Bybit Lending: A Complete Walkthrough to Crypto Lending

Crypto lending is nothing new, but it has grown into billions in total value locked (TVL) on certain lending platforms in recent years. This service is favored by many traders and institutions primarily for its lending convenience and, most importantly, the versatility to earn high annual percentage yields. 

As the vulnerability of the banking system spreads, Bybit strives to provide the most reliable and transparent crypto lending services by learning from past events. Beyond our competitive hourly interest offerings, we also bring state-of-the-art risk management systems, ensuring users' assets are secured throughout the process. 

Key Takeaways:

• Crypto lending involves matching lenders and borrowers of an asset with underlying collateralized loans to earn interest and for trading.

• High-interest rates, flexible redemption and accessibility are among the top reasons users look to Bybit Lending to efficiently maximize their funds. 

• Bybit Lending is a highly protected product that deploys sophisticated security measures and risk management services to ensure users' assets are always safe. 

• Users can begin their lending journey with Bybit Lending in just four simple steps. 

What Is Bybit Lending? 

Bybit Lending uses a pool for lenders to contribute their idle crypto assets and earn high-interest payouts from borrowers. In this way, Bybit serves as the intermediary, bridging the gap between borrowers and lenders in the crypto environment. 

Fund depositors (lenders) in the lending pool earn hourly interest. The collected funds are available for traders (borrowers) to trade marginal products, or to invest in Bybit Earn products. Borrowers must deposit the required amount of collateral, depending upon the lender's terms, in order to borrow crypto assets. These loan terms are varied and can be as short as one day whenever the daily redemption is available.

Bybit Lending offers flexible deposit and redemption, meaning users can redeem anytime if the redemption window is still available. However, the lending system will enter a cool-down period once the service reaches either 100% capacity or the daily redemption limit, whereupon the withdrawal function will cease until the system refreshes every hour. 

The redeemable amount from the asset pool is calculated automatically by the system based on the Loan-to-Pool ratio, depending upon the crypto asset you've loaned. Bybit will update the APR and interest hourly based on market conditions and the actual interest income generated by the loan amount. 

Bybit Lending 

The Bybit asset pool accumulates deposits from lenders, and the built-in matching system in Bybit Lending matches borrowers' needs to a lender. In return, the lender earns APR from the pool, creating a win-win situation for participants. The funds in the pool serve as liquidity for the platform, to be used solely to support users' trading needs. 

Understanding the Interest Payout (APR)

The APR payout on Bybit Lending incentivizes lenders to earn interest income whenever they deposit funds into the asset pools available to borrowers. The APR is an adjusted payout that’s calculated hourly based on real-time market conditions. Depending upon the chosen contract and loan asset, lenders can enjoy a high APR. 

The interest rates are variable and updated every 10 minutes to reflect changes in borrowing demand, resulting in hourly payments. To ensure the safety of your assets, Bybit manages the risks of lent assets using multiple measures, such as collateral value ratios, conservative liquidation thresholds, and an Insurance Fund.

The APR is calculated with the following formula:

APR = (Total Revenue per Hour/Unredeemed Principal per Hour) * 24 * 365.

Once your funds are successfully lent out after depositing at T (rounded up to the next hour), the interest will accrue at T+1, accumulating hourly on the principal amount. Upon redemption, the accumulated interest will be paid along with the principal.

*Please note: Historical returns are not indicative of future returns. Bybit does not undertake to repay principal and interest or pay any other form of property income return in currency, kind or equity within a certain period of time.

Loan Interest Calculation 

Of the interest generated by the depositor's loans, Bybit retains 20% as a service fee. The depositors of the asset pool share the remaining 80%, and interest earnings will be distributed upon redemption. 

*Please note that historical returns are not indicative of future returns. 

How to Earn Profits from Bybit Lending

Users of Bybit Lending can earn passive income in multiple ways. Here are some of the strategies traders can consider. 

Strategy 1: Borrow From Liquidity Providers to Lend on Bybit

Bybit Lending is a good investment vehicle for traders who want to hold onto their crypto for asset appreciation without selling their crypto, at the same time letting their money do the heavy lifting for a passive income. 

The high APR payout on Bybit allows investors to earn sustainable passive income from our platform. One option is that a participant can access liquidity from other crypto liquidity providers and lend the crypto on Bybit. Traders can borrow crypto assets from crypto platforms of their choice via OTC lending or crypto loans. These borrowed funds can be repurposed by depositing them as a lender on Bybit Lending to earn lucrative APR with a flexible redemption environment. 

Note: We do not endorse any financial advice, external platforms or services throughout this content. They are facts obtained from credible sources for educational purposes only.

Strategy 2: Taking Advantage of High APR

Traders looking to maximize their profits can look through the token list available on the Bybit Lending platform to determine the crypto asset with the highest demand from borrowers based on its APR. The higher the demand, the higher the APR provided. Traders who have idle cryptocurrencies can then choose to exchange their cryptocurrencies for these assets (if they don’t already have them) and participate in their respective lending pools to reap the rewards of the high APR. By keeping an eye on the token list and only participating in lending pools with the highest APR, traders will be able to maximize their profits.

Strategy 3: Yield Arbitrage Opportunities

This type of yield involves arbitraging assets from one platform to another. For example, a trader could borrow USDT at 5% APR and lend USDT at 5.5% APR, yielding 0.5% of the profit margin. Arbitrage opportunities are common strategies, but lending and borrowing rates are dynamic, meaning traders must be alert to catch these opportunities quickly. 

Top Reasons to Use Bybit Lending

High Interest Rate (APR): Earn Hourly, Grow Safely

Bybit Lending offers high interest payouts for lenders on certain coins, to be paid hourly starting an hour after you’ve successfully deposited with Bybit Lending. 

Flexible Redemption 

Loans contributed to asset pools are immediately made available for borrowers. Bybit Lending guarantees that all depositors can redeem funds at their discretion, with successful redemption credited immediately. 

Low-Risk Lent Assets: Lend With Peace-of-Mind

We utilize comprehensive risk management systems and high-security technology to secure your assets, ensuring your lent assets stay safe. 

Bybit Lending Sign-Up: Step-by-Step Guide

Becoming a lender on Bybit Lending is a straightforward process. Here’s a step-by-step guide to help you get started. 

Step 1: Sign up or Log in to Your Bybit Account

Once logged in to your Bybit account, you can navigate to the menu and click on Bybit Lending. You’ll be prompted to the Unified Trading Account (UTA) asset page, where you can access the Lending option on the sub-menu. 

Alternatively, you can access the Lending function by logging in to your Bybit Spot wallet. 

Note: Bybit Lending is currently only available on the Bybit App (4.16.0 and later) and Lending on Bybit Web will be released soon. Stay tuned for the updates.

Download the Bybit App to use it now!

Step 2: Choose an Asset to Lend

Click on Lending to access the complete list of available crypto assets. Then, enter the amount you'd like to lend from your available account balance. Agree to the terms and conditions to proceed with your Deposits. 

Step 3: Confirm the Deposit

Once you've verified all of your details, click on Confirm to finalize your transaction. Bybit’s team will process the request, which should take less than five minutes to confirm the purchase.

Step 4: Check Your Hourly Income

You’ll be prompted with a notification to confirm your purchase. Then, you can again access the Lending page to preview bonus details, including redemption limit, estimated APR yields and your loan utilization rate. There’s also an Interest breakdown so you can check your hourly income details. 

Sign Up to Start Lending

FAQ

In extreme cases where Margin Traders cannot repay their (Loans + Interest), how will Bybit ensure all lenders' funds are kept safe?

To ensure the safety of lent assets, Bybit employs comprehensive risk management measures, including collateral value ratios, liquidation thresholds, and an Insurance Fund. With Bybit Lending, investors can confidently grow their cryptocurrency holdings, knowing their assets are fully protected throughout the lending process.

How is the APR in Bybit Lending determined?

The APR in Bybit Lending depends on the Loan-to-Pool ratio and increases/decreases along with supply and demand. This APR is refreshed every 10 minutes, and interest is accrued every hour.

The Bottom Line

Bybit Lending offers the safest, most flexible and transparent lending environment for lenders and borrowers to access crypto in seconds. Whether you're using them for margin trading or yield arbitrage purposes, our products are customized to suit your preferences. Traders should do their due diligence when investing in financial products, and only invest based on what they can afford to lose, as all investments come with risks. 

Disclaimer: The above content is strictly for educational purposes only. This is not financial advice. Should traders intend to use the products, please seek professional advice before investing. This content will be used for translations. In any case of translation inaccuracy, the English version will prevail. 

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