How Do I Lend Crypto on Coinbase?
Lending crypto on Coinbase is a great way to earn some extra money. It's relatively low risk and can be a nice passive income stream. You can do it via the website or using the Coinbase app. Just remember to set a reasonable lending rate and be aware of the potential for default.
Crypto trading is now one of the most significant forms of online investments, and Coinbase is one of the most popular platforms for buying, selling and storing digital assets. As it has become more popular, it has opened up new opportunities. Coinbase users can earn even more money by lending crypto to other users while charging interest. For a new user, this may be confusing since it's not something that is traditionally done with fiat currency. But don't worry, we're here to help. Here's a step-by-step guide on how to lend crypto on Coinbase.
Using the Coinbase Website
Visit the Coinbase website and log in to your account. Go to the "Borrow" tab, which you can find under the "Tools" header.
On the "Borrow" page, you will see a list of all the digital assets you can lend on Coinbase. Select the asset you want to lend and enter the amount you're willing to lend in the "lend amount" field.
You will also need to set a lending rate, the percentage of the asset's value you will charge as interest. For example, if you're lending one BTC and you charge a 5% lending rate, the person borrowing your BTC will need to pay you back 1.05 BTC when they're done.
Once you're happy with the amount and lending rate, click on the "lend" button. If you have any problems, contact customer service, and they will help.
Using the Coinbase App
Open the Coinbase app and log in to your account. Tap on the "Borrow" tab, which you can find under the "Tools" header.
On the page that comes up, you will get the option to select the asset you want to lend and enter the amount you're willing to lend in the "lend amount" field.
Just as when using the website, you will need to set a lending rate before finalizing the loan.
Once you're happy with everything, tap on the "lend" button to confirm the loan.
Can Borrowers Defect Payments?
The short answer is yes. Borrowers can default on their payments. However, there are a few things to keep in mind.
First, when you lend crypto on Coinbase, you're lending it to another user the platform has verified. This means they have passed Coinbase's Know Your Customer (KYC) and Anti-Money Laundering (AML) checks. In other words, they're not anonymous, and Coinbase has some information on them.
Furthermore, when a borrower wants to take out a loan, they must put up collateral. This is usually in the form of another cryptocurrency worth more than the loan itself. So if a borrower defaults on their loan, you will still have the collateral and can sell it to recoup your losses.
Of course, there is always the possibility that the value of the collateral might go down, and you might not be able to sell it for enough to cover the loan. But this is true of any investment and is just something you need to be aware of.
What is the Borrowing Term?
The borrowing term is the length of time that a borrower has to repay the loan. You can call customer service to learn about the duration of the loan.
At the end of the borrowing term, the borrower will need to pay back the loan's original amount plus interest. The interest will be calculated using the lending rate you set when you created the loan.
Once the borrower has repaid the loan, you will get your crypto back and can do whatever you want with it. You can lend it out again, sell it, or hold on to it.
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