The crypto industry has evolved beyond a collection of tradable digital assets. An entire financial landscape has formed in the way of lending markets and new products are constantly emerging to offer even better rates of interest.
Margin lending has been a popular service offered by traditional stockbrokers and exchanges for decades, it has only recently emerged in the digital currency sector.
Traditional brokers such as Charles Schwab would lend either securities or fiat to their clients for trading purposes. It is a highly lucrative business model for brokers since rates can be as high as 11%.
Decentralized blockchain-based crypto assets have added a wealth of new opportunities to this scene by becoming synonymous with the democratization of financial opportunity.
This essentially means that anyone is able to lend out their crypto assets and earn the rates that brokers and institutions have been enjoying for years.
Platforms like Celsius, Nexo, and Invictus Capital have emerged to enable high-interest revenues to be passed directly on to retail investors as opposed to the big brokers.
Crypto lending platforms have come a long way since the ICO boom drove prices in 2017 and 2018. The latest report by cryptocurrency credit bureau Credmark revealed that the lending market has expanded to over $6.4 billion in loans originated by Q3 2019.
Most of the large crypto exchanges facilitate some form of margin trading on their platforms with some offering peer to peer lending by autonomously matching lenders and borrowers.
Volatility is still a big driver of the space as it leads to high liquidity which in turn motivates more trading activity. Lending rates can spike when crypto prices do as traders look to increase their market exposure.
Invictus Capital leading the crypto margin lending space
The latest offering from the firm is an innovative margin lending fund to allow investors to earn passive, high-yield dollar-based returns taking advantage of a nascent market that has to date provided consistent returns well above traditional money market yields.
The Invictus Margin Lending Fund (IML) beats the current short-term savings rate in the US, which is just under 2%, by offering a unique opportunity to earn yields in excess of 10%.
The fund also has compelling structural benefits in addition to the returns. These include 24/7 liquidity through automated smart contract subscriptions and redemptions enabling investors to redeem their tokens as and when they wish to realize returns.
As the crypto lending market expands it is expected that returns for the IML Fund will continue to remain impressive.