TL; DR
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If we want to see more money flowing into the crypto space, we will need to make it easier for large institutional players to enter the space through lending. Coinbase makes this possible.
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Coinbase has set aside a whopping $57 million to launch its lending operations, but the company will also expand its reach by allowing customers to get in on the action.
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All loans are over-collateralized – meaning Coinbase will never lend more than you give it (e.g. you lend them $1, they lend $0.80).
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With Coinbase’s lending system, unlike traditional banks that pay an average of 0.43% annual interest, it is an opt-in service and will (if it is anything like the rest of the crypto lending world) Yield -8% per year.
Full story
If you’re a large company and want a loan, there are LOTS of trusted banks you can go to to raise money… but what if you want a loan? cryptocurrency loan?
There isn’t exactly a sea of trusted/regulated companies to turn to for much of the change.
And that’s a problem.
If we want to see more money flowing into the crypto space, we will need to make it easier for large institutional players to enter the space through lending.
Good news is that Coinbase is taking one for the team and making this happen.
Now. Here you can benefit:
Coinbase has set aside a whopping $57 million to launch its lending operations, but the company will also expand its reach by allowing customers to get in on the action.
The basic idea is this:
You lend the people at Coinbase some crypto → they lend it to big investors → Coinbase pays you interest on your loan.
The risks = these borrowers could default on their loans and you could lose your crypto (this risk increases significantly if/when the markets crash).
The guarantees = these loans will be made to large institutional companies (not degens), meaning they are more likely to have decent cash reserves, ensuring they are repaid on time and in full.
Furthermore, all loans will be over-collateralized – meaning Coinbase will never lend more than you give (e.g. you lend them $1, they lend $0.80).
Here’s why we love this:
If you have a bank account, your bank not only charges you a monthly fee to have one, but it also lends your money to institutional investors whether you like it or not.
(You pay an average of 0.43% per year for this).
With Coinbase’s lending system, it is an opt-in service and will (if it is anything like the rest of the crypto lending world) return 3-8% per year.
The same, but better.