- Binance has entered the crypto lending space
- Holders can lend Binance coin (BNB), Ethereum classic (ETC) and Tether (USDT)
- Binance continues to diversify to keep customers
Binance cryptocurrency exchange is launching a lending business in its effort to attract customer deposits.
The world’s leading cryptocurrency exchange by trade volumes announced via an official blog post on August 26, 2019, that subscription for Binance Lending, the platform through which investors will earn interest, will be available for customers beginning 6:00 UTC on August 28, 2019, on first-come, first-served basis and ends on August 29, 2019. As per the announcement, users holding Binance Coin (BNB), Ethereum Classic (ETC) and Tether (USDT) will offer loans in their respective digital currencies.
According to the announcement, the annualized interest rate for the initial lending will have an initial 14-day fixed maturity term, has been set at 15 percent, 10 percent, and 7 percent, for BNB, USDT, and ETC, respectively. Binance said users have the freedom to choose the number of tokens they will lend when subscribing and they can retrieve funds with “guaranteed” interest after the designated subscription period, it added. Binance CEO Changpeng Zhao, CZ, stated:
“Binance Lending is simple and intuitive to use. Users can subscribe to any lending product and earn interest; it’s as easy as that […] the interest rate for each product is guaranteed, so your crypto balance will always grow, regardless of how the market moves.”
The announcement further says that Binance will put out a total subscription cap of 200,000 BNB, 5 million USDT and 20,000 ETC. If all the initially planned products get fully subscribed, Binance would pay out interests of 1,150 BNB, 19,178 USDT and 53 ETC, which is worth about $50,000 by the time of writing.
Sector Is Booming
The same concept that involves lending is used in crypto lending only that cryptocurrencies are used and you have your underlying digital assets as collateral. When a user lends their USD or EUR or stablecoins to a borrower on an agreed rate of interest for an agreed duration against their crypto collateral, this is crypto lending. Similarly, when someone borrows extra cryptocurrencies or USD or Stablecoins against their cryptocurrency holdings, it is called crypto borrowing. The lenders lock-up their funds for the agreed duration of lending as per the agreed rates. This enables them to earn extra interest on their capital that they were just holding previously.
The cryptocurrency lending sector is booming. The launch of Binance Lending is another move of Binance in its bid to diversify its business lines to attract and keep users. This has happened a few weeks after it formally rolled out futures trading and borrowing in July and revealed plans to add futures trading on its platform.