Binance, one of the world’s largest cryptocurrency exchanges, has announced its own lending platform in an effort to capitalize an increasing demand for cryptocurrency lending services and attract deposits from existing customers.
The new service will be launched on August 28 at 06:00 UTC, wrote the company in a statement. At first, Binance Lending Services will support three cryptocurrencies: Binance Coin (BNB), Tether (USDT) and ETC (Ethereum Classic).
Binance Lending interest rates are competitive against other crypto-based lending services such as Nexo, which offers only 8 percent APR on stablecoins. With Binance, those interested in locking USDT could earn a 10 percent APR.
However, the most generous reward goes for BNB holders, which could earn up to 15 percent annual interest on their deposits. The smallest interest is offered for deposits on Ethereum Classic, an annualized rate of 7 percent.
The maturity term is 14 days and interests are paid twice a month immediately after loan term matures. The lending platform also includes certain limits on the size of the deposits.
For example, a single user can set a deposit of 500 BNB, 1,000 ETC and 1,000,000 USDT. The exchange has also set blanket limit caps of 200,000 BNB, 20,000 ETC and 10,000,000 USDT.
The release of Binance’s lending services follows a hint by Binance CEO Changpeng “CZ” Zhao on Twitter, where he asked his followers about the idea of passive income in cryptocurrency.
Earlier this year, Binance announced the launch of margin trading on its platform for a limited number of assets, including BTC, ETH, XRP, BNB, TRX, and USDT. Entering the lending services space is another step to diversity the business core and attract a wider audience.
The exchange confirmed that it would “constantly evaluate the demand for the possibility of adding new coins and tokens as loan products.”
According the Binance Lending Service Agreement, the exchange reserves itself the right to close its lending services. “Binance.com does not take any responsibility if the final execution doesn’t match your expectations due to the above factors.”
How Binance Lending Works
1. You select an available item to purchase. Each item will be displayed on the product page and include the following details: lot size, max subscription, coupon per lot, value date and redemption date (interest payout date).
2. The Binance Lending system will automatically calculate an interest estimation based on the purchase amount you’ve selected.
3. If you proceed with the transaction, the system takes the amount from your balance. You’ll be able to see this movement in your transactions history.
4. When the due date arrives, the equity plus interest will be credited to your account balance automatically.