What is Binance Lending? Details of Lending on Binance
What is Binance Lending? This is a form of users lending a certain amount of Crypto assets to the Binance exchange and receiving interest back when the loan expires.
Lending, Borrowing solutions in the past you often see in independent Crypto projects like NEXO, ETHLend, Constant, Maker, Compound…
And recently we see this Lending solution starting to be put on exchanges. In which, Gate is one of the first exchanges with Margin Lending.
On August 26, 2019, Binance just announced that they will be launching their own Lending platform. This could be the beginning of the Lending trend on exchanges.
Today, let’s learn about Binance Lending.
What is Binance Lending?
Before learning about Binance Lending, first let’s understand what is Lending in the Crypto market?
What is Lending?
Lending or “lending” is a form of users using their assets/money to lend to other “Borrowers” at a certain interest rate.After a period of time, they will get their principal back. and interest rates as originally agreed.
This is like we bring money to the bank and receive interest.
For example, you bring 100 million USD and receive 7%/1 year interest, at the end of the year you receive 100 + 7 = 107 million USD.
In Crypto, you use assets like BTC, BNB, ETH… to lend.
What is Binance Lending?
Binance Lending is a form of users lending a certain amount of their Crypto assets (BNB, USDT, ETC…) to the Binance exchange and receive interest back when the loan expires.
- Lender: A user like us.
- Borrower: Binance.
This form is somewhat similar to the Staking Rewards Program of some coins on Binance and receives interest.
Some coins like XLM, ALGO, KMD, QTUM, STRAT.
The difference here is that in Binance Lending, Binance is the one paying interest for you. In Staking Rewards, the projects are the payers.
Details of Lending on Binance
Some information about Binance Lending:
- Official launch date: 13:00 on August 28, 2019 (GMT+7).
- Loan period: 14 days.
- Interest payment period: Immediately after maturity.
- Subscription for loans: 13:00 on August 28, 2019 (GMT+7) to 7:00 a.m. on August 29, 2019.
- Cryptos that will support at first: BNB (15%), USDT (10%), ETC (7%).
- Format: First come First serve – first come, first served.
Each different Crypto has a different Lot. Please refer to the table below:
For example, brothers participating in Lending 10 Lot BNB ie lending 100 BNB. The average profit per day is 0.057534 BNB x 10 = 0.57534 BNB.
Note: This interest rate will change depending on each period and the policy of Binance.
Review of Lending on Binance
Advantages of Binance Lending
- Safety: Binance has a SAFU system to protect/compensate users’ assets, so you have partial peace of mind when holding your assets on the exchange. Including Lending.
- Simple: Just a few clicks to join. At the end of the loan term, both principal and interest are immediately paid to the user.
- Large Lending Volume: Up to you can lend 1 million USD with USDT, about 12,500 USD with BNB and about more than 7,000 USD (at the time of writing).
- Taking advantage of users’ idle assets, optimizing profits for Holders on the floor.
Disadvantages of Binance Lending
- Uncompetitive interest rates. You can review the interest rate comparison table above. Most of these interest rates are equal or lower than other projects.
- The amount of Crypto participating in Lending is still small. At the present time, you can only use BNB, ETC, USDT to Lending. In the future, Binance will expand this service to other cryptocurrencies.
- The loan term is currently 14 days. Not flexible yet.
Binance Lending has just been launched and these disadvantages, in my opinion, will soon be overcome and offer more options for users.
Compare interest rates on Binance Lending and other platforms
You can immediately see that the Lending interest rate on Binance is at an average level. Even less attractive than some other projects in Crypto like USDT, ETC.
However, for BNB alone, the lending interest rate of 15% is the best level for Lending in the current market.
Who should join Binance Lending
Binance’s goal is to encourage users to participate, helping them increase the amount of idle assets on the exchange.
You see that the interest rate at the moment is only from 5%, 7%, 10% is not high. Of course it is not suitable, not attractive to all brothers.
Binance Lending is suitable for you: Owning an idle amount of assets on the exchange, still want to make more profit from this asset but do not have time to trade and make a profit. Lending on Binance will be a suitable and safe form.
For example, those who have BNB holders and have confidence in the long-term future of BNB can choose to Lending BNB on Binance to receive 15% a year respectively.
Attention: Binance has a SAFU policy to protect/compensate for user assets. Therefore, brothers holding coins on this exchange can be somewhat more secure.
Guide to Lending on Binance
Before joining Binance Lending, you need to know some input parameters as follows:
- Lot Size: Loan amount in each Lot.
- Maximum Subscription: The total amount of Lot that a user can join.
- Coupon Per Lot: Profit received after the loan term expires.
- Value date: Starting date of interest calculation.
- Redemption Date: Date of payment of interest and principal.
Step 1: Visit Binance Lending page: https://www.binance.com/en/lending
Here you choose the type of Crypto you want to lend and click Subscribe.
At the present time (August 27, 2019), there are 3 Crypto supported by Binance including BNB, ETC, USDT.
Step 2: Enter the amount of Lot you want to lend.
For example, in the picture, I want to lend 10 Lots, equivalent to 100 USDT.
Step 3: After successfully performing the Purchase step, Binance will automatically deduct the corresponding amount.
To see a list of your loans, select Successful Purchase.
Step 4: Binance pays principal and interest upon loan expiration.
Note, you need to make sure you have enough balance and choose the appropriate Lots.
Note when Lending on Binance
When joining Binance Lending, you need to pay attention to a few things:
- Always make sure your balance in your account is enough to participate.
- The profit stated by Binance is on an annual basis. In fact, the daily interest rate will be different and the loan term is only 14 days. You should calculate the total interest received after this time before officially joining Lending.
- Joins should only be made when the asset is idle. For those of you who are trading, buying and selling every day, this form is not suitable.
- You always prepare mentally for the case of Crypto participating in discount lending. For example, BNB brother Lending 100 BNB at the time of lending is 30 USD. At the end of 14 days, you can withdraw (principal + interest) = 100.57534 BNB. But, at that time the price of BNB fell to 28 USD, it was still a loss in USD terms.
Frequently asked questions about Binance Lending
Can I lend a small amount of capital?
Is not! Binance has fixed the corresponding Lot for each Crypto.
For example, 1 Lot of BNB = 10 BNB, 1 Lot of USDT = 10 USDT, 1 Lot of ETC = 1 ETC.
You can only participate in the correct multiples of these Lots.
For example, you can only Lending 10, 20, 30 USDT but not 15 USDT, 25 USDT…
Does the BNB loan count for the Binance Launchpad snapshot?
You lock BNB in Binance Lending to receive interest, but it is still calculated when taking a snapshot for Binance Launchpad.
What are the conditions to join Binance Lending?
You must complete the KYC Level 2 step to participate in Lending.
That is, you must successfully authenticate with Passport
Can I borrow funds from Margin Trading to join Binance Lending?
As long as that money is from your Margin account, it can be used to lend in Binance Lending.
This can be seen as the next step in Binance’s Exchange the World roadmap. In June they released research on Lending and Borrowing. And now the official launch of this service.
Next time Binance will launch other new products to further expand their ecosystem, most likely it will be Borrowing.
Binance Lending currently only supports 3 types of Crypto BNB, USDT, ETC and with a fixed interest rate and loan period.
In the future, maybe they will soon add other types of Crypto, as well as provide more options for users to participate in more diverse.
Above is an article sharing about Binance Lending and some of my predictions about this product in the near future.
Hope you have received a lot of valuable information in the article.
See you guys.