The arrival of blockchain and cryptocurrencies into the Fintech sphere has yet to reap rewards.
According to a newly released report by Graychain, crypto lenders have earned less than 2% on $4.7 billion in loans made.
The startup which looks to bring credit assessment into the world of crypto revealed that from the $4.7 billion believed to have been lent out since crypto lending began, only $86 million has been earned in interest. The 1.8% return is considerably lower than the typical 6 – 10% annual borrowing cost charged.
Not Lucrative But Growing Rapidly
The arrival of crypto lending was supposed to shake up the business loan world. However, whilst the report indicates that the crypto lending industry as a whole may not be as lucrative as the fiat lending industry, it does show that there is indeed a strong demand for crypto lending.
Neil Zumwalde, Graychain’s chief technical officer said:
“Generally these companies that are doing really huge originations are originating really short-term loans. The lending industry is maturing really, really quickly in this space. These markets are becoming more mature and people are trusting it more with their assets.”
Neil Zumwalde, Graychain’s chief technical officer
Having used private data from Maker, Sharma, Unchained Capital and Compound, Graychain found:
- There were 5462 new loans made in the first quarter of 2019. In the second quarter, this grew to 18562 new loans made.
- The total value of the crypto loans made in Q1 was $64.8 million. In Q2, this figure more than doubled, with the total loans made amounting to $159.3 million.
- Compound, second-ranked public protocol, started 2019 with $13 million locked in. By early August, this figure reached $100 million.
With the bulk of the borrowing being made by private lenders, there is still plenty of gaps in the data. However, the conclusion to be made is that there is still some way to go before cryptocurrency lending replaces traditional lending, but it is catching up.
