Search

    Select Website Language

    Why African crypto startups are getting into the lending business

    15 hours ago

    1

    0

    👍 ❤️ 😂 😮 😢 😡

    This is Follow the Money, our weekly series that unpacks the earnings, business, and scaling strategies of African fintechs, financial institutions, companies, and governments. A new edition drops every Monday.

    Owning Bitcoin and Solana no longer means selling them when cash runs out. Across Africa, digital asset startups are borrowing another idea from traditional finance: lending to consumers who are crypto-rich but cash-poor.

    Crypto-backed loans, a form of lending tied to cryptocurrencies, allow users to obtain credit—in fiat, stablecoins, or other digital assets—by pledging their crypto holdings to these startups. It is a form of lending that is gaining momentum in Africa’s largest crypto markets, including Nigeria and South Africa.

    In January, Busha, a Nigerian fintech startup that allows users to buy and sell digital assets and pay bills, launched crypto-backed loans as an additional product to its stack. The product offers up to 50% loan-to-value (LTV), allowing users to borrow up to half the value of their Bitcoin and Solana holdings and access the loans in Naira. Busha said it charges a 2% monthly interest.

    Busha is one of several African startups offering crypto-backed loans. The emerging product, which borrows some features from the traditional finance sector where lending is a profit centre, could expand core services to crypto users that are overlooked in the broader secured lending market.

    It could signal a maturing crypto market, especially if the startups are actually deploying their own capital into loans, rather than simply intermediating and sourcing liquidity from other global lending protocols, such as US-based Morpho. But as some African crypto lenders target the broader mass market, they face a bigger challenge: expanding the product beyond people who already hold crypto.

    John Babodor, the African lead for Blend, a US-based startup that provides infrastructure to enable businesses to offer stablecoin yield, said that since the start of the year, he has received between $2,000 and $5,000 in crypto-backed credit from global lending platforms, including Aave, Kamino Finance, Hyperlend, MarginFi, Hyperliquid, and HypurrFi.

    “I use crypto-backed loans to avoid selling my volatile assets like Bitcoin, Ether, Solana, and the $HYPE token,” Babodor told TechCabal. “For example, I deposited ETH into Aave and borrowed stablecoins against it. I then used those [stablecoins] to pursue additional yield opportunities, trade, buy meme coins, and occasionally off-ramp [withdraw] funds when needed. At one point, I had more than $5,000 worth of ETH deployed in this strategy.”

    Crypto-backed loans are digital products originally built for digital asset traders. But Olayinka Omoniyi, co-founder of Monierate, a currency price-tracking platform, sees a larger market beyond traders.

    Unlike Babodor, who prefers borrowing stablecoins and other digital assets, Omoniyi prefers borrowing in Naira. He said he regularly uses global exchange Binance or Bitmonie—a crypto-backed lending product he co-founded—to access liquidity without selling his Bitcoin holdings.

    “If most of my income is in Naira, it makes sense for me to borrow in Naira,” he said. “You don’t want FX [foreign exchange] volatility becoming another problem when you’re trying to repay.”

    The contrast between the two users captures a question at the centre of Africa’s emerging crypto credit market: is crypto-backed lending primarily a trading tool, or can it become a mainstream credit product?

    That question reflects a broader opportunity.

    While crypto-backed lending remains nascent in Africa, Galaxy Research, a US-based crypto research firm, estimated that the global crypto-collateralised lending market stood at $67.4 billion in outstanding loans at the end of Q1 2026, after reaching a record $78.7 billion in Q3 2025 before pulling back amid market volatility.

    As more Africans accumulate Bitcoin and other cryptocurrencies, startups are building lending products that let users unlock liquidity without selling their assets, filling a gap left by traditional banks, which generally do not accept digital assets as collateral.

    The startups building Africa’s crypto lending market

    Nigeria is beginning to emerge as a market for crypto-backed lending.

    The African Crypto-Credit Matrix

    Compare LTV limits, interest rates, and loan structures across the startups defining Africa’s digital asset lending landscape.

    Filter by:
    Platform
    Core Market(s)
    Loan Currency
    Max LTV
    Reported Rate / Terms
    Source: TechCabal Reporting. Terms subject to platform volatility controls, risk profiling, and market changes.

    Roqqu, a cryptocurrency exchange that operates in Nigeria and Kenya, has offered crypto-backed loans since 2023. TransferXO, a Nigerian startup that launched in 2023, expanded its crypto-backed lending product to Ghana in October 2025. The startup—which, like Busha, also provides Naira loans—claims it has disbursed over $10 million and recorded a 4.2% default rate.

    Global players have also begun paying attention. In May 2026, Blockchain.com launched crypto-backed loans in over 100 markets where it operates, including Africa. The new product offers users access to USDC stablecoins without requiring them to sell their crypto holdings.

    South Africa’s market is further along.

    AltCoinTrader, one of South Africa’s oldest crypto firms, was one of the first exchanges to launch crypto-backed loans. In 2022, the startup introduced Easy Loans, enabling users to access crypto-backed credit at up to 7.95% annual interest.

    In January 2025, VALR, one of South Africa’s largest cryptocurrency exchanges, launched a lending product for crypto traders. It doesn’t use an LTV ratio; VALR prices and issues loans based on a user’s risk profile, taking into account factors such as their collateral and trading activity.

    Launched in August 2025, Geddes Capital, a South African investment and alternative finance firm, offers crypto-backed financing to small businesses and high-net-worth individuals at up to 50% LTV.

    South African Bitcoin treasury firm Africa Bitcoin Corporation also plans to launch a Bitcoin-backed lending product, offering loans of up to a 50% LTV ratio at 12% annual interest, with repayment terms of up to 60 months.

    NFTfi, a South African-founded startup that provides a marketplace to buy and sell digital art such as non-fungible tokens (NFTs), is the outlier. It enables users to lock their NFTs as collateral and borrow cryptocurrencies, such as Wrapped Ethereum (wETH) or stablecoins, from peer lenders.

    Why crypto firms are getting into lending

    For crypto companies, lending is a retention product. 

    When customers need cash urgently, they can simply sell their crypto, leave the platform, and sometimes never return. Crypto-backed loans offer another option: borrow against the asset instead.

    By keeping assets on the platform, lenders can earn interest on loans while encouraging customers to remain active users. 

    Become the Lender: Revenue Simulator

    How much can you earn issuing crypto-backed loans? Set your terms, issue fiat to a borrower, and navigate historical market volatility to calculate your net yield.

    Lender Dashboard

    Note: Crypto-backed loans are fundamentally revolving credit lines offered in perpetuity. While there is no strict end date as long as the loan remains healthy, typical institutional planning models estimate lifecycle caps of 24 to 36 months before the borrower closes the position or is liquidated.

    Step 1: Configure Your Lending Product

    Prices up to date as of July 6, 2026
    Value: $62,950
    12.0% APR
    Effective Monthly Yield: 1.00%
    Why do this? Selecting a real chronological timeline lets you stress-test your expected lending revenue against actual market crashes, bull runs, and periods of extreme volatility.
    At a standard 50% LTV, you will issue the borrower:
    $31,475 in Fiat Liquidity
    Powered by TechCabal Data. Uses exact historical price timelines across distinct chronological market eras for Bitcoin, Ether, and Solana. Prices up to date as of July 6, 2026.

    The economics differ from conventional consumer lending. Crypto loans are typically over-collateralised, meaning lenders face less credit risk than banks and digital lenders issuing unsecured personal loans. Instead, the business depends on monitoring collateral values, maintaining sufficient liquidity, and liquidating positions quickly enough to avoid losses during periods of market volatility.

    The challenge, however, is determining who the product is really for.

    “Crypto-backed loans are still niche products in Africa,” Daniel Felix, co-founder and chief executive officer of NectarFi, a Nigerian startup that lets users trade digital assets and tokenised stocks, told TechCabal. “It has always been like that because of consumer choice and the way the product is structured. It is marketed as a DeFi [decentralised finance] product: you borrow when you need to buy another asset, farm a point, airdrop, or yield on a [DeFi] protocol.”

    Babodor’s use case fits the original design. He deposits Ether, borrows stablecoins, and deploys the proceeds into other DeFi trading opportunities. According to him, the loan functions as trading capital.

    Busha and TransferXO are pursuing a broader audience. By lending in Naira, they are targeting users who may never touch a DeFi protocol but still want liquidity without selling their holdings.

    TechCabal reviewed the lending terms of African crypto lenders in June and found that the advertised LTV ratios range from 50% to 60%, depending on the collateral and the lender’s risk appetite. Interest rates range from about 1% to 2% monthly, while others charge annual rates of up to 8%, calculated daily.

    For lenders, collateral quality matters as much as collateral value. Bitcoin and Ether remain the preferred assets because they are easier to liquidate during periods of market stress than smaller cryptocurrencies, allowing lenders to recover loans more quickly if prices fall sharply.

    Liquidation and consumer protection risks

    The biggest risk in crypto-backed lending is liquidation. When crypto prices fall and a borrower’s collateral drops below required thresholds, lenders can automatically sell part or all of the assets pledged against the loan to recover their funds. 

    Babodor learned that lesson through experience.

    “I’ve [been liquidated] before. It usually happens when you’re not watching your LTV ratio, which I wasn’t,” Babodor said. “I had some ETH in Aave, and I lost all of it. At first I thought I was over-collateralised, but that wasn’t it—It turned out I’d actually borrowed too much against my position. My LTV was at a very risky level, so when the price dropped sharply, I was liquidated.”

    Due to crypto’s volatile nature, lenders are often exposed to collateral value swings, whether they hold the assets themselves or route loans through external protocols. Most platforms maintain collateral buffers to hedge against liquidation risk and unexpected under-collateralisation.

    A sharp move in the price of Bitcoin, Solana, or Ether—major cryptocurrencies used for collateral—can trigger forced sales within hours. To cushion against losses, these platforms charge a penalty.

    A liquidation penalty—imposed when a position falls below required collateral levels and is sold off—discourages strategic defaults, such as when borrowers choose not to top up collateral or repay a loan when prices fall. They get liquidated and still pay the penalty.

    South Africa’s AltCoinTrader charges a 12% liquidation fee when collateral is sold off to cover a loan.

    Become the Borrower: Crypto Loan Simulator

    Crypto-backed loans let you borrow cash while keeping your assets. But if the market crashes, you could lose it all. Will your loan survive a real bear market? Set your terms and play through actual historical volatility sequences.

    Step 1: Configure Loan & Select Timeline

    Prices up to date as of July 6, 2026
    $62,950
    50%
    2.0%
    Your Collateral Pledged: 1.0 BTC
    Initial Value (Locked Base): $62,950
    Borrowing: $15,000
    Click here to Read More
    • Share:
    The Miami startup building blockchain settlement rails for African governments
    Previous Article
    The Miami startup building blockchain settlement rails for African governments
    Next Article
    ‘Pigs!’: Trump’s Embarrassing July 4th Celebration Was a Filthy Mess — And Leaked Video Exposes Shocking Truth the White House Doesn’t Want You to See
    ‘Pigs!’: Trump’s Embarrassing July 4th Celebration Was a Filthy Mess — And Leaked Video Exposes Shocking Truth the White House Doesn’t Want You to See

    Related Diaspora Updates:

    Are you sure? You want to delete this comment..! Remove Cancel

    Comments (0)

      Leave a comment

      Send