Bitget, a crypto exchange based in Seychelles, has launched a crypto lending product. Users can bet their crypto assets to get more liquidity funds.
Bitget's new crypto loan service allows users to stake low-demand digital assets, in return, Bitget will provide these users with more liquid funds.
The digital exchange highlighted that the loan product takes a “dual crypto asset approach.” Users who wager cryptocurrencies receive corresponding amounts in separate assets. It was not disclosed which cryptocurrencies will be included in the program. The company added that a fixed interest rate applies to each loan and the loan amount is based on the market price of the amount wagered by users. The terms of the loan are set in advance, but some point out that users can repay early.
Biget said it was aiming for a "smooth onboarding" and that its lending services were modeled after traditional financial services. When users post collateral, they automatically receive the loan amount and can disburse the funds or adjust the collateral.
The company also said it would support withdrawals and provide “rapid verification” of loan applications. No details were given about the security guarantee.
The crypto lending sector is growing, but struggling.
The crypto lending market could be worth more than $8.5 billion in 2022 and could grow 20.5% by 2032, citing GMI data.
Despite the company's optimistic outlook, several crypto lending firms (most notably Celsius) began bankruptcy in 2022 after failing to meet withdrawal requests. Since Bitget's lending services are intended to provide users with temporary access to additional funds or non-permanent rewards for wagered funds, is Bitget prone to such liquidity problems? It is unclear whether Bitget declined to say if it plans to reinvest or use customer bets.