Justin Sun and Poloniex are advertising 64% interest on USDC

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.

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:

“APR 65.46%?I have 100 million #USDC and want to deposit🤣 $USDC $USDT

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.

Research shows that Poloniex market share is trending downwards since Justin Sun’s acquisition

The Block, crypto research and news outlet, released statistics of Poloniex’s market share and it has begun to trend downwards since mid-November.

Poloniex Market Share
Credit: The Block

On November 13th, Justin Sun, founder of TRON and CEO of BitTorrent admitted to being part of the investment group that acquired Poloniex from Circle. This is almost exactly when their market share began to trend downwards.

On one hand, the decrease in users could have more to do with a change in management rather than Sun’s involvement. Even when my local taco place said “under new management,” I had this instinctual urge to never go back, because I liked how it was.

On the other, Justin Sun has an unquestionably controversial reputation because of the impression that TRON is more centralized than they advertise to be, he started a fund to censor journalism and kicked DigiByte’s coin off of Poloniex a day after the founder criticized the exchange.

Immediately after the acquisition, Poloniex purchased TRONs most popular “decentralized exchange.” People joked that you can’t buy a decentralized exchange, but in a recent piece, we clarified that even in DeFi there is no truly decentralized institution. This month, Poloniex also said that there would be no listing fees for any TRON based assets.

Here’s Justin Sun essentially thanking his one company for helping his other out:

Obviously, people who are media trained and keep up with the crypto space daily will understand that Sun is playing 4d chess with all of his businesses. That might be the reason why their market share had started decreasing so quickly. The exchange still might have a fighting chance in the future if they play their cards right.

Now that Sun has merged his projects together, it might be best for Poloniex’s market share to just stop talking about TRON. Eventually, new people will enter the space and others will forget about the affiliations.

 

 

When is the Poloniex withdrawal deadline?

Circle announced last month that it would be spinning out Poloniex and forming a new independent firm called Polo Digital Assets. With this major change, Circle and Poloniex highlighted some of its biggest challenges, which resulted in shutting down Poloniex US “in order to be competitive in the global market.” So when is the Poloniex withdrawal deadline and what do you do if you have cryptocurrency still sitting in your account?

Read moreWhen is the Poloniex withdrawal deadline?

Poloniex cuts off U.S. customers under new ownership

Poloniex announced today that they are splitting from Circle and need to abandon U.S. traders in order to be competitive in the global market. As a U.S. based exchange, Poloniex has done only $577 million in volume over the last 30 days which is less than half of what non U.S. compliant BitMex does in a day.

Polo Digital Assets, Ltd. will now take full ownership of Poloniex and be backed by a “major investment group.” The block was reportedly told by insiders that Justin Sun may be heading the investment group and therefor in charge of Poloniex.

Until the end of the year, Poloniex will not be charging spot trading fees. Spot trading refers to purchasing crypto with cash.

In 2018, Poloniex removed leveraged products from their U.S. exchange in order to become more “professional” and compliant with U.S. regulations. Popular exchanges like BitMex, Binance and FTX have all distanced themselves from operating in the U.S. in order to keep up with demand for leveraged trading.

Other reasons Poloniex may have decided to avoid U.S. regulations is so they won’t have to require users to verify their identity before trading. The U.S. has stringent KYC (know your consumer) policies requiring proofs such as drivers licenses and social security numbers before users are allowed to make transactions. Holding sensitive identity related information on an exchange can be cause for concern as Binance had tons of information leaked earlier this year.

Lastly, it is harder to get coins approved for listing in the U.S. Binance went from offering hundreds of coins to less than twenty this year when they released a U.S. only exchange. Their non-U.S. exchanges only saw an increase in futures and leverage.