If you prefer to earn interest on your money rather than trade it or rather than promoting Poloniex, after having read our Poloniex referral program review, you can also borrow your funds to other users through Poloniex Lending. This feature allows you to choose which coins you want to lend to others, how long you are willing to lend the money, and how much you charge the borrower. Credit is one way of generating passive income from funds without having to actively trade them.
When a margin trader makes a trade in which he has to borrow money, the Poloniex platform compares him to another trader. The platform connects the borrower who wants to trade with the lender who is the fund that offers the peer-to-peer loan.
When the trade is closed, the spread trader pays the lender interest on that trade and pays the lenders back the interest on that trade. The loan remains open as long as the spread trader closes the trades until the maximum term of the loan is reached.
People lend to each other because lending means using capital in exchange for gains in the form of interest. Most risk is minimised and interest is calculated on the basis of the agreed interest rates – the interest rate and term of a loan.
By contrast, an experienced trader can trade crypto on Stellar, an open network for Bitcoin, or participate in crowdfunding crypto projects. Some will require crypto, others can borrow (credit limits vary from platform to platform), and still others can easily accept liquidated items, even valuable items with reputations. No value of any kind can be transferred or exchanged without the consent of the borrower or lender (e.g. credit cards, bank accounts, etc.).
The Transfer Credit section allows you to top up your exchange or loan account with just a few clicks. You can also deposit cryptocurrencies in your wallet, where your funds can be managed by logging in via email or by depositing into your account.
If you don’t have a cryptocurrency, Poloniex offers an option for those who can buy crypto with Simplex integration, and that costs you a fraction of the cost of a conventional credit or debit card. If a borrower believes that a price increase is imminent for a particular coin, he or she can apply to borrow money via the exchange, provided the funds are made available. This is a Bitcoin credit platform until the Lightning Network for Bitcoin is set up. It’s perfectly right for you, it borrows from someone and lends them its Bitcoins and you them.
If you prefer to earn interest on your money rather than trade it, you can also borrow it to other users. Each person will set up their own collateral that they wish to receive, such as a bank account, credit card or other financial institution.
Before you transfer the money to your Poloniex lending credit account, you must offer it by clicking on the “Lending” tab at the top of the page. Then select the coins you want to offer in the balance box on the right and select “Offer Coins.”
Check the box if you want to offer the funds for other purposes (e.g. as an investment or as part of a barter). While you can close your margin position at any time, you will find that the loan is taken out and released after closing the corresponding margin positions.
When a margin trader opens a position that requires only a portion of the loan, Poloniex will bring lenders and partial debtors together and keep some available to others. When the trader gives up the loans, they go back into the credit pool and are available again.
Loans to margin traders can be a great opportunity to earn substantial returns, but there are still risks, even if you have a protected lender. While you are not yet ‘trisk free, you can still be involved in the lending process with Poloniex lending.
Lenders deposit their money into the Poloniex account, as traders do, and the rest is transferred to the sub-account of the lenders. Lenders: Create a credit offer for a margin trader using the Pol Pot credit order book.
This puts the supply in the first line, which is around 20%, and the remaining 70% is credit. If you are a better trader, you could adjust the ratio a bit more to the trading side. Bitcoin adheres to Poloniex: 15% is used for regular trading, 15% is collateral for margin trading and 5% for lending, while 15% -15% of it is used for collateral and 10% for bitcoin.