In times of high bitcoin volatility like these, many are cautious about the various technical indicators showing that it may be due for a major correction to the prior support levels. If you're someone like me, do read on.
As some of you have probably read, there tons of lending options out there (eg. Celcius, BlockFi, etc) which offers very good interest rates from 8 to 12% per year. However on KuCoin, there's a hidden gem which allows you to lend stablecoins at a typical rate of above 25% P.A. to margin traders. Obviously, you have to set up a KUCOIN account first. Next, navigate to the "Crypto Lending" option under "Earn" on the homepage.
Then, you'll end up on the lending page. There are all sorts of cryptocurrencies one can lend while HODLing onto their favorite coins.
As it is still generally a bull market as of the time of writing, stablecoins like USDT are of higher demand than cryptocurrencies, which means higher interest rates for them. The interest rate fluctuates based on how bullish cryptocurrencies are at that point of time, but the daily interest rate generally ranges from 0.08% on days that the market bleed, up to around 0.2% when bitcoin hits or nears its all-time high. Thus, even on a bearish day, the interest rate of about 29% far exceeds those that BlockFi and Celcius offers. However, there is a 10% (insurance) and 5% (platform) fee to be paid on that interest, so please bear that in mind.
Now that I've sold you on the upsides, it's time to talk about the downside and that is mainly about the loss of liquidity. I'll admit that there are times when my favorite crypto rallies, that I wish I hadn't lent that money out but at the end of the day, lending with a fixed term (7, 14, 28 days) is an exchange of opportunity cost for almost zero risk. Also, the borrower can choose to return the principle lent earlier and the interest will be calculated based on the number of hours the funds were borrowed.
Overall, I find this to be an excellent way to get almost risk free returns on your money. The 2 biggest risks I can think of are in the case of a KuCoin hack/bankruptcy or USDT losing value because of its insufficient reserves. I'm assuming in the case of the former, that the insurance we pay will cover the lost funds. Good luck, and all the best earning interest!
