Binance Crypto Lending Program expansion - a bad idea for traders

Cryptocurrency lending platforms have been growing significantly in recent years. The blockchain peer to peer (P2P) is growing despite the bearish cryptocurrency market. It works by connecting different users to a broad network of lenders who are registered in a platform.

Binance is one of the latest entries in launching its crypto lending platform on August 28. In the first phase, it began with a short period fixed return on Binance (BNB), USDT (Tether) and Ethereum Classic (ETC). It provides an annual return of 15%, 10%, and 7% respectively, beginning with a 14-Day fixed period. Binance starts with about $30 million in crypto-lending. Moreover, the annual interest offered is higher than the return from banks. 

In the second phase of Binance’s lending program, users will be able to lend ADA, ETH and BTC in addition to the previous coins to earn interest payable from September 5 - September 19. The annualized interest rate for initial lending products with a 14-day fixed maturity term has been set at 8%, 7%, 6%, 6%, and 3%, for Tether(USDT), Ethereum Classic (ETC), Cardano(ADA), Ethereum(ETH), and Bitcoin(BTC) respectively.

Why Binance Crypto-lending could be a bad idea

The fixed interest rates offered are unwise, especially in the financial industry and could cause problems in the future. One of the proposed interest payment options being in Tether (USDT) making it even more dangerous. Binance company is in a fishing expedition of getting people to hold Binance Coin, knowing very well that the platform won't last for long.

The borrowers' basic crypto security is not guaranteed because all the keys are being held by one big digital institution and as the old crypto adage goes, ‘Not your keys, not your coins'. Moreover, Binance has experienced a hack before making it vulnerable to its users.