Top crypto exchange Bitget is launching a crypto loans product to cater to all kinds of customers. The crypto derivatives and copy trading platform announced the product will use a dual-coin approach to enhance crypto loans experience.
The approach allows users to stake an asset as collateral and borrow another crypto asset. The platform is coming as an alternative to traditional lending institutions which offer less than the required quality of service to clients, with cryptocurrency backing.
Bitget believes that crypto lending is gaining more traction due to its importance in this age, and the fact that it offers better services to clients than traditional institutions. According to reports, the overall digital lending sector surpassed $8.5 billion in 2022, with a compound annual growth rate of 20.5%.
“Users now have the opportunity to stake less-demanded coins, enabling them to obtain loans in more liquid assets for investment purposes,” Bitget Managing Director Gracy Chen said in the statement. “Our platform’s flexible borrowing and repayment mechanism is designed to cater to the needs of all users, accommodating their requests and ensuring convenience.”
How the platform works
Bitget says its loan product is streamlined to replicate a more familiar process found in traditional finance to ease user onboarding. How much a user can borrow is determined by the market value of the collateral staked and is automatically disbursed, with each loan issued at a specific interest rate.
After borrowing, users can make use of the loans as they wish, and can still adjust the collateral to fit their needs, as well as repay the loan on or before the due date. The platform promises an easy withdrawal and quick review process for applications to ensure that users get served promptly.
Bitget has embarked on some expansion projects lately. In March this year, the exchange acquired a controlling stake in the crypto wallet BitKeep, making it to now be known as Bitget wallet. It also announced a $100 million venture fund in April, which has come from different investors including Dragonfly Capital.
The crypto lending sector
Indeed, crypto lending is growing rapidly and many more people are getting comfortable with the service. However, it probably would be much more popular if not for the incidents in 2022.
The year was a tough one, during which centralized crypto lending platforms such as Celsius, BlockF, and Voyager Digital went bankrupt and folded up for various reasons. For Celsius, it was due to lack of liquidity as a result of “extreme market conditions”.
BlockFi went down after the SEC came after the platform because it did not register with the agency and placed its customers at risk. Voyager closed down due to high volatility in the crypto market and after Three Arrows Capital (3AC) defaulted on a loan Voyager issued running into hundreds of millions of dollars.
With such incidents affecting hundreds, maybe thousands of lending customers, the chances of Btiget’s new platform gaining rapid popularity may be affected. However, the exchange says its quick loan application review and instant withdrawal is sure to attract users to the platform.
The new platform’s dual-coin approach is also new, and users may be open to trying it out since it offers flexibility in lending, utilization, and repayment of loans, unlike other lending platforms.
