Crypto derivatives exchange Bitget has launched a new crypto lending program that will allow users to stake their own coins in exchange for loans on another.
The platform aims to serve borrowers who are dissatisfied with traditional lenders, a Press release of the firm said.
He explained that the new program, dubbed the Crypto Loans program, will allow borrowers to use their coins as collateral to borrow an equivalent amount denominated in another cryptocurrency.
Each loan is associated with a specific interest rate, and the maximum amount that can be borrowed is determined based on the market value of the collateral posted.
An activity made popular recently by Ethereum’s transition to a proof-of-stake (PoS) blockchain, staking allows people to validate cryptocurrencies across different nodes.
By staking and delegating their crypto to validators, users can earn rewards, making the activity a potentially attractive passive income stream.
An opportunity to diversify into other currencies
Gracy Chen, Bitget’s CEO, noted that the lending program offers borrowers the opportunity to expand their investment portfolios beyond the currencies they currently hold.
“Users now have the opportunity to stake less in-demand coins, allowing them to borrow into more liquid assets for investment purposes,” he said, adding:
“Our platform’s flexible lending and payment mechanism is designed to meet the needs of all users, accommodating their requests and ensuring convenience.”
Digital loans are not without risk
While digital loans offer faster decision-making compared to traditional loans, they are not without risk, including the potential for hacking and fraud.
The sector has seen notable failures, such as Celsius, FTX, BlockFi, and Genesis, which filed for bankruptcy during the most recent Bitcoin bear market.
However, success stories such as Fidelity’s partnership with Nexo demonstrate the potential of crypto lending.
It will follow the traditional procedures.
In its announcement, Bitget emphasizes that its onboarding process follows established procedures used by traditional lenders.
The platform also emphasizes the implementation of protection measures to safeguard borrowers’ collateral and account for their holdings.
In March, Bitget announced a partnership with Space and Time (SxT) to develop a decentralized data warehouse, offering a tamper-proof, verifiable audit trail.
Additionally, the platform added a test booking section to its site, further increasing the security and transparency it offers its users.
Last month, Bitget, along with rivals Kraken and Bybit, was mentioned by blockchain research firm Nansen as one of the cryptocurrency exchanges gaining ground following the FTX crash.
