Crypto Cash Lending Makes a Comeback: Behind the Wild 20% Interest Rates — Opportunity or Trap?
If you’ve been following the crypto space lately, you might’ve noticed a familiar and somewhat dangerous old face reappearing — crypto cash lending. Yes, the same borrowing model that triggered a cascade of liquidations in 2022 and left many investors wiped out is now quietly making a comeback.
This time, the new players aren’t just offering more flexible unsecured loans — they’re also throwing in new tricks like “AI-powered lending agents” and “iris verification.” Some firms are even confidently justifying 20%–30% interest rates, claiming they can cover first-time default rates as high as 40%.
So the question is: What does this “resurgence” of crypto cash lending actually mean? Is it an innovative opportunity in a recovering market — or just a repeat of past disasters? That’s what I want to talk about today.
Why Is Crypto Cash Lending Hot Again?
Over the past year, the digital asset market has gone through a long-overdue recovery. Bitcoin returning to all-time highs has reignited confidence across institutions and investors. Trump voicing support for digital assets in public speeches has also injected “policy optimism” into the market. With capital flowing back in, sentiment warming up, and risk appetite increasing, lending — an old-school high-leverage, high-yield track — naturally gets pulled back into focus.
New-gen lenders like Divine Research have already begun issuing loans at scale. According to founder Diego Estevez, they’ve issued over 30,000 unsecured short-term loans just since December last year. These loans are usually under $1,000, but carry annual interest rates of 20%–30%. For users with tight finances and no access to traditional credit lines, this kind of fast-loan model clearly has appeal.
What stands out is that this wave of cash lending isn’t targeting big players or degens inside the crypto circle — it’s aiming at groups long overlooked by traditional finance. Divine’s clientele includes high school teachers, street vendors, and even average consumers living in high-inflation countries. That’s a big shift from the early user base of crypto lending platforms, which focused on miners and traders.
A New Model: Unsecured + AI + Blockchain
Compared to the old days when you had to collateralize BTC or ETH to get a loan, the crypto cash lending model in 2025 is more like a “DeFi version of Ant Credit Pay” — and even more “wild.”
Unsecured lending: Platforms like 3Jane and Wildcat allow users to borrow using “verifiable proofs of assets” rather than directly locking up digital assets.
AI lending agents: 3Jane is developing an AI-powered agent platform that uses artificial intelligence to automatically review loan requests, execute contract terms, and monitor borrower repayment behavior. These AI agents are said to operate strictly according to smart contracts, which is what gives platforms the confidence to offer “low or no collateral” loans.
Iris verification to prevent malicious borrowing: Divine goes even further by leveraging Sam Altman’s iris scanning system to ensure defaulted users can’t borrow again.
These new technologies certainly make crypto lending look safer and more efficient. But the real question remains: Can technology truly solve the core risk — borrowers not repaying? In the real world, that’s still the biggest issue for any lending model.
Why Is This Market So Tempting?
The answer is simple: the profits are insane.
Take Divine Research as an example. Even with a first-loan default rate as high as 40%, they can still make money thanks to interest rates of 20%–30% and partial recovery via “bonus tokens.” For venture capital firms, this is the textbook “high-risk high-return” model.
Startups like 3Jane have already raised $5.2 million in seed funding from firms like Paradigm, which says a lot about investor enthusiasm for crypto lending. Meanwhile, market makers and institutional traders are getting involved too — Wildcat reports over $170 million in loans already issued, mostly serving market makers and institutional clients.
Where’s the Risk? The Old Pitfalls Are Still There
Let’s not forget — the “lending avalanche” of 2022 is still fresh in memory. Celsius, Genesis, and other top platforms collapsed one after another. The crash of FTX triggered a massive domino effect across the entire industry. Lending models marketed as “risk-free high yield” ended up being nightmares for countless investors.
The core problem hasn’t changed: unsecured lending is inherently risky.
Even with blockchain transparency, defaults can’t be avoided.
No matter how powerful smart contracts and AI agents are, they can’t fix the issue of “what if the borrower disappears?” Especially when lending to users in emerging markets — once they go dark, recovery becomes near impossible.
High interest rates are a double-edged sword: they can cover risk, but they can also push borrowers into rapid default, triggering a vicious cycle. If this new wave of crypto cash lending keeps expanding without robust risk control, it could easily replay the blowups of the past.
Traditional Institutions Want In, Too
Interestingly, it’s not just crypto-native firms getting into lending — traditional financial giants have their eyes on this as well. Banks like JPMorgan are reportedly considering lending against customers’ crypto holdings. Cantor Fitzgerald even launched a $2 billion Bitcoin lending program.
This suggests that crypto assets are gradually being seen as “collateral-worthy alternative assets,” just like real estate or stocks. That’s a positive signal for the entire crypto market, because it means higher liquidity and broader capital access.
Looking ahead, the crypto lending market may split into two extremes:
One side: Regulated institutional lending, like collateral-based loans led by top platforms such as Coinbase and Tether — basically the “crypto version of banking.”
The other side: Decentralized, small-scale, high-interest lending, aimed at high-risk markets and underserved populations.
If regulators don’t intervene, this “high-risk high-return” model could thrive for a while. But if a chain-reaction default event like 2022 happens again, the market could plunge into panic all over again.
From an Investor’s Perspective — How Should We View This?
This depends on how you look at it:
Innovation can’t be denied: Combining DeFi and AI in lending truly brings an efficiency revolution. Unsecured lending can reach populations that traditional finance simply ignores.
But the risks can’t be ignored either: Any loan with more than 20% interest is never a “risk-free business.” Don’t forget — blockchain transparency can’t erase the risk of default.
If you’re an investor looking to get into this track, keep a few things in mind:
Try to stick with platforms backed by top VCs. For example, 3Jane has Paradigm’s support.
Don’t let high interest rates blind you into reckless borrowing — and definitely don’t treat this as a stable income strategy.
Pay attention to regulatory developments. Any new policy could instantly wipe out this business model.
Conclusion: Will the Madness Repeat Itself?
The resurgence of crypto cash lending is, in some ways, a signal that market sentiment is coming back — people are once again willing to take risks. But history has shown that lending is one of the riskiest parts of the crypto world. No matter how advanced the tech, it can’t fully replace “credit,” which remains the weakest link.
So in the face of this new lending wave, we can’t outright deny it, but we also can’t be blindly optimistic. It could become a new engine for market growth — or another ticking time bomb waiting to explode.
Looking at it with a clear head is one of the few ways to survive in this market.
