Once you decide to go into the crypto world, you need to open a crypto exchange account. After some googles, you notice that Binance is pretty good (In fact, Binance is the biggest crypto exchange in the world by trading volume), and wonder if you should just buy-and-hold bitcoin.
Binance Earn is an awesome way to increase your savings while you’re sound asleep, knowing that your funds are doing all the work for you. There are several different options, each with their assumptions about your risk profile, time horizon, and desired returns.
You may have come across this famous quote by esteemed investor Warren Buffett:
Binance Earn is an awesome way to increase your savings while you’re sound asleep, knowing that your funds are doing all the work for you. There are a number of different options, each with their own assumptions about your risk profile, time horizon, and desired returns.
Whether you just want to stake your Proof of Stake (PoS) coins, lend your funds for interest, or safely deposit them to a DeFi service through Binance, we’ve got you covered. So, let’s see what Binance Earn has to offer.
As there are many investment options available in Binance, they are grouped under one area called Binance Earn, which you can find under the Finance tab on Binance’s home page.
Let’s go through the main categories of Binance Earn so you can figure out which suits your investment style the best.
Binance Saving supports both Dollar level risk free and Token level risk free investment.
Binance saving is probably the easiest one to understand. You simply deposit your token into Binance saving, and receive a fixed interest rate daily as specified on the website.
Return: 6% p.a. for stable coin (e.g. USDT / BUSD) / 1.2% p.a. for Bitcoin
You could transfer your token into a saving account by simply clicking the transfer button, and you would receive an interest payment on a daily basis. Also, you could transfer money back from a saving account to a spot account at any time immediately.
If you are certain that you won’t withdraw your money from your saving account for a fixed period (7/14/30 days), you can apply for a Fixed Saving. You can still redeem early and transfer money back to your spot account at any time, but you will lose all the interest payment you received, should you choose to do so.
The most obvious reason is that many traders trade the Binance margin, which means they need to borrow money from other users in order to use the trading power. Binance has a high-quality system that controls the maximum losses that the trade can benefit from, thus providing a safe environment for borrowing and lending.
If you feel like you have a backup, it is always a good idea to put them in Binance savings, and get a 6% annual, full free refund at the dollar level.
Binance Staking is Token level risk-free investment.
If you plan to hold tokens for a longer-term (say 1–3 months), you should definitely check out Binance Staking to see if your token is eligible to be staked and receive more tokens of the same kind along the way, known as proof-of-stake.
Return: Depends on the token you are holding. For ETH, 10% p.a.. For some other popular tokens, like SUSHI and 1INCH, they provide 15–20% p.a.
Once you decide to stake, you will start to receive the same token as interest payment. You can redeem earlier at any time, but you will lose all the interest payment you received, should you choose to do so.
Because many tokens, by design, requires other token holders to validate the transaction. The proof of Stake (PoS) concept states that a person can mine or validate block transactions according to how many coins he or she holds. This means that the more coin owned by a miner, the more mining power he or she has.
However, staking outside Binance often requires the user to execute multiple smart contracts to get started, and has a minimum staking requirement. For example, ETH2.0 requires the user to stake at least 32 ETH (as a validator). If your investment amount is small, it might not be viable to do this because the transaction fee (ether gas) of a smart contract could often be very high in a bullish market. Therefore, using Binance Stake could save a tremendous amount of transaction cost, as well as provide an error-free environment for the user to experience PoS.
For ETH specifically, when user stake ETH, Binance will tokenize it as BETH. The user could choose to early redeem the ETH by converting the BETH back to ETH. However, doing this would result in roughly 5% loss, so you need to be 100% sure that you won’t redeem staked ETH before ETH2.0, which the ETA is unknown.
For other tokens, the only risk is the price volatility in the token that you are staking (maybe they would drop to 0 dollars before your staking period is over, just saying…..
Binance Vault is Token level risk-free investment, specifically for BNB holder.
Return: Depends, but at least 5% p.a. on BNB
According to the official FAQ, BNB Vault is a BNB yield aggregator. Depositing BNB means participating in Launchpool, Savings, Defi staking and other projects and at the same time gaining rewards.
Currently, the BNB saving provides 5% p.a., so its guarantee to have 5% p.a.
Other development teams often want to have a partnership with Binance to promote their projects. One common way to do it is to accept BNB to ‘mine’ that token, this is known as Launchpool. On top of that, we also have BNB saving account, and defi staking. Combining all different kind of risk-free investments that you could do with BNB is termed as BNB Vault.
Liquidity swap / Liquidity Provider, often term as LP, supports both Dollar level risk-free and Token level risk-free investment.
Return: 8% on BUSD/USDT, 12% on BTC/WBTC
Binance liquidity swap is an automated market maker (AMM) to facilitate cryptocurrency exchange. AMM would earn bid-ask spread and commission income, distributing them back to the liquidity provider.
For example, when you choose to provide liquidity for BUSD/USDT pair, whenever other user trade BUSD/USDT, part of their commission fee would be distributed back to you!
To add liquidity, you only need to hold one of the tokens from such a pair, and choose “Add USDT” or “Add BUSD”. Binance would help to convert 50% of your holding into a balanced holding pair and start to use your holding to execute market-making order.
In my opinion, LP is probably the most exciting application in 2021 decentralized finance (and still is in 2021). Imagine you want to exchange USDT to BUSD (or vice versa) or BTC to wBTC. These are the token pair that has the same face value, thus having a fixed exchange rate across time. Being a decentralized LP means that no one needs to rely on Bank to do such foreign exchange transaction. YOU are the foreign exchange provider, isn’t that cool?
As a result, Binance has opened on some of the stable token pair as a way for the user to be the market maker on the trading platform.