Over the years, Blockchain has not only proven indispensable but also very dynamic. Today, it has applications in every market and industry imaginable. Who would have thought that one day Crypto would become a household name? And when we think about crypto, lending is one of those features that are common between the Crypto sphere and the traditional finance system.
Many Crypto platforms facilitate lending and the list is only bound to expand as Crypto adoption increases. KuCoin is one of these platforms that has created a name for itself in the Crypto lending space and you’re about to find out why. This article will teach you everything you need to know about parking your funds with KuCoin – how does lending on KuCoin work and how to lend on KuCoin.
Understanding Crypto Lending
Every investor under the sun has one goal which is to increase his holdings. Some prefer buying low and waiting to sell high (holding). However, most Crypto enthusiasts lack the patience to wait in a highly unpredictable market.
Crypto lending is an investment strategy that enables the lending of Cryptocurrency between individuals in exchange of interest rates on the lended amount. It is similar to traditional Peer-to-Peer lending. It is therefore a dream come true for most investors – unlocking the true value of their investments – because Crypto lending comes with significant interests on investments generating often 6 to 10% yearly return.
What is KuCoin?
Launched back in 2017, KuCoin is a global crypto exchange that provides a number of trading options to its six million users. These include spot, margin, futures, and P2P trading, along with lending, and staking. KuCoin claims to offer the most advanced level of security and a selection of nearly 400 cryptocurrencies. Despite its variety of features, it is a beginner-friendly exchange, with a sleek and easy-to-use interface. The exchange also charges some of the lowest fees in the crypto industry.
KuCoin Lending
Among the impressive features provided by KuCoin is a Customer-to-Customer lending function. Users that need to borrow funds are matched with the most appropriate lenders. Once the transaction is matched, the borrower receives the money which means that the lender earns the set interest. KuCoin lending comes second to none.
On KuCoin, 65+ cryptos are supported for lending and rates of return can go pretty high, with an APR of 40%+ at the moment for USDT.
How Does Lending on KuCoin Work?
The best type of Crypto lending platform is the kind that operates differently from the typical loans. The borrower should be required to deposit the interest (in Crypto) beforehand. This interest serves as collateral in case of loan defaulting to ensure the investors’ money is not lost. Once the collateral has been sent to the exchange, the seller then sends the ‘loan’ to the borrower. In case the transaction goes south, the collateral can be used as a form of compensation.
There are a few outstanding features that will optimize your lending experience; they are as follows:
- Terms – The period that you intend to lend your money. There are three options, either 7 days, 14 days, or 28 days; sometimes the borrower will pay ahead of time which the system will accept. Other times the borrower will delay and not pay until the debt expires, in which case the system will collect the principal as well as interests.
- Rates – Percentage of returns
- Reserved amounts – Amount of money that you wish to withhold on your exchange wallet. This money cannot be lent out unless you change the settings.
- Regularly updated information on your orders – KuCoin ensures that you can track all your transactions by periodically updating the open orders, unsettled orders, settled orders, and the order history.
- Auto–lending – a feature that allows you to make profits without having to physically place and update the orders.
How to Lend on KuCoin
Here is the procedure on how to lend on KuCoin step by step.
1. Add assets in your Main Account to start lending them
2. Enter the lending marketplace to open an order.
Go on the top menu of your dashboard, click on Finance > Crypto Lending. You will then be redirected to the lending marketplace. Once the marketplace opens, you will see the coins you can lend on the left sidebar. And by clicking a coin you will see the daily returns you can earn.
Returns are written in daily interests so you need to multiply them by 365 to calculate the yearly return. But overall rates range from 3% to 70%, depending on the coin you are lending. To lend you only need to fill in the Loan Amount, the Daily Interest Rate (ranging from 0 to 0.2%) and the Lend Terms (7 days, 14 days, and 28 days).
3. Your order will then be listed on the market. All the open orders are listed on the right side of the screen. Once your order is matched, it is moved to the Unsettled page and becomes a loan.
As you could see, the lending process is pretty simple, but here is some advice:
- The first thing you need to consider when lending on KuCoin is how competitive the rates are. You will have to find the rates that you are comfortable with.
- Always go for the most prudent investment option. USDT has proven to have the biggest rates (currently at 12% APY).
- It is recommended that you use auto-lending to free yourself of some of the load.
Advantages of KuCoin Lending
- Income-generating opportunity – KuCoin avails money to both borrowers and lenders; the lender earns through interests while the borrower earns prudent use of the borrowed money. The returns are generally higher than those of traditional savings.
- Assured transparency – Blockchain was created specifically for this; the system is immutable thus fraud and risk-proof.
- Speedy transactions – The entire transaction is virtual and automated; it only takes a couple of minutes thus making it considerably faster than traditional lending.
- Safety – Safety is right at the heart of the KuCoin Lend platform; it is also a top concern for every single investor whETHer they are holding their funds or lending them. The platform has a comprehensive risk control system that secures the user’s assets. This top-notch security feature is a great relief for users that like to store piles of coins.
- Lenders are assured of full repayment – Say you have lent money to a certain borrower and they don’t have enough balance to repay at the end of the agreed term. Borrowers are mostly usually hindered by extreme market conditions such as volatility. In case that happens, the insurance fund of KuCoin margin will cover the gap to ensure that the lender always gets the full repayment.
Risks of KuCoin Lending
- The crypto market is not fully regulated – The Crypto sphere is mostly unregulated which may make the debt collection difficult if the borrower decides to default on the loan. KuCoin Lend has put measures in place to ensure that lenders get value for their money (collateral). Still, in the event a loan defaulting occurs, the process to recover your assets or interests can be quite complicated.
- Borderless transactions – Normally, this is a huge merit because Crypto introduces you to an entirely new market. However, when it comes to Crypto lending, this leaves room for potential abuse. It can be exhausting to follow up on a debt abroad. KuCoin has put functionalities in place to avoid this but it is still a risk worth noting.
- Extreme price volatility – Crypto and price volatility go hand in hand, the prices could swing against your favor and greatly undermine the value of your investment.
- Hacks and thefts – Holding your Crypto on an exchange platform come with the risk of theft. KuCoin is very secure but it’s still on many hackers’ target lists. KuCoin has a long and successful history of keeping its customers safe and satisfied.
Closing Thoughts
Understanding how to lend on KuCoin is the perfect opportunity to make passive income. It is a very simple process and the risk involved is notably low which makes it perfect for amateur traders who are not ready for advanced trading. Borrowers get the necessary money to amplify their profits while lenders earn a stable passive income.
If you have digital assets that you don’t currently need, then lending might be a great win for you. Though, always exercise extreme caution; do thorough research before committing your money to anything.
