Cryptocurrency exchange Binance recently announced that it wants to launch a lending platform for crypto fans. It is expected to go live tomorrow as a “value-added service” to the exchange’s users and will offer 14-day fixed-term lending products with varying interest rates, depending on the underlying asset, and will concentrate on its own Binance Coin (BNB), Tether (USDT) and Ethereum Classic (ETC). Just announced two days ago, the new offering is already receiving a lot of negative attention, with some referring to it as a very “bad idea.”
Binance CEO Changpeng Zhao, more commonly known as “CZ,” has said about the new offering that the “interest rate for each product is guaranteed.” Many have pointed out that guaranteeing a fixed interest rate for financial products is not a smart move, especially given the volatility of the crypto markets and the fact that one of the assets being offered is a stablecoin.
One Twitter user, “isamalia,” responded to the announcement by saying, “I did not know that @cz_binance is so desperate to try to make us keep his coin… once binance is out from us #BNB will crash so hard that [people] will start starving and they will also ruin his family i think is time to create a blog about all this ponzy [sic] scams!”
The idea behind the new product is almost certainly an attempt by the exchange, and Zhao, to get more people buying and “hodling” the BNB coin. However, as the crypto community has been quick to point out, this means that there will be more assets at risk on an exchange that has already shown itself to not be capable of properly securing data. Binance was hacked earlier this year, losing $40 million in Bitcoin Core (BTC) and, more recently, became the center of unwanted attention after it was revealed that it had possibly allowed the personal data of its users to be compromised.
Binance seems to be taking the “throw everything at the wall to see what sticks” approach to business development. It also wants to develop a stablecoin that it says would rival Facebook’s Libra, but should spend more time concentrating on developing its current operations before delving into new ventures. CZ should also dedicate some time learning about long-term business strategy and less trying to find excuses every time something goes wrong with his operations.
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.