Lending
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Curious about lending on the exchanges. How does it work?
Mainly, if I'm going to lend coins, what protections are in place that they borrower can't just run off with the coins? Is it just a temporary exchange of one coin to the other meaning that the user has to have x amount of coin in one crypto before they can borrow the other?
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@DougLife The user can't withdraw the balance, it's just extra margin to trade. If the person wins or loses their trade you gain money. It's just more risk and reward for the borrower, and if they lose, they lose more so you can get your money back as always.
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@rapidfireman so they must have to have that balance in their account that gets "escrowed" then?
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@DougLife Here's an example: Lets say someone has 0.01 bitcoin and you lend someone 0.01 btc so now they can trade with 0.02 bitcoin. It never shows up in their balance, but they can make longs and shorts with it, and if they close their position they only get their winnings so basically they never physically own what you loan.
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@DougLife They don't get to access the funds, but they get to margin trade with it
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Ohhh, I see. Seems kind of like a no brainer if you just have funds sitting in the exchanges not doing anything?
Or is there another aspect of it that I'm missing?
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@DougLife My coins that can be loaned are almost always on loans ....
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I'm going to keep that in mind going forward, seems like an easy, passive income.
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@DougLife My coins that can be loaned are almost always on loans ....
So its technically worth it to loan then?
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@mathew Yeah, low risk passive income. You won't get rich, but I've earned about 1 BTC off loans.
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@haitch can I borrow 1btc to loan :-P
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@DougLife Sure, just send me 1.1 BTC as collateral.
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I just dropped it in the mailbox. Won't be picked up until tomorrow around noon and should be to you by Monday. We good? :-D
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@DougLife As soon as it arrives ........ ;-)
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So basically you are providing liquidity to the exchange for the margin traders. That's clever indeed :) Which of the exchanges provide better rates? Any comments on that?
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@vExact I've only done it on Polo, so can't comment on the other exchanges.
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@haitch the loans demand there come from people or from the exchange itself? Just courious
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@vExact From traders, not the exchange.
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Not sure if you're on Poloniex, but there's a tool out there for lending purposes: https://www.poloniexlendingbot.com/
It's helped me take advantage of the highest interest rates available
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@k.coins You can download this bot for free and not pay any fees for lending. https://github.com/Mikadily/poloniexlendingbot
