Exchanges "Lending" features. Worth it?

[oldkolobok]

So recently I found out about the Lending feature that multiple exchanges seem to be offering. I read about a few of them, and I must say, its quite attractive. For example Bitfinex and Poloniex, they are both reputable exchanges who have been running for multiple years. Ofcourse, Bitfinex has alot more liquidity though. I saw they both offered about 0.03% interest per day on your Bitcoin-investment. (On Polo even higher, up to 0,04xx%) So after doing some math, I found out that if a person would store 65 Bitcoins in there, he would earn about 2.6BTC per day if his loan offers were taken?! I understand the chances of your loan being picked by a margin trader are not 100%. But on Bitfinex, with all their liquidity, it would come pretty close to 100% right? And the only real danger here is the exchange owner running with your funds, or some other hack-scandal right?

This seems to good to be true. Anything im missing here?

[Dr Charles]

It is "safe" for the most part, especially on Bitfinex due to their size and track record. Lending for margin on exchanges has proven to be a stabe return for some investors and is geared more towards the risk averse who would rather not take a chance in playing with the markets but rather have the opportunity to generate slight gains regardless of whether the market is going up or down.

I would not expect to get rich on margin lending/swaps though.

[oldkolobok]

It is "safe" for the most part, especially on Bitfinex due to their size and track record. Lending for margin on exchanges has proven to be a stabe return for some investors and is geared more towards the risk averse who would rather not take a chance in playing with the markets but rather have the opportunity to generate slight gains regardless of whether the market is going up or down.

I would not expect to get rich on margin lending/swaps though.

Yea that was what ive been thinking, a nice stable source of income without to much risk. But currently there is a "Flash Return Rate" at Bitfinex of 0.0239%. Is this really per day? I cant imagine, the profits I would make with that when I moved my funds there.

[gentlemand]

I was reading elsewhere that someone was getting 7% annual return on Bitfinex for lending out dollars.

I'm sure Bitfinex is lovely but it's also in a very far off land and not regulated or insured in any way whatsoever. Considering the level of risk I'd want at the very minimum one zero added to that annual return.

[edric]

So recently I found out about the Lending feature that multiple exchanges seem to be offering. I read about a few of them, and I must say, its quite attractive. For example Bitfinex and Poloniex, they are both reputable exchanges who have been running for multiple years. Ofcourse, Bitfinex has alot more liquidity though. I saw they both offered about 0.03% interest per day on your Bitcoin-investment. (On Polo even higher, up to 0,04xx%) So after doing some math, I found out that if a person would store 65 Bitcoins in there, he would earn about 2.6BTC per day if his loan offers were taken?! I understand the chances of your loan being picked by a margin trader are not 100%. But on Bitfinex, with all their liquidity, it would come pretty close to 100% right? And the only real danger here is the exchange owner running with your funds, or some other hack-scandal right?

This seems to good to be true. Anything im missing here?

You pretty much figured out the implied risk.  The risk free rate of return is a lot less than these exchanges offer.  The reason, as you pointed out, is that people don't trust them like they do major central banks.

[thejaytiesto]

It is "safe" for the most part, especially on Bitfinex due to their size and track record. Lending for margin on exchanges has proven to be a stabe return for some investors and is geared more towards the risk averse who would rather not take a chance in playing with the markets but rather have the opportunity to generate slight gains regardless of whether the market is going up or down.

I would not expect to get rich on margin lending/swaps though.

Well, if OP has 65 BTC and he starts making 2.6 BTC a day (who the hell makes that?), in a month he'll have more than  doubled his investment. Then he just has to reinvest again and keep building a ton of BTC. Seems like a good deal to me. Too good to be true actually, even considering the risk that the exchange may run away which is unlikely that you are that unlucky that it happens when you are doing it.

You'll need to get your Bitcoins taxed tho, as far as I know Poloniex is going to require you all kind of credentials, not sure how Bitifinex works tho.

[gentlemand]

You'll need to get your Bitcoins taxed tho, as far as I know Poloniex is going to require you all kind of credentials, not sure how Bitifinex works tho.

At the moment you can feed nonsense details into Poloniex. If you're crypto only Bitfinex don't require details either. That might change very soon.

[Dr Charles]

You'll need to get your Bitcoins taxed tho, as far as I know Poloniex is going to require you all kind of credentials, not sure how Bitifinex works tho.

At the moment you can feed nonsense details into Poloniex. If you're crypto only Bitfinex don't require details either. That might change very soon.

Yes I believe thats correct. As long as you dont want to deposit or withdraw in USD or your native currency, you shouldnt need any verification... unless youre based in New York or soon Connecticut