I was asked to comment for a media report on some of the inherent dangers in crypto lending. Here is the gist of what I had to say.
"We think the risks of a crypto credit lending event are significant. Everyone is chasing yield but they don't realize that the higher yield translates into a weaker credit counter-party. I don't think there is any question we will see a Refco/MF Global/Lehman moment within the space, it's only a matter of when.
Ironically, it could happen on a sharp rally when market participants are caught short and can't cover, and then there are forced liquidations. We prefer a crypto lending model that is predicated on options so the only risks are bilateral - not systemic.
All this will change even further, of course, when CME and ICE list cleared bitcoin options, as seems very likely. In short, credit risks in crypto lending are substantial, inevitable and perhaps imminent, and a whole lot of people are likely to get hurt because they don't fully understand the risks they are embracing."
The Binance offer, in my opinion, is a marketing ploy to bring traders onto their platform.
There's nothing wrong with that, of course, but it isn't scalable - as witnessed by the caps they impose & small coin amounts available to borrow
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