Cryptocurrency lending and traditional bank lending may seem like financing methods, but their approaches are so different that they hardly belong to the same category.

The traditional route follows the old way: banks act as intermediaries. To borrow money, you first need to pass a credit check, with asset verification and transaction history verification all essential. From submitting the application to receiving the funds in your account, it can take days or even weeks. The advantage is strong regulatory oversight, making the risks relatively controllable; the downside is that it’s too slow and rigid, and interest rates depend on the central bank’s policies and your credit score.

Crypto lending operates on a completely different logic. Smart contracts take center stage, and over-collateralization (usually 120%-150%) allows for instant fund transfers, with no need for credit checks. Supply and demand directly determine the interest rates, with no human intervention. It sounds very appealing, but the risks are obvious: market volatility can cause your collateral to plummet in value instantly, leading to forced liquidations.

Looking ahead to 2026, the crypto lending market faces dual pressures: tightening regulations and volatile assets like BTC. Many institutions have already shifted their approach, no longer treating it as a core business but rather using it as a tool for leveraged trading or short-term liquidity management. Traditional lending, on the other hand, has maintained its position in real economy financing, offering stability but limited flexibility.

Both models have their own ways of thriving; choosing which path depends on your needs and risk tolerance.