Boom or bust? Welcome to freewheeling world of crypto lending

Boom or bust? Welcome to freewheeling world of crypto lending

It sounds like a surefire bet. You lend money to a borrower who puts up collateral that exceeds the size of the loan, and then you earn interest of about 20 per cent. What could possibly go wrong?

That's the proposition presented by "DeFi", or decentralised finance, peer-to-peer cryptocurrency platforms that allow lenders and borrowers to transact without the traditional gatekeepers of loans: Banks.

And it has exploded during the Covid-19 crisis.

Loans on such platforms have risen more than seven-fold since March to $3.7 billion, according to industry site DeFi Pulse, as investors hunt returns at a time when central banks across the world have slashed interest rates to prop up economies battered by the pandemic.

Proponents say DeFi sites, which