Quick Take
- Binance has launched “Lite Loan,” a bitcoin-backed borrowing product that lets eligible users borrow up to $1,000 in USDT without selling their BTC.
- Lite Loan is aimed at users with small, short-term borrowing needs and does not trigger price liquidation during the initial 30-day loan term, Binance said.
Crypto exchange Binance has launched “Lite Loan,” a new product that lets eligible users borrow up to 1,000 USDT without selling their bitcoin.
The exchange said the product is designed for users with small, short-term borrowing needs who want a simpler borrowing experience. “Lite Loan is designed for users who want access to liquidity without the complexity that often comes with crypto borrowing,” Jeff Li, Binance's vice president of product, said in a statement.
Users can also use bitcoin held in Binance's Simple Earn Flexible products as collateral, allowing those holdings to continue earning yield while the loan is outstanding. Borrowed USDT can be used for trading or payments through Binance Pay.
Binance said there is a gap between interest in crypto-backed borrowing and actual usage. Citing research from crypto lender Ledn, the exchange said 88% of crypto holders would consider borrowing against their digital assets. Still, only 14% currently do because of concerns about price volatility and liquidation risk.
Unlike Binance's existing loan products, Lite Loan does not trigger liquidation from bitcoin price movements during the initial 30-day loan term. If the loan is not repaid by then, users can keep it outstanding for up to another 30 days, a Binance spokesperson told The Block.
During this overdue period, interest accrues at an annualized rate of 36%, and standard price-liquidation risk applies if the loan-to-value ratio reaches 91%, the spokesperson said. Binance currently sets the margin call threshold for Lite Loan at 85%. If the loan remains overdue after the additional 30 days, the pledged bitcoin will be liquidated to repay the outstanding balance, the spokesperson said.
Lite Loan is available to verified Binance users who meet the exchange's compliance requirements and hold enough bitcoin to secure the loan, according to the spokesperson. The product carries a one-time upfront service fee. Binance is currently offering a promotional 0.5% fee until Sept. 3, after which the standard fee will increase to 1%.
Binance already offers Flexible Rate Loans, Fixed Rate Loans, and VIP Loans. Flexible Rate Loans have variable interest rates and continuous loan-to-value monitoring, meaning borrowers can be liquidated if the value of their collateral falls, the spokesperson said.
Fixed Rate Loans lock in a borrowing rate for a set period but still follow standard collateral and liquidation rules, and currently require a minimum loan amount of 50,000 USDT. VIP Loans are designed for institutional and high-volume users, offering higher borrowing limits, multiple collateral options, and customized terms, the spokesperson added.
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