AI Summary
Show More
Quickly grasp the article's content and gauge market sentiment in just 30 seconds!
The distinctions between the terms lending, loaning and borrowing are blurred by the broad interpretation and overlapping use of these terminologies. Furthermore, the perspective from which these transactions are used when a participant commits as either lender or borrower further complicates things, leading to the enigmatic question, “What are lending, loan, and borrowing?”
To mitigate confusion and clarify the respective roles and viewpoints of a lender and borrower, this article attempts to provide solid insights into this evergreen dilemma.
Key Takeaways:
Bybit users are encouraged to explore the different lending and loan services it offers to see which suits their risk appetite.
This article explores the differences between each lending product, highlighting purpose, mechanics and participation requirements.
A comparison table will be provided to help you evaluate at a glance which of these lending products will fit your trading needs.
Bybit Lending enables users to lend their cryptocurrency assets to borrowers in exchange for competitive hourly interest payouts. Lenders can earn passive income by contributing funds to an asset pool. These pooled funds are then made available to traders who require additional capital to leverage their positions in the market, or to invest in Bybit Earn products.
To obtain a loan of cryptocurrency assets, borrowers are required to provide collateral according to the lender's specified conditions. Bybit serves as an intermediary, facilitating the matching of lenders with suitable borrowers and ensuring a secure and transparent process.
Bybit Lending offers advantages for both lenders and borrowers: Lenders can leverage on their unused assets to earn interest, while borrowers gain access to extra capital for activities such as margin trading or obtaining crypto loans. This additional capital can be used to potentially enhance their profits or provide a safeguard against market volatility.
Bybit Crypto Loan provides users the gateway to meet their short-term liquidity needs by borrowing crypto assets without selling their crypto holdings. Participants can use their crypto assets as collateral, and pay interest in exchange for other coins like BTC, ETH or XRP, as well as stablecoins such as USDT and USDC.
The crypto loan amount is determined based on a percentage of the cryptocurrency you pledge as collateral, also known as loan-to-value or LTV. After borrowing an asset, you must repay it within the loan term, ranging from 7 to 180 days.
Crypto loans are popular among borrowers when trading leveraged positions by expanding their margin availability to avoid liquidation. Borrowers leverage these loans to maximize their passive income by earning annualized yields.
The following table compares the differences between Bybit Lending and Loans and summarizes the product highlights at a glance.
Unified Trading Account (UTA) | Spot Margin Trading | Crypto Loans | Institutional Lending | |
Applicable Customers | - All Bybit users - Institutional users | - All Bybit users - Institutional users | - All Bybit users - Institutional users | Institutional users |
Supported Account | Bybit UTA Account | Bybit Spot Account | - Bybit Spot Account - Funding Account | - Bybit Spot Account - Options Accounts |
Borrowing Margin and Leverage | Up to 10x | Up to 10x | Less than 1x | Optional 3x or 5x |
Borrowing Rates | Variable rate, depending on users’ tier levels | Variable rate, depending on users’ tier levels | Variable rate, depending on users’ tier levels — interest yields are fixed after borrowing | Variable rate, depending on users’ tier levels — rates renew every six months |
Interest Accruals | Hourly interest payout | Hourly interest payout | Hourly interest payout | Interest payout per day |
Borrowing Cryptocurrencies | Support up to 60 crypto assets. For more details:Borrowing Currency | Support up to 68 crypto assets. For more details:Borrowing Currency | Support up to 42 crypto assets. For more details:Borrowing Currency | Support only USDT & USDC stablecoins |
Margin Trading Cryptocurrencies Support | Support up to 70 crypto assets. For more details:Margin Currency | Support up to 71 crypto assets. For more details:Margin Currency | Support up to 43 crypto assets. For more details:Margin Currency | Support up to 71 crypto assets. For more details:Margin Currency |
Amount of Transferable and Withdrawable Balance | Initial Margin Rate (IMR) ≤ 100% — partially transferable | Loan-to-value (LTC) ≤ 60% can be transferred | No restrictions | Loan-to-value (LTC) ≤ 80% can be transferred |
Scenarios for Borrowed Funds | - Spot/Derivatives coins trading - USDT Perpetual contracts - USDC Options contracts | - Spot/Derivatives coins trading | All coin trading, perpetual, options, yields earning programs | - Spot/Derivatives coins trading - USDT Perpetual contracts |
Asset at Disposal | Flexible | Flexible | Locked | Flexible |
Liquidation | Maintenance Margin Rate (MMR) is up to 100% or depends on the amount borrowed ≥ the borrowing limit | MMR depends on the amount borrowed ≥ 95% of the borrowing limit | MMR depends on the amount borrowed ≥ 95% of the borrowing limit (varies depending on the cryptocurrency) | MMR depends on the amount borrowed ≥ 95% of the borrowing limit (varies depending on the chosen product) |
Risk Control Parameters | - IMR - MMR | -Withdrawable/Transferable Threshold - Liquidation Threshold - Margin Call Threshold | - Initial LTV - Margin Call LTV - Liquidation LTV | - Restrictions on Withdrawal/Transfer - Restrictions on new Spot Buys/Sells new USDT Perpetual positions - Liquidation Threshold - Restrictions on Tradeable Spot Pairs, USDT Perpetual Contracts, USDT Leverage Perpetual Contracts |
Customization | Borrowing limit | Borrowing limit | Borrowing limit | - Borrowing limit - Risk Control Parameters |
Borrowing/Lending | Lending method: APP/Web Borrowing scenario: - Leveraged for long positions - Leveraged for short positions - USDT Perpetual - USDC Options | Borrowing method: APP/Web/OpenAPI Borrowing scenario: - Leveraged for long positions - Leveraged for short positions - Direct Borrowing | Borrowing method: APP/Web Borrowing scenario: - Direct Borrowing | Borrowing method: Offline Application/OTC Borrowing scenario: - Direct Borrowing |
Repayment Methods | Repayment via APP/Web Repayment scenario: Automatic Repayment | Repayment via APP/Web/Open API Repayment scenario: Direct Debit | Repayment via APP/Web Repayment scenario: Direct Debit | Repayment via Offline Application Repayment scenario: Direct Debit |
Product Description | ||||
API Documentation | Not supported |
Bybit Lending and Bybit Loans offer the safest, most flexible and transparent lending and borrowing environment for users to earn passive income and fulfill their liquidity demands in seconds. Depending on the purpose of these services, we highly recommend users research before use, as all investments come with risks.
Disclaimer: The above content is strictly for educational purposes only. This is not financial advice. Should traders intend to use the products described, please seek professional advice before investing. This content will be used for translations. In any case of translation inaccuracy, the English version will prevail.
#Bybit #TheCryptoArk