Poloniex just announced USDC and USDT lending for EU users, with interest rates as high as 64% APR. This is basically an unprecedented rate of returns for lending money, especially USDC.
Starting now, USDC & USDT lending is open for EU customers pic.twitter.com/JAMdL4xV1I
— Poloniex Exchange (@Poloniex) December 17, 2019
There is a disclaimer at the bottom of their advertisement saying “Lending on Poloniex is inherently risky and may not be suitable for all users,” but that isn’t anything outside of the norm.
Coinbase lets users earn interest on USDC, but their rates are about 1.25% because they are not actually lending the tokens. A better comparison to Poloniex would be a decentralized protocol such as Compound that is currently paying 8.4% APR for lending USDC.
The main difference between decentralized lending protocols and Poloniex is that your funds are locked for a certain amount of days on Poloniex, and it is specifically used for margin trading. In Compound, users can take out their money as they please because it is in a lending pool format. The only time they aren’t allowed to take money out is when all funds are being used.
Poloniex has users determine how many days they would like their funds to be locked up which takes part in determining their interest rates. 64% seems too good to be true, but it might actually be possible since it is the first day that the program is releasing and they need to attract users to be the first to lend. Unfortunately, as someone in the US, I am not able to see exactly what it takes to get 65% APR.
Possibly the funniest part about all of this is Justin Sun’s response. Sun is an investor in Poloniex exchange but the way he speaks on it makes it seem like he has no involvement whatsoever. Here’s a quote from him:
After Poloniex changed leadership roles with new investments, they acquired TRON’s biggest decentralized exchange, listed TRON and let TRON projects become listed with no fees. People have their opinions on the integrity of the TRON project, as they will about these extremely high interest rates.