- May 31, 2020
- Posted by: admin
- Categories: Exchanges
In this article, we’re going to talk about Binance Lending. Binance is easily one of the best and the biggest crypto exchanges in the market. A giant of the industry, they’re aggressively expanding their product offerings to other business verticals. For example, you can now see Binance Staking, Binance Savings and Binance Lending under your user profile.
As a user of Binance, these developments are exciting to see. On the flip side, there are plenty of examples of companies who tried to do too much, and ended up hurting their core business. Let’s hope that’s not the case with Binance, and we can continue to enjoy their exchange platform.
Lending and credit business is huge. There are companies like Nexo, Coinloan and Blockfi, who have seen their businesses grow exponentially in recent years. Binance Lending is a direct competitor to these established players, and there’s an obvious advantage to using Binance – you don’t have to send your cryptos to any other platform, if you’re already trading there.
One of the downsides seems to be that you can only borrow stablecoins against your cryptos, but not the actual fiat. It’s not a major issue, as you can easily exchange your USDT or BUSD (the available stablecoins), but it would be even better to get EUR or USD without any additional hassle.
Pros of Binance Lending
There are three main pros to Binance Lending. Let’s take a look at them below.
Choice of cryptos as collateral
Usually, when you want to loan fiat against your crypto, you can pretty much only give Bitcoin or Ethereum as a collateral. The choice of cryptos includes BCH, LTC, EOS, and XRP. However, due to the volatility of the altcoins, it may not be the best idea, as your available credit line is dependent on the value of your collateral.
That’s a major upside for users like me. I am rarely interested in doing another KYC for a new platform and go through the hassle of sending my coins to anywhere. It’s just not a convenient thing to do.
This is where Binance will probably capture its market share, and most likely many “new borrowers” will choose Binance if they’re already using Binance as a preferred exchange.
Not to say that other platforms aren’t secure, but security is something that you always think about when you’re starting to use a new crypto platform. Can I really trust this? Will it be safe? For Binance, even if it’s not more secure than Nexo or Blockfi, you’ve probably made your mind about trusting Binance if your’re trading there already.
Cons of Binance Lending
There are things that could be better when it comes to the lending services of Binance, and we’ll briefly write about them below.
Not Getting USD or EUR
It would be great to get USD or EUR against the collateral, and not have to go through the additional step of exchanging the USDT or BUSD on the exchange (and pay another set of fees). It’s not a major issue, but that would be preferred as no one wants to do extra steps.
No Binance Card – yet!
It’s likely that you can soon borrow fiat on Binance and have it deposited directly to your Binance card. However, they’re not there yet. As an alternative, You can borrow and have your money deposited to your Nexo card, if that’s what you’re looking to do. If you’re interested in Binance card, go sign up on their landing page here.
Short Borrowing Periods
The lending periods are 7, 14, 30, and 90 days. Even the 90-day lending period is rather a short period of time. You’re probably wondering what will happen if you will not repay your loan in time. Binance gives you 3-days of overdue time. For these three days, you’ll be paying 3-times the interest. If you won’t pay it back in three days, your collateral will be liquidated to service the loan.
Crypto lending business has a huge potential. There are many people who own crypto, who have made a lot of money with crypto, but who do not want to sell their cryptocurrencies. The option to borrow fiat gives these people access to the capital they need.
It’s likely that we’ll see more exchanges coming to this market, and at the end of the day, this will serve the consumers, as the interest rates will get more competitive and acceptable.
Let us know your opinion on which are the best crypto lending services in the market!