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Crypto Lending and Borrowing Explained

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Crypto lending and borrowing are essential components of the digital asset economy, allowing investors to maximize their holdings while maintaining liquidity. Institutional crypto lending has become a popular way to generate passive income, as it allows institutions and individual investors to lend their digital assets in exchange for interest. With the rise of cryptocurrency loans, centralized and decentralized platforms offer users the opportunity to earn yields or access funds without selling their crypto holdings. This article delves into how crypto lending works, the advantages of borrowing, and the risks associated with these financial instruments.

How Does Cryptocurrency Lending Work?

Crypto lending operates through centralized and decentralized platforms, allowing users to lend their assets and earn interest or borrow funds by providing collateral.

Centralized exchanges (CEXs) facilitate crypto lending by acting as intermediaries. Users deposit their cryptocurrencies into lending pools, and the platform manages the lending process, distributing funds to borrowers. In return, lenders receive interest payments based on the crypto interest rates set by the platform. These rates vary depending on the asset chosen and market conditions. Centralized crypto lending is often preferred by investors seeking user-friendly services and higher security.

Decentralized finance (DeFi) platforms facilitate peer-to-peer crypto lending through smart contracts. Unlike centralized exchanges, these platforms eliminate intermediaries, ensuring a transparent, trustless lending process. Lenders deposit funds into liquidity pools, where borrowers can access loans by providing collateral. The interest rates are algorithmically determined based on supply and demand dynamics.

Benefits of crypto lending:

  • Passive income – lenders earn interest on their idle assets without actively trading. By participating in lending platforms, investors can put their digital assets to work, accumulating interest over time. This approach is especially beneficial for long-term holders who want to generate income without selling their holdings. Some lending platforms offer tiered interest structures where higher deposits lead to better returns, optimizing profit potential.
  • Liquidity optimization – digital asset liquidity improves as lenders provide assets to borrowers in exchange for interest. Instead of keeping assets idle in wallets, lending ensures that digital assets remain in circulation, enhancing overall market efficiency. This increased liquidity benefits traders and investors by reducing price slippage and enabling seamless transactions across exchanges and DeFi protocols.
  • Flexible terms – many platforms offer flexible lending terms, allowing users to withdraw or reinvest their assets. Some lending services provide both fixed and variable interest rates, allowing lenders to choose based on their risk tolerance. Additionally, some protocols allow users to lock funds for a specified period to earn higher yields, while others provide instant access to funds, ensuring convenience for users who may need liquidity at short notice.

Advantages of Crypto Borrowing

Crypto borrowing allows users to unlock the value of their holdings without selling them. This method is particularly useful for investors who want to maintain exposure to their assets while accessing liquidity.

Borrowers deposit cryptocurrencies as collateral to secure loans. These collateralized loans ensure that lenders are protected from default. The loan amount is determined based on the loan-to-value (LTV) ratio, which varies across platforms. Borrowers repay the loan with interest, regaining access to their collateralized assets upon full repayment.

Collateral is the digital asset that a borrower deposits to secure a loan. If the collateral value drops significantly due to market fluctuations, the platform may liquidate the borrower’s assets to recover funds, ensuring the lender’s protection.

Benefits of crypto borrowing:

  • Access to capital without selling assets – investors can obtain liquidity without triggering taxable events.
  • Leverage for trading – borrowed funds can be used for margin trading or investing in additional assets.
  • Lower interest rates – many cryptocurrency loans offer competitive rates compared to traditional financial institutions.
  • Stablecoin lending – borrowers can obtain stablecoin lending options, allowing them to access dollar-pegged assets without fiat conversion.

What Are Crypto Loan Risks?

Despite their benefits, cryptocurrency loans carry risks that investors should consider:

  • Volatility Risk. The crypto market is highly volatile. A sharp drop in asset value can lead to collateral liquidation.
  • Smart contract vulnerabilities. DeFi lending platforms rely on smart contracts, which may contain bugs or vulnerabilities leading to asset losses.
  • Counterparty risk. In centralized platforms, users must trust the platform’s solvency and security measures to safeguard their funds.
  • Regulatory uncertainty. Governments worldwide continue to develop regulations for digital asset lending, which could impact platform operations and lending policies.

Crypto lending and borrowing present significant opportunities for investors to maximize their holdings, earn passive income, and access liquidity without selling their assets. Whether through centralized exchanges or peer-to-peer crypto lending platforms, these financial tools are reshaping the digital economy. However, investors need to weigh the risks, including market volatility and regulatory uncertainties, before participating in lending and borrowing activities.

 

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Don’t miss HTW’s upcoming deep dive into health AI

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Our sister publication Health Tech World brings its first live event to London this summer, gathering the people building, buying and regulating healthcare AI for a single afternoon. With a full line-up confirmed and two months to go, tickets are open now, and this first edition is one to book early.

Health Tech World Live, the debut live event from FemTech World’s sister title Health Tech World, makes its first appearance on Friday 21 August, bringing clinicians, founders, developers, NHS commissioners and investors together at Teesside University London in Stratford for an afternoon on where healthcare AI goes next. The programme is confirmed, and with two months to go, it is worth booking your place while the diary is still clear.

The line-up for this first edition reads like a who’s-who of UK health AI. Speakers include Dr James Harmsworth King, Chief Medical Strategy Officer at Numan, fresh from the MHRA’s AI Airlock; Dr Sonia Szamocki, founder and CEO of 01Health; Hugo Dragonetti of NHS London Procurement Partnership; Mikael Kågebäck, CTO at Sleep Cycle; Max Gattlin, Commercial Director at X-on Health; and Marcus Vass, Head of Digital Health at Osborne Clarke, with proceedings chaired by Alastair MacColl.

Across six sessions, the afternoon moves from scaling specialist care and smarter NHS procurement, through responsible delivery and consumer AI, to fair access to GP care and the regulation underpinning all of it. Between the talks, delegates get time with the speakers and the Health Tech World editorial team, the kind of access that is hard to come by anywhere else.

It is shaping up to be one of the summer’s standout dates in health tech, and a launch worth being part of from the start. If you are planning to be there, now is the time to get it booked.

The future of healthcare AI: strategies, opportunities and vital insights
When: Friday 21 August 2026, 12 noon to 4pm
Where: Teesside University London Campus, Queen Elizabeth Olympic Park, 14 East Bay Lane, London, E15 2GW
Tickets: £99

Book your place now »

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Menopause

Immunotherapy may temporarily restore fertility in premature menopause

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Immunotherapy may temporarily restore fertility in women with autoimmune premature ovarian insufficiency, a pilot study suggests.

Three of the 10 women who received treatment later gave birth to healthy babies.

Premature ovarian insufficiency, or POI, affects just over three per cent of women worldwide and occurs when the ovaries stop functioning before the age of 40.

The condition significantly reduces fertility and can have several causes, including autoimmune processes and genetics.

Researchers at Karolinska Institutet examined whether immunotherapy could make the ovaries temporarily responsive to hormonal stimulation in women with POI caused by autoimmunity.

The study included 12 women aged between 18 and 35 with autoimmune POI.

Two withdrew before treatment began. The remaining 10 underwent ovarian hormone stimulation before receiving rituximab and again four to six months after treatment.

Rituximab is an approved and well-established medicine used to treat several autoimmune conditions and cancers.

None of the women responded to ovarian stimulation before receiving the drug.

After treatment, six developed follicles that made it possible to retrieve eggs in response to ovarian stimulation.

Follicles are small sacs within the ovaries where eggs develop.

Professor Angelica Lindén Hirschberg, the study’s first author and a professor at Karolinska Institutet’s Department of Women’s and Children’s Health, said: “The results show that in some women there remains an egg reserve that can be activated when the autoimmune process is suppressed.”

In five women, mature eggs could be frozen or fertilised.

Three later had embryos transferred and all three gave birth to healthy babies.

For safety reasons, the embryo transfers took place no earlier than one year after treatment.

One serious side effect was reported and was linked to the hormone stimulation rather than the immunotherapy.

Women with autoimmune POI commonly have other autoimmune diseases.

All six women who responded to the treatment also had autoimmune Addison’s disease, a condition in which the immune system destroys the adrenal glands.

The study was a proof-of-concept investigation without a control group and involved a small number of participants, meaning the findings must be interpreted cautiously.

A proof-of-concept study is an early investigation designed to assess whether an approach could work before it is tested more widely.

Professor Lindén Hirschberg said: “This is a first step. To determine whether the method is effective and safe, larger, randomised studies are required.”

The research team has launched a larger randomised study.

The work was carried out by researchers at Karolinska Institutet, Karolinska University Hospital and the University of Bergen.

It was funded by organisations including the Swedish Research Council, the Knut and Alice Wallenberg Foundation, the Novo Nordisk Foundation and Region Stockholm.

The researchers reported no conflicts of interest.

POI is also linked to long-term health risks caused by oestrogen deficiency, including osteoporosis, an increased risk of cardiovascular disease, cognitive decline and poorer mental and sexual wellbeing.

Hormone replacement therapy can relieve menopausal symptoms and reduce many of these risks, but no treatment has been reliably shown to restore fertility in women with POI.

Egg donation was previously the only option for women with the condition who wanted to become pregnant.

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Entrepreneur

Xella launches AI-powered precision health platform

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Xella Health has launched what it calls the first AI precision health platform built for the XX chromosome.

The company says it aims to address a lack of diagnostic precision and clinical research focused on female biology.

Women make up half of the population and account for 80 per cent of consumer healthcare decisions, but research into women’s health has historically received less funding than male-focused studies.

Kelly Lacob, Xella Health co-founder and chief executive, said: “Women have been trapped in a diagnostic dark age experiencing debilitating symptoms like severe period pain, bloating and GI issues, exhaustion, and brain fog, routinely dismissed by the healthcare system.

“This dismissal results in women being diagnosed four years later than men, on average, for the same conditions, and a seven-to-10-year delay for women to receive an accurate diagnosis for conditions like endometriosis.

Stalling necessary care and treatment results in prolonged suffering with chronic pain, heightened infertility risks, and declining mental health.

Xella is here to replace the systemic medical gaslighting women have endured for generations.

We are handing women the evidence and information they need to advocate for themselves and secure faster, accurate diagnoses before early-stage conditions spiral.”

Xella says its AI examines billions of data points from clinical information and multi-omic biomarkers to assess the probability of more than 130 conditions specific to female biology.

Multi-omic data combines information from several biological areas, including genes, proteins and hormones.

The conditions assessed include polyendocrine metabolic ovarian syndrome, or PMOS, formerly known as polycystic ovary syndrome, as well as perimenopause and endometriosis.

Xella was founded by Lacob, Adriana Dantas and Dr Jesus Ching, who developed the concept while working together on molecular diagnostics at Mammoth Biosciences.

The founders say the platform is designed to provide information about possible underlying causes through advanced testing and long-term care of a kind often available only through expensive concierge services.

They drew on personal experiences to build a service intended to identify small changes in a woman’s biological baseline.

Members complete an initial health questionnaire before having blood taken at a local partner laboratory such as Quest or Labcorp.

A phlebotomist can also visit a member’s home for an additional charge.

The company’s AI analyses biomarker data from genomics, proteins and hormones alongside symptoms, lifestyle risks and medical history.

Xella says this information is used to screen for more than 130 female-specific conditions, including PMOS, Hashimoto’s disease, premenstrual dysphoric disorder, endometriosis and perimenopause timelines.

Hashimoto’s disease is an autoimmune condition in which the immune system attacks the thyroid gland.

Premenstrual dysphoric disorder, or PMDD, is a severe form of premenstrual syndrome that can cause significant emotional and physical symptoms.

The results are processed through Xella’s own dry laboratory, which the company says is certified under the US Clinical Laboratory Improvement Amendments and accredited by the College of American Pathologists.

A dry laboratory analyses data using computing and other non-experimental methods rather than carrying out traditional laboratory procedures.

The findings are turned into a personalised healthcare plan and reviewed with a certified telehealth doctor.

The doctor may recommend immediate clinical action, including personalised hormone therapy or referrals to genetic counsellors, pelvic floor physiotherapists and reproductive endocrinologists.

Reproductive endocrinologists are doctors who specialise in hormones, fertility and reproductive health conditions.

Dantas, co-founder and chief operating officer, said: “Women’s health data has historically been treated in isolated silos – a hormone test here, an ultrasound there – but no one was connecting the dots across the entire biology.

“By tracking unique biological patterns longitudinally across cycles and life stages, we aren’t just providing data, but a clear path forward.”

Xella’s clinical advisers include Dr Allison Kurian, director of Stanford Women’s Clinical Cancer Genetics Program and professor of medicine, epidemiology and population health at Stanford.

They also include Dr Lynn Westphal, a reproductive endocrinology and infertility specialist and chief medical officer of Kindbody.

Xella has received US$4.7m in angel and pre-seed funding from Precursor Ventures, Capital F, Ulu Ventures and Swizzle Ventures.

Other funds and angel investors from healthcare, diagnostics and consumer technology also participated.

Margaret Coblentz, co-founder and general partner of Capital F, said: “Women’s health is one of the highest-momentum categories in the market today, driven by a US$15tn female economy.

“Xella represents exactly how Capital F sees women’s health evolving: deep clinical expertise paired with a consumer-first mindset, and a genuine opportunity to unlock the next generation of healthcare.”

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