How To Generate A Passive Income Stream With KuCoin Crypto Lending

How To Generate A Passive Income Stream With KuCoin Crypto Lending


I am so tired of banks. In most cases, traditional banks don't pay you any interest on your savings and if they do, the interest rate is so low that it is not worth mentioning. Luckily for you and me, we are living in the year 2022 and the traditional finance and banking industry is more and more integrating itself into the cryptocurrency sector. Fiat can be replaced by cryptocurrencies and traditional banks get replaced by cryptocurrency exchanges and cryptocurrency lending platforms that allow us to earn significant interest on our savings.

In this post, let me explain why lending on the KuCoin exchange is a good choice and how it works.

 

What Is Cryptocurrency Lending And How Does It work?

You can either simply HODL your cryptocurrencies and wait for the right moment to sell them with a profit or you can put your cryptocurrencies to work. One of the most popular and easiest ways to earn passive income on your crypto is to lend it out and earn interest. Simply take your Bitcoin, your Ethereum, or your Stablecoins and deposit them into a lending platform like KuCoin Lending.

The platform provides a bridge between cryptocurrency lenders on the one hand and cryptocurrency borrowers on the other hand. This means, that you can lend out your crypto to borrowers in exchange for an interest payment. As a lender, you receive the interest from the borrower in exchange for the crypto loan. The borrower, on the other hand, has to deposit collateral assets in order to secure the loan from the investor. The collateral assets serve as a guarantee for the lender because if anything goes wrong, the collateral can be liquidated and be used as a form of compensation for the investment of the lender.

KuCoin Lending is a peer2peer lending platform. Borrowers and lenders can connect on KuCoin and make a lending deal. Once a lender has made his crypto available for lending, the borrower can ask to lend out a part or all of the funds available at that moment. In the end, the borrower has to repay the loaned cryptocurrency with the assigned interest rate after a certain time period.

Lending out your crypto with KuCoin Lending is actually really easy to do. To be honest, it is just as easy as simply HODLing your crypto. Just set it up with some simple clicks, forget about it, and the passive income stream is generated. Now you can lean back and watch how your crypto holdings surely increase over time.

 

What Are The Benefits And What Are The Risks Of Cryptocurrency Lending?

I would consider cryptocurrency lending a low-risk investment product. However, it is also true that every aspect of the finance industry has its risks and even lending is not entirely risk-free, no matter what centralized or decentralized platform you choose. For this reason, doing your own comprehensive research before selecting a crypto lending platform is extremely important.

One risk to keep in mind is that a regulatory structure surrounding digital assets is either not existing or changing fast and frequently. This absence or the change of regulation is complicating the procedure. 

Then it can be challenging or impossible to take legal steps toward debt collection against an individual, especially if this individual is living in another country. In decentralized lending platforms, you also have to face the difficulty that you do not even know the identity of that individual as crypto is widely anonymous.

Another downside of crypto loans is the high volatility of cryptocurrencies. For example, if a borrower has to pay $1000 in Bitcoin but the lent-out Bitcoin value doubles over the term of the loan, the lender will lose half of his investment because the borrower will only repay the $1000 worth of Bitcoin.

Of course, I wouldn't recommend crypto lending if it wouldn't also have multiple advantages besides the risks named above. The biggest advantage of crypto lending is the possibility.to generate a steady passive income stream. The interest paid is significantly higher than the interest offered by your traditional bank. Compared to other crypto investment products like margin trading, futures trading, or providing liquidity with the risk of impermanent loss, crypto lending can be considered a low-risk investment with stable returns.

Then it is also very easy to implement from opening up an account to putting your crypto to work with a few clicks. This makes it very user-friendly also to new investors in the crypto space.

Finally, KuCoin's Lending platform runs a comprehensive risk control system that ensures the protection of all your lend-out investments. 

 

What To Pay Attention To

If you want to make an investment by lending out your crypto, you have to evaluate certain factors depending on the platform that you choose. There are already a bunch of different lending platforms out there, centralized and decentralized ones, and their number keeps increasing steadily. 

The first thing you should pay attention to as a lender is the collateral amount presented against your loan. The total value of the collateral presented against your loan should always be more than that of the loan, usually in popular cryptocurrencies such as $USDT, $ETH, and $BTC.

Several platforms implement a Loan-to-value ratio (LTV) of approximately 58%, which denotes that borrowers will get less than 58% of the offered value of the collateral.

Owing to its volatility, crypto collateral is subject to sudden depreciation, resulting in a significant loss on the lender's end.

 

Why KuCoin Is A Good Choice To Lend Out Crypto

There are different exchanges and specialized lending platforms that allow you to lend out your crypto and earn interest. Let me explain why I believe that KuCoin is actually a good choice to lend out your crypto and start earning interest.

KuCoin is a TOP cryptocurrency exchange for trading altcoins as it supports a wide variety of more than 600+ tradable assets. I already wrote about my investment strategy when I hunt the next low market cap gems on KuCoin. This post is still up to date and in case you have missed it, you can still check it out here: Finding Low Market Cap Gems On KuCoin 💎

KuCoin is also known as the "People's Exchange" because it is built for all classes of cryptocurrency investors from novices to professional traders and investors. Being among the TOP 5 cryptocurrency platforms, KuCoin has been named the Best Crypto App of 2022 for cryptocurrency enthusiasts by The Ascent.

Crypto Lending on KuCoin is the best choice to generate a passive income stream for holders as well as for investors. KuCoin Lending already supports more than 180 cryptocurrencies for crypto lending. This is is indeed a huge number of supported assets if you compare it to other lending platforms like BlockFi. Among the more than 180 supported digital assets, Bitcoin and $USDT are the TOP choice of cryptos to lend out.

You can also choose between two different lending modes. You can either choose the Auto-Lend mode or you can set up the interest rate manually. I will show you later on in this post how to operate both modes.

Publish0x and KuCoin

Finally, if you are earning crypto for writing and/or reading here on Publish0x, you should already have a KuCoin Account ready to use for lending out your crypto. Why? Because withdrawing your earnings from Publish0x directly to KuCoin has some benefits. I have already covered them in a post that you still can read here: Should I Withdraw My Publish0x Earnings to KuCoin?

 

Why $USDT Is the Best Choice For Lending

Let me explain why $USDT is actually the best choice for crypto lending. The interest rate of lending changes dynamically and is determined by the market because KuCoin does not set the lending rates as it is a peer2peer lending platform.

The lending rates for $USDT are following a certain pattern. If the crypto markets are showing an upward trend movement, more users will buy long, which will lead to increasing demand for $USDT and lending out $USDT can get more income. On the other hand, if the crypto markets are entering a downward trend, a large number of users like borrowing cryptocurrencies such as Bitcoin and Ethereum to go short. Then it is more profitable to lend these cryptos than $USDT.

KuCoin states in their article "5 Things You Need To Know About KuCoin Crypto Lending" that margin traders on their platform are generally more prone to long rather than short. This results in $USDT often having the highest APR for lending.

 

How To Lend Crypto On KuCoin - Step by Step

Of course, you need to have a KuCoin Account if you want to lend out your crypto savings on KuCoin. If you are for some crazy reason not registered on KuCoin yet, you can use my referral link with the invitation code 21vPud5 for signing up. When you introduce a friend to cryptocurrency and trading on KuCoin, keep in mind that you can share your own invitation link as it will save both of you some money. 

Log into your Kuoin Account and make sure to have some crypto in it that you can lend out. You can trade some fiat for crypto, deposit crypto assets, or can also use your payouts from Publish0x. You need to hold your crypto assets that you want to use for lending in your main account and NOT in your trading account.

Navigate to the lending page in the KuCoin app or here on the website. As the KuCoin app has been named to be the Best Crypto App of 2022 for cryptocurrency enthusiasts by The Ascent, I will show the steps in the mobile app. It is easy and works the same way on the KuCoin website.

KuCoin Lending

If you do not have the time to monitor the crypto market all the time, then auto-lend is the best option. All you have to do is to choose the cryptocurrency that you want to lend out and set up the reserve amount, the terms, and the minimum daily rate. On the screenshot, I have chosen $USDT.

The reserve amount is the amount that you want to keep as a reserve. In other words, the reserve amount is the amount that you Do NOT want to lend out. So if you want to lend all your available funds, you shall input a ZERO.

The terms refer to the period that you want to lend your funds. With Auto-Lend, you can choose 7 days, 14 days, and 28 days, or you can select all time frames at once.

Finally, set the minimum daily interest rate that you accept and the system will never lend your funds out with a lower rate.

KuCoin Lending

Now you can enable auto-lend and if you have any available $USDT balance in your Main account, the system will place lending orders for you automatically in seconds.

Of course, you can also choose the traditional Lend. With traditional Lend, you can set a daily interest rate. If the daily interest rate that you have set is significantly higher than the current market rate, it will be difficult to get your funds lent quickly. That's why I recommend taking the optimal rate as a reference when you set the daily interest rate.

KuCoin Lending

 

Final Words

Cryptocurrency lending on KuCoin is a fairly easy opportunity to generate a passive income stream and a beneficial alternative to simply holding crypto. 

As you are earning crypto here on Publish0x, you should already have your KuCoin Account set up as you can withdraw more often (every Monday) and with a lower minimum withdrawal amount. However, if you are for some crazy reason not registered on KuCoin yet, you can use my referral link with the invitation code 21vPud5 for signing up. When you use it, it will save you trading fees each time you perform a trade on KuCoin. Don't forget about this possibility when you introduce a friend to cryptocurrency as it will save both of you some money. 

I hope I could provide you with some interesting and useful information about how to generate a passive income stream by lending out your crypto on KuCoin. If you like to keep yourself up to date with the latest developments on KuCoin, I recommend following their social media like Twitter or their blog here on Publish0x.

At the end of my post, I also like to remind you that my intention in this post is to raise your awareness of KuCoin lending and my intention is not to replace your own research. However, this article really reflects my own opinion.

If that's the kind of stuff that you like to read on Publish0x, make sure to hit that follow button. Thank you guys for reading, liking, following, and tipping 👍 

If you like, you can also follow me on Twitter, and also on noise.cash.

You may also like: Finding Low Market Cap Gems On KuCoin 💎

 

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