Since Malta-based crypto exchange Binance first offered lending in July, as much as $100 million in cryptocurrency have been borrowed, the company announced in a Twitter post.
oh, btw. @binance Margin borrowing amount reached above $100m (USD equivalent) a few days ago.
— CZ Binance (@cz_binance) September 19, 2019
The company offers margin lending – which enables lenders to earn interest on cryptocurrency during the term of the loan – on 21 different cryptoassets.
The company announced earlier this week that it was adding margin trading options for two additional cryptoassets: dash and zcash. Binance also announced it would include dash among the assets it allows customers to lend over the exchange. The ability to lend and borrow cryptocurrencies on an exchange helps increase their liquidity, thus, eventually reducing price volatility.
Dangers of Margin Trading
Margin trading in cryptocurrencies has been broadly criticized as leveraged trades amplify potential gains, but also risk increasing potential losses. Given the volatility in the cryptoasset market in recent years, the Bank of England would like to ban the trading of highly-leveraged products to reduce the exposure of retail investors to huge losses.
Altcoins, such as dash and zcash, are more volatile than the better capitalized tokens such as bitcoin and ether as they lack liquidity on exchanges – meaning that because trading in them is so light and infrequent, large price swings can be generated by relatively small block-trades.