Cryptocurrency lending has become a popular financial tool for investors seeking short-term liquidity without selling their digital assets. Among leading platforms offering such services, Binance stands out with its crypto-backed lending product—allowing users to borrow stablecoins by pledging existing cryptocurrencies as collateral. This guide walks you through the entire process, from loan application and loan-to-value (LTV) ratio to interest calculation and repayment strategies, ensuring you understand the risks and benefits.
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How Does Binance Crypto-Backed Lending Work?
Unlike traditional banks, Binance offers a fast, fully digital lending experience. You don’t need credit checks or lengthy approval processes. Instead, the system operates on collateral-based borrowing, where users lock up their crypto holdings to receive instant loans in stablecoins.
The core mechanism is simple:
You pledge your cryptocurrency (like BTC or BNB) as collateral and receive a loan in BUSD or USDT.
This service fits within Binance’s broader suite of financial products—including savings plans and yield farming—but serves a distinct purpose: providing short-term liquidity for traders and investors.
Step-by-Step Loan Process
- Apply for a loan via the Binance lending platform, selecting both the asset you want to borrow and the one you’ll use as collateral.
- Collateral transfer: Your chosen crypto is moved from your spot wallet to Binance’s secured lending vault.
- Funds disbursement: The borrowed amount is instantly credited to your spot account.
- Daily interest accrual: Interest begins accumulating immediately, calculated per day.
- Flexible repayment: You can make partial or full repayments at any time before maturity—with no early repayment fees.
- Loan maturity: If not repaid by the due date, penalties apply, and forced liquidation may occur.
This streamlined workflow makes it ideal for those needing quick access to capital—whether for trading opportunities, hedging positions, or personal use.
Which Cryptocurrencies Can You Borrow and Pledge?
Not all coins are eligible for borrowing or pledging. Binance maintains a curated list to manage risk and ensure market stability.
Borrowable Assets
- BUSD
- USDT
These stablecoins offer price stability, making them ideal for predictable borrowing costs.
Collateral Assets
- BTC
- ETH
- BNB
- LTC
- XRP
- EOS
- BCH
Each collateral asset comes with different loan-to-value ratios and interest rates. For instance, BTC offers the highest initial LTV at 65%, meaning you can borrow up to 65% of your BTC’s value. Other assets like BNB start at 55%.
For updated terms and availability, always refer to official sources—Binance regularly expands its supported assets based on market demand and volatility.
What Is Loan-to-Value (LTV) Ratio?
The LTV ratio is the cornerstone of risk management in crypto lending. It determines how much you can borrow relative to your collateral and triggers alerts or actions when thresholds are breached.
LTV Formula
LTV = (Loan Amount + Accrued Interest) / Collateral Value
*Values are typically calculated in BTC for consistency.*There are three key LTV levels:
- Initial LTV (e.g., 55% for BNB): The maximum loan you can take when opening a position.
- Maintenance LTV (75%): At this level, Binance sends a warning—urging you to add more collateral or repay part of the loan.
- Liquidation LTV (83%): If reached, Binance automatically sells part of your collateral to repay the debt.
👉 Avoid unexpected liquidations—understand your LTV before borrowing.
Example: Borrowing USDT with BNB
To borrow $100 worth of USDT at a 55% LTV, you’d need to pledge approximately $182 worth of BNB ($100 ÷ 0.55). If BNB’s price drops or interest accumulates significantly, your LTV rises—bringing you closer to liquidation.
Key takeaway: Always monitor your LTV. Stay below 75% to avoid warnings and far from 83% to prevent forced sales.
How Is Interest Calculated?
Interest is simple and transparent:
- Daily compounding: Charged each day, with any partial day counted as a full day.
- Fixed annual rates: Most loan terms carry an APR of 18.25% (≈0.05% daily).
- 90-day loans: Slightly higher at 18.98% APR.
For a 30-day loan, total interest comes out to about 1.5% of the principal.
You can reduce costs by repaying early—there are no penalties for doing so. Interest is paid first during repayment, followed by principal reduction.
Complete Step-by-Step Guide: Borrowing, Adjusting, and Repaying
✅ How to Borrow
- Go to Binance’s lending page.
- Select the coin to borrow (e.g., USDT), enter the amount (minimum 100 USDT).
- Choose loan term (7, 14, 30, or 90 days).
- Review auto-calculated collateral requirement and interest.
- Confirm and approve the loan.
Within seconds, funds appear in your spot wallet.
🔁 Managing Your LTV
If your LTV increases due to market swings or accumulated interest:
- Navigate to Loan History.
- Click “Adjust Collateral” on the relevant loan.
Choose:
- Add collateral to lower LTV.
- Remove collateral if your LTV is low and you want to free up assets.
Adding collateral is common during bear markets when crypto prices drop.
💳 Repayment Process
- In Loan History, select “Repay.”
- Enter amount (partial or full).
- Confirm—the system applies payment to accrued interest first.
No hidden fees. No delays.
What Happens If You Miss the Deadline?
Binance allows a grace period:
- 7-day and 14-day loans: Up to 3 days overdue.
- 30-day and 90-day loans: Up to 7 days overdue.
During this time, interest triples daily. After the grace period ends, Binance initiates forced liquidation to recover the debt.
Late payments hurt your borrowing capacity and risk asset loss—always plan ahead.
Frequently Asked Questions (FAQ)
Q1: Can I borrow more than once using the same collateral?
No—you cannot reuse collateral across multiple loans simultaneously. Each loan requires dedicated pledged assets.
Q2: Does interest compound daily?
Yes, interest is calculated daily and added to your outstanding balance until repayment.
Q3: Can I change my loan term after borrowing?
No. Loan duration is fixed at initiation. To adjust timing, repay early and reapply under a new term.
Q4: Is my collateral safe during the loan period?
Yes—your assets are held securely by Binance. However, they remain exposed to market risk and may be liquidated if LTV exceeds 83%.
Q5: Are there minimum or maximum loan amounts?
Minimum varies by asset (e.g., 100 USDT). Maximum depends on your account tier, available collateral, and platform limits.
Q6: Can I repay with a different cryptocurrency?
No—repayment must be made in the same asset borrowed (e.g., USDT loans require USDT repayment).
Final Thoughts: Is Crypto-Backed Lending Right for You?
Binance’s lending service offers a powerful way to unlock capital quickly—ideal for short-term strategies where returns may exceed borrowing costs (e.g., 1.5% over 30 days).
However, high interest rates and liquidation risks make it less suitable for long-term financing. New users should start small, closely monitor their LTV, and avoid over-leveraging.
👉 Maximize your crypto potential with smart borrowing strategies—start exploring today.
This article is for informational purposes only and does not constitute financial advice or endorsement of any product. Cryptocurrency investments carry substantial risk. Conduct independent research before making any decisions.