Binance Crypto Exchange has rolled out “Lite Loan,” a new offering that enables eligible users to get up to a 1,000 USDT loan without liquidating their Bitcoin. According to the announcement, this service caters to users with short-term borrowing requirements who want a simple experience. Bitcoin stored on Binance’s Simple Earn Flexible products can also be utilised as collateral by users, thereby ensuring that such an investment earns returns throughout the duration of the loan. USDT obtained via borrowing can be traded or transferred using Binance Pay.
New Product Targets Short-Term Borrowers Seeking Simpler Crypto Loans
Binance claimed that there is a gap between the interest and the usage of cryptocurrency-backed loans. According to Binance’s statement based on research conducted by crypto lender Ledn, 88 percent of crypto holders would borrow through crypto. Nevertheless, only 14 percent do that due to fears over price fluctuations and liquidations. As opposed to Binance’s current loan services, Lite Loan does not get liquidated due to the movements of the Bitcoin price in the first 30 days of the loan.
Jeff Li, Binance’s vice president of product, said in a statement that “Lite Loan is designed for users who want access to liquidity without the complexity that often comes with crypto borrowing.”
Lite Loan is open to all registered Binance users who comply with the platform’s compliance standards and have enough Bitcoins to cover the loans. It is important to note that Lite Loan comes with an initial service fee only. The special offer fee from Binance will be 0.5 percent, but starting September 3, it will be 1 percent. However, Binance has also made it clear that if the loan is not paid off in full upon expiration of the loan period, the penalty interest will be charged daily at a rate of 36 percent.
Besides Binance, the US-based crypto exchange Coinbase had introduced crypto-backed USDC loans for users in the UK, which allow users to borrow USDC stablecoin against Bitcoin, Ether, and Coinbase Wrapped Staked Ether (cbETH) with up to 3.5 percent APY in USDC rewards automatically kicking in for Coinbase One members.
The loans are issued through Morpho, which is a lending protocol on Base. Coinbase added that borrowing costs can change frequently, which is why interest rates are variable and are set by Morpho based on market conditions on Base.
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