Binance Moves to Next Phase in Lending Scheme with Additional Assets
Binance is offering a new way to benefit from altcoins, by offering lending and returns service for a portfolio of coins and tokens.
Binance moves onto stage two of its lending program, by adding a whole portfolio of selected coins and tokens. Initially, lending started with Binance Coin (BNB), Tether (USDT), and Ethereum Classic (ETC).
In the second stage, eight variations of the lending and returns mechanism were offered, to include Bitcoin (BTC), for 14-day and 28-day lending periods. The various lending schemes offer annualized returns between 3.25% and 8.25%, depending on risk.
The most curious addition to the mix is Cardano (ADA), an asset that has seen relatively low activity in the past months, and has seen its price slide significantly from its trading peak. ADA currently trades at $0.045, and is no longer among the top 10 coins. The Cardano project has also lagged behind in adoption and its network so far has not built the smart contract activities and dApps previously promised.
Binance, through its lending program, enters a newly emerged field, that of decentralized finance, or DeFi. In 2019, when altcoins are mostly drifting or sliding, various lending schemes have cropped up, creating worries that they may lead to personal finance losses. Binance, as a leader in the crypto space, may offer a more transparent approach to lending, while offering high, but not outlandish annualized returns.
Still, buying and holding onto the assets may be risky, as the weekly return may not offset price volatility.
Skeptics about lending and DeFi programs view this tool as a way to bring some life back to older altcoins and tokens, which have multiple “bagholders”. As altcoins offer more limited price action, using them for staking or other forms of returns may make sense. The other innovation is offering interest on the Tether (USDT) stablecoin. The 5-days annualized rate for $100 worth of USDT would be 5%. Depending on the lot or type of asset, Binance traders may make use of the lending with minimal amounts of the listed coins.
Following the news, BNB rose about 5% overnight to $22.55, still far from its peaks above $34. Binance is also facing a trading reform, as it will soon stop offering trading for registered US-based users. From September 12, those traders will only have access to wallets for withdrawals, but not for trading.