk-control system verifies every transaction on the blockchain.
As soon as your deposit gets activated, you can start earning interest on your stablecoins. Keeping track of accumulated APY is done via the dedicated dashboard that gets updated on a daily basis.
Users have the option of increasing their deposit amount at any time in order to maximize their prospective profits. There are no time restrictions on the deposits, and the user can deactivate their savings account and withdraw all the funds at any moment.
Are There Any Risks?
As with any other DeFi lending project, there is always a chance of losing your deposited collateral, or that the value of your collateral will plummet within the duration of your loan. In such extreme circumstances, your funds will be liquidated if the price falls below a certain level, and your collateral will be sold to pay for the losses.
However, a nifty CoinRabbit feature is that they notify you in advance whenever the market value of your deposited coins drops below a certain level. Aside from regularly tracking the market yourself, these notifications should help you gauge your positions better and decide on next steps accordingly.
As for depositing your crypto for interest earning, in general, this strategy allows you to mitigate much of the risk associated with price depreciation, especially when the crypto market appears unsure or volatility has risen dramatically. Your crypto deposits on CoinRabbit would allow you to profit consistently regardless of the state of the cryptocurrency market.
At any rate, it is up to the user to make informed decisions about their investments, as well as the level of trust they put into a platform like this.
Is CoinRabbit safe and secure?
As regards security levels, CoinRabbit was launched in partnership with ChangeNOW and Guarda Wallet, both of which have a long track record of credibility. CoinRabbit, like most crypto lending companies, keeps your funds and collateral in a Guarda “cold” wallet that is not connected to the internet. The platform assures that users’ private keys are held in safe storage and are only accessible over a VPN via specific IP addresses. The developers also say that the private keys get renewed on a monthly basis, and that your balance is checked every second using ChangeNow’s risk-management system.
Through these measures, it does appear that hacking could hardly be an issue on this platform; regardless, you should keep in mind that CoinRabbit does not supply insurance on their savings accounts and loans. This is the case with many other platforms: ultimately, you are entrusting them with your asset keys. That means you can still lose your digital assets if CoinRabbit or its partners fail as a business. Therefore, it would be ill-advised to pour in huge sums of money in any third-party asset management tool, including CoinRabbit.
Aside from this, CoinRabbit has a TrustPilot score of 4.7, and many customers have shared positive reviews regarding the platform’s helpful customer service, quick and reliable loan transfers, as well as the platform’s competitive interest rates.
Does CoinRabbit Have Any Fees?
CoinRabbit does not charge any fees for depositing or withdrawing assets from the platform. However, they do charge a $100 fee to borrowers if they decide to close their loans in less than 30 days.
CoinRabbit Compared to Other Lending Platforms
Here is an easy overview of alternative third-party platforms offering similar services to CoinRabbit and how they compare to each other.
Basically, CoinRabbit takes the win in terms of having the highest annual percentage yield of deposited stablecoins, so if you’re keen on earning interest on Tether or USD Coin, this platform would likely be your best option.
Other platforms such as Nexo, Celsius, BlockFi and Crypto.com offer slightly lower APY rates on their stablecoin savings accounts; however, keep in mind that these platforms have other cryptocurrencies on offer that can also be used for interest earning, which CoinRabbit simply cannot compete with.
In terms of APR for loans, while CoinRabbit offers fixed rates no matter the market state, their interest rates are definitely some of the highest ones we’ve seen compared to other, similar services.
In addition, most of them do not have any fees associated with depositing and withdrawing funds from these platforms, so CoinRabbit is pretty much on par with everyone else in this regard.
|Platform||APY on stablecoins||APR for loans||Deposit and withdrawal fees|
|CoinRabbit||10%||14% – 16%||None on deposits, $100 withdrawal fee within 30 days|
|Nexo||8%||0.10% – 13.9%||None|
|Celsius||7.1%||1% – 8.95%||None|
|BlockFi||7%||4.5% – 9.75%||None on deposits, withdrawal fees depend on the currency|
|Crypto.com||1.5%||2% – 8%||None|
Is CoinRabbit Worth It?
To sum up our CoinRabbit review, we feel that the platform is ideally suited for beginner investors wishing to use cryptocurrency to grow their income in stablecoins. In exchange, the platform provides a secure and protected means of earning high-interest returns, but also obtaining rapid stablecoin loans.
While CoinRabbit’s interest rates for savings in stablecoins are typically higher than those offered by similar platforms, there are some other options that provide higher yields in possibly more attractive currencies. Indeed, the restricted number of supported cryptocurrencies is a definite disadvantage, although it should be noted that more types of coins are intended to be introduced in the future.
If you want to earn interest on your stablecoins or use your cryptocurrency as security for a stablecoin loan, CoinRabbit is definitely a viable option. However, there are no possibilities for depositing money, obtaining a loan, or accumulating returns in fiat money.
There are several crypto-backed lending sites that demand registration, request monthly payments, and maintain harsh repayment terms. CoinRabbit has opted to make life easier for its community by developing an easy-to-use platform that addresses the majority of these difficulties, making collateralized crypto loans more accessible.
Disclaimer: All information contained here should not, under any circumstances, be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.