There are three types of platforms that you can use to lend out your BTC. These include centralized exchanges, decentralized platforms, and dedicated lending sites. Additionally, there are two different types of lending: flexible and fixed. There are more types of lending available on exchanges such as dual investment lending but these advanced types of lending are not recommended.
Flexible lending is when you can lend out your BTC and then stop lending and receive your BTC back within an hour. Fixed lending is when your BTC or USD is locked up to a certain date. Almost always, fixed lending will carry a higher APY (annual percentage yield). APY tells us what % we will make per year from interest. A quick shorthand to interpret APY when you see it is to divide the APY you see by 8760. This will give you the hourly rate.
Some centralized exchanges such as FTX (and FTX US), and Gemini among others offer safe, flexible lending at a typically low interest rate. However, this interest rate can vary heavily with market volatility.
Decentralized platforms typically carry larger interest rates, however this comes at a cost of safety as lending on defi can be notoriously dangerous. Additionally, some lending platforms may not payout lending earnings in BTC, but rather in a native token that is near worthless.
Dedicated lending sites do not allow for trading, but rather purely for lending/borrowing. These sites tend to on average carry higher lending rates than centralized exchanges.
If you are bearish on BTC and don’t want to place limit buy orders, you can also lend out USD. Typically, lending USD tends to offer higher APY than lending BTC. The platform Gemini offers high APY with flexible deposits/withdrawals for USD stablecoins into their earn platform. Use this platform for lending if you reside within the US. You can earn 7.15% annually from USD on Gemini by using GUSD (1:1 ratio with no fees). In order to get GUSD to lend, click here after logging in to Gemini in order to go to the page where you can swap USD into GUSD for free.
If you reside outside the US and would like to participate in flexible lending then using FTX is likely your best bet, due to its safety and generally higher lending rates than Binance.
Now that we have covered the exact dynamics of how you can profit as a HODLer, let’s go over how to assess whether the market is more likely to rise or fall.