Starting August 28, Binance will launch the new cryptocurrency lending platform Binance Lending.
On August 26, Chanpeng Zhao Zhao (CZ) on his Twitter hinted that Binance would soon provide a new earning opportunity for users:
Here is what is currently known:
- The new platform will be launched on August 29 at 06:00 UTC;
- Binance users will be able to earn interest using their funds, giving them a loan for a certain period;
- Initially, 14-day lending products will be introduced for BNB, USDT and ETC coins;
- The annual interest rates for BNB, USDT and ETC will be 15%, 10% and 7% respectively;
- The subscription period will begin at 06:00 UTC on August 28 and end August at 00:00 UTC on August 29; service format – in order of priority;
- Interest accrual period – from 00:00 UTC 29 August 28 to 23:59 UTC September 10;
- Interest is paid as soon as the loan is due.
This has pleased many traders, however, the reaction to the launch of such a service from Binance has been mixed, and not everyone considers it a good idea for the cryptocurrency ecosystem.
Fixed interest rates are unreasonable
The cryptocurrency community has not responded very well to CZ’s attempt to dominate the crypto industry by attracting the maximum number of customers. Fixed interest rates are not so common in the financial industry and may cause problems in the future, especially if one of the options for paying interest is calculated in Tether (USDT).
The Block’s research director, Larry Cermak, tweeted that “offering guaranteed profits was never considered a good idea.”
While some panelists said that Binance’s approach was dictated by supply and demand, others compared it to Bitconnect credit fraud, which was stopped in January 2018.
There were such harsh statements:
“I did not know that CZ is so desperate to force us to keep BNB. It seems that as soon as we don’t have Binance, the BNB will collapse so that hunger begins … ”
Of course, it is unlikely that Binance is a fraudulent scheme, but CZ’s diligent attempt to use Binance Coin (BNB), apparently, did not appeal to everyone.
About cryptocurrency security
Another aspect that discerning crypto observers have not lost sight of is the promotion of storing funds on a centralized exchange, which this year has already been hurt by hackers.
Of course, Binance has a specialized SAFU fund for insuring user funds. However, it is unlikely that such a fund is unlimited, while the exchange itself is, in fact, just a large crypto bank that stores all the keys of users. As the old crypto proverb says: “If you do not own the keys, then you do not own the coins either.”
Binance Exchange also strives to become a leader in stablecoins tethered to world currencies and built on the company’s own blockchain. There is a company’s desire to adequately combat such ambitious projects as Facebook’s Libra. Apparently, Binance is also going to become Google for the Crypto World.
However, in order for cryptocurrencies to fulfill their mission as decentralized money, they must be exempted from such controlling links as centralized exchanges, companies and lending schemes. It seems that the latest Binance offer completely contradicts the basic rules of cryptocurrency security, adding a new element of control by third parties for users’ funds.