By
Bena Ilyas
May 10th, 2024
The announcement comes at a time when crypto loans are increasing in popularity owing, in large part, to the overall growth of the digital lending market.
Crypto derivatives platform Bitget has announced the launch of a new product called “Crypto Loans” targeted at users not satisfied with traditional lending institutions. The new product will enable users to stake one coin as collateral to enable them to borrow the corresponding amount in another coin in what is known as a dual-coin approach.
According to Bitget, the borrowing process has been simplified and designed to emulate the process used by traditional lending institutions. This is in a bid to facilitate user onboarding. First, users will have to stake their collateral following which the requested loan amount will automatically be released. Loans will have varying interest rates, with the amount one can borrow depending on the market value of the staked collateral.
Bitget’s Managing Director Gracy Chen noted that beyond providing credit, the Crypto Loans service will also help users expand their crypto investment portfolio.
“Bitget’s new product highlights the flexibility of collateralized currency usage, enhancing capital utilization. Users now have the opportunity to stake less-demanded coins, enabling them to obtain loans in more liquid assets for investment purposes,” Chen states. “Our platform’s flexible borrowing and repayment mechanism is designed to cater to the needs of all users, accommodating their requests and ensuring convenience.”
The announcement comes at a time when crypto loans are increasing in popularity owing, in large part, to the overall growth of the digital lending market. According to a report by Global Markets Insight, the digital lending sector passed the $8.5 billion mark in 2022 and is expected a Compound Annual Growth Rate (CAGR) of 20.5% from 2023 to 2032. The industry’s value is projected to reach $60 billion in 2032. This growth, along with the increased mainstream adoption of technologies such as blockchain and artificial intelligence, is expected to continue to aid the growth of the crypto loans industry.
While several crypto lenders have experienced setbacks in recent years – with crypto lenders such as Celsius, BlockFi, and Genesis filing for bankruptcy – Bitget emphasizes that their loan disbursement process is modeled after existing processes used by lenders in traditional finance. The firm also states that it has taken steps to account for its holdings and ensure that user collateral is secure.
In late March, the platform partnered with decentralized data firm Space and Time to create a decentralized data warehouse. This tamperproof audit trail was created to provide users with an increased level of transparency in Bitget operations. The exchange, like many others following the collapse of FTX, also released its proof of reserves in the form of a dedicated section on its website.