On Monday, Binance announced that it has expanded its offerings with a new program that allows its users to earn interest on their cryptocurrencies through providing loans to those interested in borrowing digital assets.
Initially, users can lend Binance Coin (BNB), Ethereum Classic (ETC) and Tether (USDT), however, the company says it plans to scale up and will keep on adding more coins in the future.
Per its official blog, Binance clients will be able to earn interest on their crypto assets by lending them to other users over a specific period of time.
During the initial phase, yields would be generated through pilot lending products on three tokens, namely BNB, USDT, and ETC.
These fixed-investment plans will be made available on the basis of a 14-day maturity term.
The interest rates vary based on the asset, up to a maximum of 15 percent on its native token, BNB, and 10 percent and 7 percent annualized returns for USDT and ETC loans respectively.
According to the product’s terms and conditions page, the Malta-based exchange can modify the rate for upcoming phases depending on market demand and supply.
Furthermore, a cap on an individual’s participation will be applied with each user able to offer a maximum of 500 BNB, 1,000,000 USDT, and 1,000 ETC.
Binance’s initiative comes at a time when competition for crypto investment products continues to heighten, with major players expanding checking, savings, and high yield offerings.
On a global scale, there are similar lending programs that are emerging rapidly where crypto exchanges are most concerned.
In comparison, New York-based BlockFi offers a 6.2 percent annual interest compounded monthly, but minimum balance thresholds are applied at 25 BTC and 500 ETH.
However, the lock-in period for Blockfi is one month compared with just two weeks at Binance.
Also in the U.S., Ledgerx operates its Ledgersavings program which pays an implied rate of around 16 percent annually.
Meanwhile, Indian crypto exchange Coindcx allows users to earn up to 2 percent interest monthly while Japan’s GMO Coin started paying up to 5 percent interest annually on five cryptocurrencies.
The launch of Binance Lending follows a recent move by the exchange to compensate users who fell victim to the KYC hack scandal that surfaced earlier in the month.
Binance is offering affected customers a lifetime VIP membership which includes preferential trading fees and support as well as additional services.
Binance also said the investigations into the hack that occurred at the beginning of August are still ongoing and its staff is pursuing leads in relation to the source of the leaked images.
Specifically, some of the customers’ data that surfaced online thus far overlaps with those processed by a third-party vendor the exchange contacted several times from December 2018 to February 2019.
Despite its ongoing woes, including a large-scale security breach that allowed hackers so steal 7,000 Bitcoin in May, Binance remains the runaway market leader with over $1.1 billion worth of crypto trades taking place on the platform during the past 24 hours, according to CoinMarketCap.
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