How to Properly Use the Crypto Lending Product To Earn

The Crypto Lending (Margin Loan Market) has been available for a while. However, some users may still encounter problems when processing it. In order to provide a better understanding of the usage scenarios of this product, we hereby provide a more detailed explanation. 

 


How Does Crypto Lending Generate Token Income

 

Crypto Lending is a product generating token-based income that relies on borrowing out tokens to Margin traders.  

 


Crypto Lending users subscribe and match their tokens to others who desire to borrow, thereby achieving profit. The interest paid to subscribers (lender) is token-based which is the interest settled from margin traders (borrower) houly. 

 

Properly Control Lending Scale is the Key 

 


Once token prices rise rapidly, Margin traders most likely go short which may lead the token under heavy needs. At the time, the token is insufficient and may cause failure to redemptions.  

 


Since the Margin trader currently holds the token, the lender can only redeem the token until the borrower repays it. For this reason, it is strongly recommended that lenders should manage their subscription scale in good shape. 

 

For instance, User A subscribes to 9 BTC via Crypto Lending. The total subscription amount is 100 BTC at this time with many subscribers. Meanwhile, 60 out of 100 BTC are borrowed to Margin traders which means 40 BTC are remaining borrowable.  

 

BTC prices are rising rapidly and the demand to borrow BTC goes short and becomes heavy. After the price surge,95 out of 100 BTC were lent out, and 5 BTC are remaining borrowable.  

 

At this time, User A wants to redeem the subscribed tokens and sell them due to the BTC price surge. Under current circumstances, the maximum redeemable amount is 5 BTC for User A, and the remaining 4 BTC can be redeemed after the amount is returned by borrowers.  

 

If Redemptions Occur, What Users Can Do 

 

When redemption fails, it is recommended that users try to redeem in small amounts instead. For example, the BTC price surge, and the borrowing demand is heavy. If a user wants to redeem 1 BTC at this time, the user can try to redeem 0.2 BTC or less once multiple times. Professional users can also perform hedging operations on the value of the loaned tokens.  

 

Best Practice for Token-based Users  

 

For users who hold tokens steadily, the crypto lending product is most likely a good practice to earn. Otherwise, users need to pay attention to the lending scale to avoid redemption failure which affects daily transactions. 

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