Last updated: 14 Oct 2024
Disclaimer: In compliance with MiCA requirements, unauthorized stablecoins are subject to certain restrictions for EEA users. For more information, please click here.
Products and services referred to here may not be available in your region. Binance Earn product restrictions apply for Binance Flexible Loan since Simple Earn Flexible Product assets are used as collateral for this product.
1. What is Binance Flexible Loan?
Binance Flexible Loan, ie. Binance Loans (Flexible rate), is an isolated, overcollateralized, open-term loan product.
Users are able to take up isolated loan positions made up of one collateral-loan pair each, such as, [USDT collateral + ETH loan] in one position, and [USDT collateral + BTC loan] in another. Each collateral-loan pair position has distinct Loan-to-Value (LTV) ratios as well as margin call and liquidation LTV levels.
Each loan position must be overcollateralized, meaning the value of collateral pledged by you is more than the value of the digital assets we advance to you.
Since Binance Flexible Loans are open-term, you can keep your positions open indefinitely as long as this product supports the loaned and collateral digital assets, and the relevant LTVs are not exceeded.
2. How do I pledge my assets and start borrowing on Binance Flexible Loan?
You may apply through the collateral-loan pair ordering process and decide which cryptocurrencies you’d like to pledge and borrow. You can also specify the respective amounts.
Users may only pledge assets as collateral that they’ve deposited to Simple Earn Flexible Products (Simple Earn Collateral). If the Simple Earn Collateral is insufficient to secure the desired loan amount, you may also subscribe digital assets from your Spot Wallets to Simple Earn Flexible Products as additional collateral. If you choose to pledge these digital assets as collateral, you must first agree to subscribe these digital assets to Simple Earn Flexible Products.
Digital Assets that you use to subscribe to Simple Earn Flexible Products pledged in Binance Flexible Loan will continue to earn Simple Earn Flexible Product Real-Time APR rewards and Bonus Tiered APR rewards (if applicable).
These Real-Time APR rewards are accumulated directly in their respective collateral-loan pair positions, increasing the amount of collateral (in token amounts) as rewards are accumulated over time.
Upon successful order, pledged collateral will be locked in your Earn Wallet to secure any outstanding loan positions, while loaned assets will be distributed to your Spot Wallet.
The total amount of Simple Earn Flexible Product assets that are pledged for the Binance Flexible Loan will be reflected in the [Collateral Amount] column and under [Collateral] tab in your Earn Wallet.
Please Note: Only users who pledge collateral in Flexible Loan can view the [Collateral] tab. Once the loan order is repaid, the user will no longer be able to view it.
For users accessing Binance via the website, your collateral amount and APR rewards for the collateral are combined and included in your single subscribed Flexible Product’s position, displayed under the [Cumulative Total Reward] tab.
For users accessing Binance via the app, your collateral amount is listed under the Collateral category (highlighted in red).
Please note: This feature is only available for app versions 2.88 and above, we strongly advise users to update to the latest version of the app.
3. What is the Loan Wallet?
To provide users with a clear understanding of their Loan debt and an accurate reflection of their assets and liabilities, we have launched the Loan Wallet. Additionally, we have updated the Earn Wallet and the Estimated Balance to include the Flexible Loan collateral value.
Users can now check the amount of their loan debt in the [Loan Wallet] under [Assets] - [Overview]. Since loan orders are considered liabilities, the debt value will appear as a negative amount in users’ total assets.
Please note: If the [Hide assets <1 USD] function is selected, the Loan Wallet will be hidden.
4. What is LTV, and how much can I borrow from Binance Flexible Loan?
Depending on which cryptocurrency you wish to pledge, a different initial LTV may apply. LTV stands for Loan-to-Value. It represents the ratio between the value of the digital assets loaned to you plus accrued interest, if any, relative to the value of your collateral. These values are based on each cryptocurrency’s Price Index.
LTV = Loan Value / Collateral Value
For example, assuming an initial LTV of 65% for USDT: if you have pledged 1,000 USDT, you may borrow up to 650 USDT worth of loanable assets.
5. Are there limits to how much I can pledge and borrow?
Yes, for every cryptocurrency, there are different maximum amounts you can pledge or borrow.
For example:
Let's assume you've already pledged 60,000 USDT and borrowed 20 ETH. If the maximum collateral that can be pledged for USDT is 100,000 USDT and the maximum borrowing amount for ETH is 30 ETH, you can only pledge an additional 40,000 USDT and borrow 10 ETH. These amounts are subject to change.
6. What is loan liquidation, and what is the liquidation LTV?
In a secured loan, the lender (Binance) has the right to obtain ownership of the collateral if the borrower (user) defaults in their obligation. For example, when the current LTV exceeds the liquidation LTV. This might happen when the collateral decreases in value or the value of the borrowed assets increases due to accrued interest over time.
7. What happens when a loan is liquidated?
A full liquidation occurs once a hard-cap liquidation LTV of 91% is reached for any cryptocurrency. The entire loan will be repaid using the equivalent value of collateral for that loan position.
If liquidation happens, you will not be able to adjust LTV nor repay the corresponding Loan order. You will be charged a 2% liquidation fee based on your borrowed amount which will be deducted directly from your collateral in accordance with the asset’s market price. The rest of your assets will remain in your Earn Wallet.
If the market is volatile and the value of the collateral becomes less than the total debt value at the time of liquidation, you are obliged to immediately repay the remaining arrears.
8. What is a margin call?
A margin call is issued when a particular collateral-loan pair position reaches its margin call LTV, which is 85% at the moment. This margin call LTV represents a warning that the loan position is getting close to the liquidation LTV. You can take action by pledging more assets to increase the collateral value or to partially reduce the outstanding loan, thus reducing the LTV.
For example, in a BNB/BTC collateral-loan pair with a margin call LTV of 75%, the system will remind you to top up the Collateral Asset when the Outstanding Loan + Accumulated Interest/ Collateral Asset ≥ 75%.
9. Will I be notified in the event of margin calls or liquidations?
You’ll be notified via in-mail, email, and SMS in the event of a margin call or liquidation. The notifications serve as a risk warning and cannot guarantee timely delivery.
By using the service, you agree that under certain circumstances, you may be unable to receive or get delayed SMS or email reminders. The circumstances include but are not limited to personal network congestion, poor network environment, local restrictions, service provider's policies, and device malfunctions.
Please note that if the margin call time and liquidation call time are too close, the margin call notification will be automatically canceled by the system, and you’ll only receive the liquidation call notification. Binance reserves the right with no obligation to deliver notifications.
10. What Interest Rate applies to my loan?
Binance publishes all relevant interest rates, and the borrowing rates for each cryptocurrency in Binance Flexible Loan are updated every minute.
Changes to the interest rate may occur frequently and at any time. It’s important that you carefully monitor the applicable interest rate. You can choose to repay your loan at any time.
Please refer to the Loan Data page for more information.
11. How is interest accrued for my loan positions?
Upon a successful loan order, interest is accrued every minute based on the total outstanding loan and the prevailing APR for each minute. The interest accrued after each passing minute adds on to the total outstanding loan.
12. How do I perform loan repayments or adjust my loan LTV?
In the [Ongoing Orders] tab, click [Repay] or [Adjust LTV] to perform loan repayments or increase/reduce collateral respectively. You may only repay your Flexible Loan using the same cryptocurrency that you borrowed. Repayments using collateral assets are currently not supported.
Loan repayments will reduce the outstanding loan and accrued interest proportionately. For instance, you can’t choose to repay either accrued interest or outstanding loan only or in unequal proportions. You may also adjust the LTV for each loan position by increasing or reducing collateral.
Please note, if you perform partial loan repayments, your current LTV will be reduced and corresponding collateral assets will be released immediately. However, there are two scenarios where corresponding collateral assets won’t get released:
- The adjusted LTV is still higher than the Initial LTV, which means the loan order is still at high risk.
- User enables the [Keep the collateral in the order] function.
13. Which cryptocurrencies can I pledge or borrow on Binance Flexible Loan?
Binance Flexible Loan offers and accepts a wide range of cryptocurrencies as loanable and collateral assets, including USDT, BTC, and ETH.
Please note that same-cryptocurrency collateral-loan pairs aren’t supported on Binance Flexible Loan. For example, you can’t pledge BTC and borrow BTC within a single loan position, but you can have multiple loan positions to borrow BTC with non-BTC collateral.
The available cryptocurrencies for pledging and borrowing are updated from time to time. Please refer to the Loan Data page for more information.
14. What can I do with the cryptocurrencies borrowed from Binance Flexible Loan?
You may use the loan for any purpose, including trading on the spot market, depositing into Binance Earn products, or even withdrawing them from Binance. The collateral pledged will remain with Binance Flexible Loan as security for the return of the Digital Assets you’ve borrowed.
15. Where can I find the relevant API to read my LTV levels or repay my loans?
You can access them via Binance Flexible Loan SAPI. It allows you to request, monitor, and manage your loan orders, track repayment history, and fine-tune your Loan-to-Value Ratio (LTV). Please refer to the Binance API documentation to find the relevant APIs.
Disclaimer: Digital asset prices are subject to high market risk and price volatility. The value of your investment may go down or up, and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance is not liable for any losses you may incur. Past performance is not a reliable predictor of future performance. You should only invest in products you are familiar with and where you understand the risks. You should carefully consider your investment experience, financial situation, investment objectives and risk tolerance and consult an independent financial adviser prior to making any investment. This material should not be construed as financial advice. For more information, see our Terms of Use and Risk Warning.
This document may have been translated and published in different languages. In the event of any inconsistency, misstatements, omissions, or errors appearing in any translated version, the English version shall prevail.