If you are considering activating Lending in your vault, it can bring great rewards. But we also want to make you aware of the risks. At BLOX, we have thoroughly researched Lending, its possible risks and how to offer it to our users in the safest way possible.
Earning returns always comes with risks, even when lending your cryptos. The third party you lend your cryptos to may not be able to repay the loan. As a result, you run the risk of losing your lent cryptos (or part of them).
Carefully Chosen Partners: BLOX works with a select group of partners who have been extensively screened in a detailed due diligence process and must meet key conditions. Here, we looked at their reputation, regulatory compliance and financial health (liquidity, balance sheet, reserves).
We chose partners with years of experience. This gives us a clear insight into how returns are generated.
Risk Separation: All crypto coins of users who only trade (buy and sell) are grouped in one category. The crypto coins of users who stake (part of) their crypto are in a separate category. Finally, the crypto of users who lend (part of) their crypto coins are also grouped in a separate category. This is how we keep traditional trading, Lending and staking separate. If something happens to one, it does not affect the other.
Select Lending Coins: Don't want to lend all your coins right away? That's no problem. You have the flexibility to decide for each coin whether to activate it for lending. This allows you to maintain control over what part of your investment you are willing to take on risk to earn extra returns.
Liquid Crypto Coins: For lending, you can choose only reliable cryptocurrencies. Each coin undergoes a detailed evaluation before being considered for lending. A crucial requirement is that the coin has sufficient volume and liquidity, meaning there must be enough supply and demand in the market.
These precautions are carefully designed to minimise potential risks and ensure the safety of your cryptos. With lending, you put your cryptos to work and can take advantage of market movements, earning returns on your investments held in your vault.
It is important to carefully consider whether crypto lending suits you and whether you can bear any losses. Make sure you fully understand the terms and conditions of crypto lending before you get started.
Do you want more information about the risks of Lending? Click here.