CEO of the popular digital asset exchange Binance Changpeng Zhao published a post in his microblog stating that platform users will be able to “earn cryptocurrencies while they sleep” soon. At the same time, the specialist urged participants in the crypto community to closely monitor publications on the website’s official account.
Would you like to earn #crypto while you sleep?
Keep an eye on @binance today.
— CZ Binance (@cz_binance) August 26, 2019
Most commentators agreed that Changpeng Zhao means the imminent launch of lending services on the platform.
Other popular speculations include cryptocurrency stacking or mining-related opportunities.
The Cryptocurrency Lending Sector Is Growing
Cryptocurrency lending is a very popular thing. Graychain researchers have recently found that cryptocurrency lenders issued $ 4.7 billion in loans over two years.
According to cryptocurrency credit bureau Graychain borrowers usually take up a loan at 6-10% per annum, the yield of this service is only 1.8%.
Graychain used the data that it managed to collect from P2P lending platforms such as MakerDAO, Compound, dYdX, and Nuo.
However, 65% of loans were issued by Celsius and Genesis credit platforms, which are private credit organizations and are less inclined to share information about their business, so Graychain had to take the figures they named for granted.
Despite the low profitability of the sector, the demand for cryptocurrency loans is growing: in the 1Q of 2019, 5,462 new on-tap issued, in the 2Q – 18,562. The volume of lending increased too. In the 1Q, lenders issued $ 64.8 million in loans, in the 2Q – $ 159, 3 million.
Is It Worth Getting A Loan In Crypto?
There is no single answer to this subject. This is a lesson for experienced miners and traders who understand and are fully aware of the risks involved. Crypto loans have many risks:
- High volatility. A loan can both help you earn money and be in debt. If the borrower withdraws funds to fiat, and the cryptocurrency significantly increases in price, he simply will not be able to pay. But if the borrower is lucky and virtual currencies become cheaper, he will be able to earn.
- Lack of warranties. Lenders act at their own risk. Fraudsters often pay a few small loans to raise their rating and take a larger loan. The forums have a lot of tips on how to pass verification on fake documents.
If the borrower does not repay the loan, it will be difficult to get him to repay the debt, especially if he lives in another country. Agreements on services are unlikely to convince the courts, as long as there are no relevant laws. With large sums, Western collection companies can theoretically help.
Now only US citizens can compete for the return of their funds – there is already a precedent when the court ordered the borrower to repay the debt in Bitcoin.
Taking a crypto loan is an activity for experienced miners and traders who know exactly what they are doing and are aware of the risks involved. Or for those who do not have the opportunity to receive money in alternative ways. But for a beginner, cryptocurrency loans are associated with too high risks.
However, Binance users don’t rejoice in advance do not rejoice in advance and approach such innovations wisely.