For the past month, I’ve been putting my crypto currencies to work for me. I’ve been lending BTC, ETH and USD$ to margin traders on a couple of exchanges. The exchanges used to lend on are Poloneix and Bitfinex. Currently they are the only two exchanges that allow users to lend crypto currencies to margin traders on their platform.
The loans are short term of typically two days, and the quoted rates of return (interest) is listed as daily rates. As a lender you are free to choose any loan duration and interest rate for your loan. Choosing an interest rate is a balance between having your funds be picked up by a borrower sooner (lower interest rate) and picked up later or never (higher interest rate). Each exchange will list the interest rates that the market will bear, so in the interest of getting your finds picked up by a borrower sooner, it’s recommended that an interest rate close to that market value is chosen. For me loans have been typically been picked up within minutes or sooner.
Both Poloneix and Bitfinex allow for lending ETH and BTC. The rates of return on lending BTC have been significantly higher on Poloinex while rates of return on ETH have been higher on Bitfinex. Also, Bitfinex is the only exchange that lends USD and I’ve lent a few dollars there.
What follows is average returns for the past week’s worth of lending on Poloneix and Bitfinex.
Lending BTC on Poloneix, I’ve seen rates in the neighborhood of 0.12% to 0.13% daily interest. There are fees that are levied on your earnings by the exchange, and the net earning percentage (average over the past week) has been 0.107% daily return. Compounded daily, that works out to 47.2% annualized (yearly) interest.
Lending USD on Bitfinex has had slightly better returns. The lending rates on the website are around 0.16% – 0.18% and after fees, I net an average of 0.13% daily return. That’s 60.2% annualized return.
(In order to loan USD, I use CAD$ to buy ETH on the canadian exchange QuadrigaCX move the ETH to Bitfinex and sell it there for USD which I then loan out.)
On the ETH front, lending rates are a lot lower. Bitfinex has the best interest rates (much better then Poloniex) and they have been in the neighbourhood of 0.01% to 0.03% daily interest. After a weeks worth of lending the average net profit has been 0.017% daily, which is only 6.5% annualized return. While low compared to BTC and USD lending, if you’re holding ETH, it’s still better return the not investing it at all.