The entire loan will be repaid using the equivalent value of the collateral for that loan position. However, the pledged collateral remains with Binance Flexible Loan as security for the return of the digital assets you’ve borrowed. Also, every cryptocurrency is subject to varying maximum amounts you can pledge or borrow.
By eliminating transaction fees, the loan becomes more cost-effective for you because you don’t have to pay additional fees to manage your loan. There’s no expiration date for open positions unless your position is liquidated or specific cryptocurrencies are no longer supported on the platform. Liquidation means that the lender has the right to obtain ownership of your collateral if you default on your obligation. For example, this could happen when the collateral decreases in value or the value of the borrowed assets increases due to accrued interest over time. In other words, the liquidation gets triggered when the current LTV exceeds the liquidation LTV.
Real-time APR rewards
Therefore, your assets will continue to earn rewards, allowing you to benefit from them even while you borrow against them. The competitive interest rates of a flexible loan product allow you to borrow cryptocurrency at a lower interest rate compared to many other loan options available on the market. This may allow you to save money on interest payments and potentially reduce the overall cost of your loan, making it more affordable in the long run.
Binance Flexible Loan is an isolated, overcollateralized, and open-term loan product. For instance, this could mean taking an ETH loan with TUSD collateral in one position and a BTC loan with USDT collateral in another. To start borrowing with Binance Flexible Loan, you must first open the Flexible Loan page on Binance Earn. Next, you’ll need to click “Borrow,” and choose which cryptocurrency you’d like to pledge.
What’s the Difference Between a Flexible Rate and a Stable Rate?
The advantage of the Simple Earn Flexible Product is that when you use assets as collateral for your loan, those assets continue to earn rewards in the form of real-time APR. Binance Flexible Loan offers and accepts a wide range of cryptocurrencies as loanable and collateral assets, including USDT, BTC, and ETH. However, same-cryptocurrency collateral-loan pairs are not supported on Binance Flexible Loan. A partial liquidation occurs when the current LTV for a particular loan position meets or exceeds the liquidation LTV. ~50% of the outstanding loan for that position will be repaid using the equivalent value of the pledged collateral. A full liquidation occurs when a hard cap liquidation LTV of 90% is reached for any cryptocurrency, or when an outstanding loan has a value of less than 200 USD.
To complete the process, you’ll need to agree to the terms of the loan, including the APR, interest rate, and redemption price. This means you won’t be charged any additional fees for making transactions related to your loan. This can include activities such as making loan repayments or accessing funds from your loan account.
Competitive interest rates
You must be wondering how the Binance can trust that the borrower will repay the loan. This contingency is built into the overcollateralized loan design, which requires the value of the collateral to be greater than the value of the digital assets offered to you. This means if you want to borrow 100 TUSD, you would first have to provide collateral worth more than that. In case of liquidation, you will be charged a 2% liquidation fee based on your loan amount.
Binance Flexible Loans are open-term, which means that you can keep your positions open indefinitely as long as the relevant LTVs are not exceeded. As a result, each position in a collateral-loan pair has a different LTV ratio, margin call, and LTV liquidation level. The stable rate acts as a fixed rate in the short term but can be rebalanced in the long term based on changes in market conditions. A variable rate is a rate that is updated every minute based on factors such as asset volatility and market conditions. The total amount of Simple Earn Flexible Product assets pledged for the Binance Flexible Loan will be reflected in the “Collateral amount” column in your Earn wallet.
What Can I Do With the Cryptocurrency Borrowed as a Binance Flexible Loan?
Conversely, if the price drops to 0.3 BTC, the stop-limit order will be executed and your profit-taking order will be canceled. For instance, you may have bought 5 ETH for 0.34 BTC due to speculation Что такое binance that ether will likely increase in value against bitcoin. You can then use OCO orders to minimize losses should your prediction be incorrect, or take profits if the outcome is in your favor.
- There’s no expiration date for open positions unless your position is liquidated or specific cryptocurrencies are no longer supported on the platform.
- If the price rises to 0.4 BTC, your sell order will be executed and the stop-limit order will be canceled automatically.
- The stable rate acts as a fixed rate in the short term but can be rebalanced in the long term based on changes in market conditions.
- Liquidation means that the lender has the right to obtain ownership of your collateral if you default on your obligation.
This means that as each minute goes by, a small amount of interest is added to the total amount owed. This ongoing accumulation of interest after each minute gradually increases the overall outstanding loan balance. This feature allows you to place two limit orders at the same time, which can minimize potential losses. However, the use of OCO orders may vary slightly, depending on the specific exchange used. To avoid liquidation, you can lower your LTV by depositing more collateral or repaying a portion of your loan. All interest rates for each cryptocurrency in Binance Flexible Loan are updated every minute.
Once you borrow from Binance Flexible Loan, you can decide how you want to use the loaned assets. You can use the borrowed assets for any purpose, including trading on the spot market, depositing them into Binance Earn products, or withdrawing them from Binance. You can also use the cryptocurrency with a Binance card for your personal expenditure or convert the cryptocurrency to fiat. Binance Flexible Loan allows you to leverage Simple Earn Flexible Product assets as collateral to borrow any available cryptocurrency.
If the initial LTV is 65% for USDT and you have pledged 1,000 USDT, you can borrow up to 650 USDT in the cryptocurrency of your choice. This article is sponsored content and should not be considered as financial or investment advice. The opinions expressed in this article are those of the contributor/author and do not necessarily reflect the views of Binance Academy. As the name implies, the fixed rate will remain fairly constant and is the best option for planning ahead for how much interest you will need to pay. To do this, you could place a profit-taking order at 0.4 BTC, along with a stop-limit order at 0.3 BTC. If the price rises to 0.4 BTC, your sell order will be executed and the stop-limit order will be canceled automatically.