Please note that this is an outdated version of this article. You can find the updated article here.
What is Lending?
Lending is a way to earn money on your funds without actively needing to trade. With this feature, you will select coins you want to lend to others, how long you’re willing to lend your funds, and select how much you will charge the borrowers.
How Do I Offer Loans and Earn Interest?
If you prefer to earn interest on your funds instead of trading with them, you can lend them to other users. Our platform connects borrowers who would like to margin trade with lenders who are willing to offer their funds as peer-to-peer loans.
Click on the Lending tab at the top of the page, then select the coin you wish to offer in the My Balances box on the right. You will need to transfer funds to your lending account to offer them, which you can do from the "Quick Transfer" link in the offer box, or by visiting the Transfer Balances page.
On the side, you will be able to see your Balances, and which account they are in. Below you can see an example, where a user is able to lend DOGE, but not BTC given where the respective coins are:
To lend a coin, you first need to select the coin you want to lend from Balances, so in this example the user will click DOGE.
You will then be prompted to fill out the fields pertaining to your loan, which are as follows:
- Rate: The daily interest rate you are offering your funds at (compounded daily).
- Amount: The amount of funds you are offering.
- Duration: The maximum number of days your funds will be held in a loan.
- Auto-renew: Check this box if you want your funds to automatically be offered again at the same rate after the loan they are used in closes.
So in the case below, the user is going to try to loan out all of the DOGE (998) for 2 days at a daily interest rate of .0028%.
Once you have placed your offer, it becomes available for margin traders to use. There is no guarantee that loans will be picked. Below, you can see all of the Loan Offers (and their respective rates) so that you can decide what rate to offer your loan. You can also see My Open Loan Offers, which indicates that the loan from our example is still available and has not been filled. Once the loan is taken, it will move to the My Active Loans section.
Margin traders will consume lending offers starting with the lowest rate. If a lower rate becomes available during the lifetime of a margin position, the contract may be transferred to the lower rate after the initial loan expires. Remember, a loan can always be closed early by the taker, so be sure to offer competitive rates if you want the best chance of your offers being taken.
When your loans are being used by margin traders, you are earning interest on them, which is paid to your lending account when a contract closes. (Poloniex takes a fee of 15% from the interest you earn, so be sure to consider that when you place your offers.) Your active contracts are listed under My Active Loans.
Although you cannot cancel an active loan, you can disable Auto-renew, which will ensure that your funds return to you no later than the number of days listed under Duration.
Why did my loan close prematurely?
Since margin positions can be closed at any time, you may find that your loan is taken, and then released following the closure of the corresponding margin position. If a trader abandons a loan, your loan will go back into the lending pool, and becomes available once more.
Why is only part of my loan taken?
Loans are available in both full amounts and partial pieces on Poloniex. If a margin trader opens a position that only requires a portion of your loan, Poloniex will match the lender and the partial borrower while keeping the rest of the loan available for others.
Are there any lending risks?
Our margin and lending platform is designed to protect both borrowers and lenders. However, while we have fail-safes and procedures in place to protect our lenders, there are always risks involved when exchange trading, margin trading or lending cryptocurrencies.
Except where a borrower defaults, once the duration of your loan has ended, your lending account will be credited with the initial amount lent to the borrower, plus interest, minus the fees due to Poloniex on interest you have earned. As stated, the only instance where this would not happen would be if a borrower defaults on a margin position and is unable to repay the debt owed to you.
If a borrower does default on their loan, the margin platform has a liquidation procedure in place that will liquidate borrower positions as necessary in an attempt to ensure there are enough funds left to repay outstanding debts owed to you as lender. However, as lender, you should be aware that the ability of the borrower to repay their loan is not guaranteed: market volatility, liquidity conditions, and order book activity may lead to borrowing accounts not having enough collateral to pay back their loan. While the system is designed to protect lenders, there is still risk of loss. This risk is assumed by the lender per the User Agreement.