Binance Opens Crypto Lending Service, Promising Passive Returns

Published on [Date Not Provided] by Cryptovest Staff

Binance has added another service, crypto lending, to its portfolio, generating controversy about the viability of crypto-based finance.

Binancehas expanded its portfolio to include crypto lending, offering passive income for those that want to hold onto coins. The program, calledBinance Lending, created something of a controversy, as critics are not certain of the feasibility of crypto finance.

https://twitter.com/binance/status/1166113088283860992

Binance Lending offers two products for Binance Coin (BNB) and Tether (USDT), offering respectively 15% and 10% maximum annualized interest rate. The assets can be pledged for lending in 14-day increments, with limits of 200,000 BNB and 10 million USDT.

There is an additional lending scheme involving Ethereum Classic (ETC), though with a lower rate of return at 7% and a limit of staking 20,000 ETC. The addition of ETC to the lending program was anticipated, adding to the recent price climb. Currently, ETC has stepped back to trade at $7.17.

Including ETC into the mix mystified analysts, as the asset is relatively unpopular and its price is heavily depressed in the past year.

There is no minimum for participating in the program, which would appeal even to small-scale traders and owners. Binance Lending also extends to the margin lending tool, meaning some traders may participate with funds that are not their own.

The lending program will potentially increase liquidity and turnover, but skeptics see the tools as inherently risky. The high annualized percentage gain is unusual in the world of traditional finance. Skeptics compared Binance Lending to BitConnect, though with a slightly lower risk profile. In the past, crypto lending has seen significant fallout as in the case of the SALT project. In the case of Binance, the presence of robust trading and other types of activity may create a real use case for the lending, preventing the development of a pure pyramid scheme.

The news failed to lift the price of BNB, as the asset slid down to $25.53, down about 5% in the past day. Skeptics also pointed out it was wrong for Binance to offer a promised rate of return, potentially misleading traders.