In the crypto market, aggressive investors may want to "borrow to buy coins" or "borrow coins to short", while conservative investors may choose to lend out their crypto to earn interest. Borrowers and lenders complete their loans in the lending market. Bitfinex is currently the largest crypto lending market. As of January 4, 2023, the Bitfinex lending market has a daily trading volume of USD 130 million, and an average of USD 410 million in outstanding loans per day.

To give investors a steadier way to earn during a bear market, Pionex has launched the Bitfinex Lending Product based on the Bitfinex lending market. Users put their funds into Pionex, Pionex lends them out in the Bitfinex lending market, and the interest earned is paid out to investors.

Since the Bitfinex Lending Product from Pionex is based on the Bitfinex lending market, what advantages does it have over lending directly on Bitfinex?

Compared with lending manually, investing in the Bitfinex Lending Product from Pionex has the following 3 advantages:

1. Smarter order placement algorithm, higher returns

In the Bitfinex lending market, both borrowers and lenders submit their orders to the order book. In the example below, the data in the red box shows a borrower who wants to borrow 14.9 million USDT at a daily rate of 0.077% for 120 days. The data in the yellow box shows a lender who wants to lend 321.2 USDT at a daily rate of 0.027878%.

If you lend on Bitfinex yourself, it is hard to pick a suitable rate. If the rate is too high, your funds may stay unlent for a long time and earn nothing. If the rate is too low, your funds will be lent out quickly, but it is hard to earn a decent return.

Pionex smartly adjusts the lending rate based on supply and demand in the lending market and the funds placed in the order book. When market demand for funds is strong and supply is short, it automatically raises the lending rate.

Before the product launched, Pionex ran thorough tests with its own funds. The orange line shows the returns from Pionex's smart order placement algorithm, and the green line shows the returns from Lending Pro, Bitfinex's official smart lending bot. The comparison shows that, with the smart order placement algorithm, the Bitfinex Lending Product from Pionex earns higher interest.

2. Stricter fund management, so funds don't sit idle

Although Pionex's smart order placement algorithm can automatically earn higher interest rates, it doesn't simply set the lending rate very high. When it detects weak market sentiment and expects rates to stay flat for the near term, the algorithm automatically lowers the lending rate to avoid funds sitting idle and earning nothing.

3. More controllable loan term, so funds aren't tied up for long

If you place orders manually on Bitfinex, it's easy to end up with your funds lent out for a long time through a mistake. In the example above, if a user lends at the counterparty's price, the funds would be tied up for 120 days:

The Bitfinex Lending Product from Pionex has a term of 14 or 30 days. At maturity, your principal and interest are automatically redeemed to your account, so your funds are never tied up for long.

Although the Bitfinex Lending Product offers steady interest returns, some risks remain.

1. Risks of the Bitfinex platform itself

Bitfinex is currently the largest crypto lending market. According to data from portfolio.nansen, BTC holdings on Bitfinex account for more than 50% of its total assets, the second-largest BTC holdings among centralized platforms. However, in extreme cases, market liquidity, regulatory risks and other factors could still put Bitfinex in operational difficulty, and may even cause users to lose their principal and returns.

All assets you subscribe to the "Bitfinex Lending Product" will be invested in the lending business on the Bitfinex platform. The "Bitfinex Lending Product" will make its best effort to help you earn returns, but your investment may still suffer losses due to reasons related to the Bitfinex platform.

2. Weak market demand for funds and prolonged low interest rates

Data since 2020 shows that lending rates are cyclical, with a cycle of roughly 3 months, so rates will not stay low for long. Recently, as the Federal Reserve has raised interest rates, USDT borrowing rates have also been rising gradually.

The yield of the "Bitfinex Lending Product" is floating. Your final returns depend on the actual earnings of the assets in the lending business on the Bitfinex platform, and Pionex does not promise any specific yield. Your final returns will be the amount Pionex returns to you on the maturity date.