Binance announced the launch of a lending platform, offering up to 15 percent annualized interest rate for 14-day fixed-term BNB, USDT, and ETC based instruments.
Crypto lending comes to Binance
Binance, one of the largest cryptocurrency exchanges in the world, officially announced the launch of its lending platform. According to the company’s Aug. 26 blog post, the platform will launch on Aug. 29 as a value-added service aimed at Binance users who hold “idle digital assets.”
The lending products will initially be available for subscription starting from 6:00 am UTC on August 28, 2019, to 12:00 am UTC on August 29, 2019, on a first-come, first-served basis. Only those with Binance “Level 2” verification or beyond are eligible to lend, meaning anonymous accounts cannot participate in the offering.
— Binance (@binance) August 26, 2019
Binance Lending will enable users to lend their Tether (USDT), Ethereum Classic (ETC), and Binance Coin (BNB) holdings and earn interest. The company’s blog post stated that all of the lending products will have a 14-day fixed maturity term, with the interest rates for BNB, USDT, and ETC set at 15, 10, and 7 percent, respectively.
Binance diversifying its offer
The exchange set a total subscription cap at 5 million USDT, 200,000 BNB, and 20,000 ETC. According to the blog post, if all of the products get fully subscribed, total interest of 19,178 USDT, 1,150 BNB, and 53 ETC would be paid out.
The interest rates Binance would pay for those products would be 1,150 BNB, 19,178 USDT, and 53 ETC, it said in the blog post, all of which are currently worth around $50,000. To limit the supply, all user accounts will have a hard cap set for all of the products—1 million USDT, 500 BNB, and 1,000 ETC.
Changpeng Zhao, the CEO of Binance, said that the interest rate for each product is guaranteed. “Your crypto balance will always grow, regardless of how the market moves,” he added.
Yet, this raises the question as to why Binance would offer practically free money to users. Whether this is a marketing play or a profitable lending business is still unclear.
The company said more Binance Lending products will be released soon once the company evaluates the demand for new coins and tokens. However, there is a possibility that the interest rates will change as new tokens are added. Binance’s blog post stated that the interest rates for all of the upcoming phases will be adjusted “based on market reception of the initial phase,” leaving the door open for an increase (or decrease) in rates.