Bitfinex Introduces Lending Service To Compete With The Booming DeFi Ecosystem


  • Bitfinex launches borrowing and lending features to its exchange.
  • Users can take up crypto collateralized loans, paid out in USD or Tether.

Bitfinex exchange is launching the ‘BitFinex Borrow‘ feature aiming to compete with the growing decentralized finance ecosystem. This is a peer-to-peer platform that will allow users to borrow short-term loans directly from the exchange to avoid selling cryptocurrencies. Despite an ongoing investigation by the New York State on BitFinex and its sister company Tether, the exchange is experiencing exponential developmental growth – the latest feature proving a testament.

BitFinex Borrow will allow users to place either Bitcoin (BTC) or Ethereum (ETH) as collateral to take up a loan in USD or Tether stablecoin, USDt.

The launch follows a resurgence of the DeFi ecosystem in the past few days following a month-long breather that saw investors rush back to Bitcoin. BitFinex Borrow will be competing with decentralized lending platforms such as Aave, Maker, and Compound in a burgeoning market. The exchange also joins Binance, who introduced lending services to its users earlier in the year.

Paolo Ardoino, BitFinex chief technology officer, clarified that BitFinex Borrow is strictly a borrowing platform. Unlike the DeFi lending protocols, users will not pool their funds to obtain a return rate; he further explains.

“This particular offering isn’t about lending out your crypto and obtaining a rate of return on it. The crypto loan is obtained via Bitfinex’s peer-to-peer lending platform, though it may consist of a pool of available credit.”

Once you obtain a loan, the collateralized assets are then offered to a different user through BitFinex Funding – a separate product from the Borrow feature. The two are connected using the Lending Pro feature creating a peer-to-peer web of lending and borrowing.

The service charges a variable and fixed rate ranging between 5.5% and 18.5% depending on several factors, including the amount loaned, the term of the loan, and previous history on the platform, the statement noted. The interest rate is also calculated based on the BitFinex Flash Return Rate (FRR) – offering both a fixed and floating rate.

The FRR is a “moving average of interest rates proposed on BitFinex’s peer-to-peer financing market,” Ardoino stated.

“The moving average of what is available in the market is recalculated every hour,” he added.

“The crypto loan is provided on a peer-to-peer basis through Bitfinex’s financing matching engine (separate and apart from the trading matching engine).”

BitFinex Borrow will offer short term loans with a maximum of 120 days limit on each loan. The loan service is only available to verified customers who have completed the know-your-customer (KYC) requirements.

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