Ethereum Lending Rates: Borrow Against ETH or Earn

Borrowing against ETH vs. lending it out

“Ethereum lending” means two things. Borrowing against ETH: you keep your ETH as collateral and borrow dollars or stablecoins, paying interest, without selling. Lending out ETH: you deposit ETH and earn interest from whoever borrows it. Unlike Bitcoin, ETH is in steady demand to borrow, so lending it out pays a real, if modest, rate.

LTV and liquidation, in plain terms

Loan-to-value (LTV) is your loan divided by your collateral’s value. Borrow $5,000 against $10,000 of ETH and your LTV is 50%. If ETH falls, your LTV rises, and past the market’s liquidation level some of your ETH is sold to repay the loan. ETH moves a lot, so starting well below the maximum LTV gives you room.

How DeFi borrowing works

On protocols such as Aave, Spark and Compound, you deposit ETH (as WETH) and borrow a stablecoin like USDC from the same pool; the rate is that stablecoin’s variable borrow rate there. Morpho’s markets pair one collateral with one loan asset. Sky’s vaults (formerly Maker) mint DAI against your ETH for a stability fee, and Curve’s crvUSD converts collateral gradually instead of liquidating it all at once. There’s no application or credit check, and you pay network fees.