What is a Lending?
Lending translates to "loan". So, literally means that there will be a person / an organization using its assets / money and giving it to another person / organization with a certain interest rate. After a period of time, the lender will receive back the loan principal and interest at the agreed rate.
Or you can see it similar to saving money in a bank and receiving interest.
In the electronic money space, you will not use fiat currencies to lending but instead will be popular coins such as BTC, ETH, USDT, ...
What is Binance Lending?
Through the above section, perhaps now you have a little understanding of what the concept of Binane Lending is, right.
Binance Lending is a platform that is integrated into the Binance exchange. Through Binance Lending, users will lend Binance their assets. The loaned assets will be BNB, BTC, ETH, ETC, USDT. In the near future, there will be more Monero (XMR), ZEC, and DASH.
So the borrower in Binance Lending is Binance and the lender is the user.
Many of you will find this model similar to the Staking Rewards model of some coins. However, in Staking Rewards, the coin project will pay interest for you Binance Lending, the payee is Binance. I believe this site can give you more knowledge: Bitcoin exchange.
What are the advantages and disadvantages of Binance Lending
Advantages
The first thing you can see is taking advantage of the user's idle capital. For the "holders", it is possible to create a little more profit through Binance Lending through the amount they are holding.
Simple operation. With an intuitive interface, users only need a few mouse clicks to complete lending.
Binance has SAFU fund - a fund that protects users' assets. So when storing crypto at Binance as well as lending you can feel more secure.
Defect
Relatively low interest rates. Binance Lending has a less attractive interest rate than other exchanges, just average.
Lending time is less flexible. Currently, lending packages only have 2 options: 14 days and 28 days, less flexible for users to choose.
Attention when participating in Binance Lending
When participating in any lending, not except Binance Lending, you need to pay attention to one thing. That is the price movement of crypto assets during and after lending period.
When you lend and the coin increases in price, it's okay, but if you decrease it, it's another scenario.
If the discount is higher than the interest rate during the lending period, you will definitely lose money.
Simple example: BNB brothers Lending 100 BNB at the loan time is 20 USD. At the end of 14 days, you can withdraw (principal + interest) = 100,57534 BNB. But, when the BNB price dropped to 15 USD, it still lost in USD terms.