One of the leading cryptocurrency exchanges is launching a new product for its customers. The venue published an official statement detailing that it plans to offer lending denominated in three cryptocurrencies.
With a fixed term for 14 days, the company will be offering lending of USDT, BNB, and ETC. The company plans to officially roll out the service on August 28. It is positioning the service as a way for clients who are holding digital assets to diversify their income.
“With Lending, Binance users will be able to grow their funds by earning interest income for lending out their holdings over a specific period of time,” the company detailed in a statement on its website.
The company positions the products as a new way for cryptocurrency holders to diversify their holdings and receive income. Binance Lending offers Binance users a new avenue for growing their cryptocurrency portfolios beyond trading. Users can subscribe their funds to selected Binance Lending products and accrue interest over time.
“Binance Lending is simple and intuitive to use. Users can subscribe to any lending product and earn interest, it’s as easy as that,” said CZ, CEO of Binance. “The interest rate for each product is guaranteed, so your crypto balance will always grow, regardless of how the market moves.”
With the value of cryptocurrencies fluctuating rapidly over short periods of time, despite what the CEO of Binance is saying, the lending product does not appear to be a less risky form of speculating on the digital currencies market. Regardless of the 15 percent annualized interest rate on a token like BNB, its value has been fluctuating to the tune of five to eight percent per day on a regular basis.
Borrowing money at a 10 percent rate in USDT also appears to be a questionable proposition considering the global low interest rates environment. With the value of the currency supposedly pegged to the US dollar, borrowing fiat at a much lower rate appears to provide better value for borrowers.
There is a designated hard cap per account for BNB- and USDT-denominated lending products. The initial levels are set to 500 BNB and 1,000,000 USDT, respectively. Clients of Binance will be able to choose the amount of tokens they are willing to allocate to the lending facility. The company states that the lenders are guaranteed to retrieve funds with guaranteed interest after the 14 days guaranteed period.
The company also plans to continue evaluating new coins for the lending facility and offer them based on demand. The news follows the company’s margin trading product, launched last month.