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Binance Earn as a Trusted Platform

2022-06-16

Main Takeaways

  • Binance Earn’s self-sufficient business model provides reasonable rewards and avoids over-subsidization.

  • Binance Earn has a balance of liquid and locked offerings.

  • Binance Earn carefully monitors on-chain staking percentage and savings LTV (loan to value) ratio.

  • Users can readily access top-class educational materials through the Binance Earn site.

Increased market volatility is a natural time for investors and traders to reassess their positions. Whether the market is up or down, a responsible investor should consider their portfolio and appetite for risk. 

With recent market movements, many of you will probably have found yourself in this position and are currently reflecting on the best choices to make. Before committing to any decision, you should look at the risk level of each investment. Whether you’re simply HODLing crypto, staking it, or in a futures position, it’s basic risk management to take stock.

If you’re already a Binance Earn user, we’re here to help. Let’s break down the risks involved with the service, its products, and how it manages your assets.

What is Binance Earn?

Binance Earn is a world-leading crypto passive income platform. Its wide selection of interest-bearing products is suitable for first-time users through to crypto natives. As such, it’s become a mainstay for Binance users who want to earn without leaving the Binance ecosystem.

How Binance Earn Has Created a Trusted Platform

Even in volatile market conditions, Binance Earn enables users to generate passive crypto income. The platform ensures that funds are managed through a set of key metrics: 

No subsidies

Reasonable rewards rates are vital in creating a model that operates without the need for external funds. Each product is self-sufficient, and no subsidies are required to run them. These facts make Binance Earn a sustainable platform with a self-sustaining operating mechanism.

Liquidity 

Binance Earn aims to hold a balance of liquid and locked offerings. For example, ETH liquidity at Binance Earn is currently distributed in the following ways:

  • 70% in Spot wallets and 30% in Binance Earn 

  • Within Binance Earn, 55% on-chain for ETH 2.0, 42% in Savings for lending, and 3% in liquidity pools

Monitored on-chain staking and savings loan-to-value ratios

Binance Earn carefully monitors its on-chain staking and LTV (loan to value) ratio. For reference, ETH-related numbers at Binance Earn are currently as follows:

  • On-chain staking ratio (17% of exchange) and loan-to-value ratio (33%)

  • Binance ETH 2.0 also provides a liquidity solution: the BETH/ETH trading pair explained in detail further below

User education

Binance Earn informs its users how they can responsibly use our services through the platform. From FAQs to tutorial videos and Binance Academy articles, its users have multiple ways to learn about informed investment making.

Learn about selected Binance Earn products

Our earning platform offers a range of products. Please read and consider our brief descriptions below. As always, more information is available via the Binance Earn website and our educational materials.

ETH 2.0 products

Binance ETH 2.0 aims to provide an easy way for users to participate in the Ethereum 2.0 network and earn on-chain rewards. 

Reducing the minimum investment needed for ETH 2.0 staking

With Binance Earn, users don’t need to provide 32 ETH as is required when staking directly through Ethereum. This makes the barriers to entry smaller and reduces the initial capital needed for investment. With as little as 0.0001 ETH on Binance Earn, users can gain exposure to ETH 2.0 staking without such a significant investment.

Protection from penalties and slashing

For some products, Binance limits the risk of your stake being subjected to slashing or a penalty. These occur when the nodes engage in malicious activity or experience downtime. In some circumstances, Binance Earn takes on slashing risks for users and will return your staked tokens if an incident occurs. See our terms & conditions for more details.

Providing liquidity for locked ETH 2.0 staking

Locking your crypto increases risk as you cannot move the assets if market conditions change. ETH deposited for ETH 2.0 staking is locked, but Binance Earn provides all participants with transferable BETH tokens. These can be exchanged 1:1 with ETH once ETH 2.0 is live. BETH unlocks your liquidity and can reduce the risk associated with locking your tokens. 

Please note that the market determines the exchange rate of BETH/ETH, meaning it’s subject to price fluctuations. Rewards are also calculated based on the BETH in your wallet. If you trade BETH for ETH, you will no longer receive staking rewards.

Know where your staked ETH goes

100% of users’ deposited ETH on Binance Earn is staked on the Ethereum network. Binance does not and will not use these funds for other purposes such as collateral provision or lending. 

Savings products

Flexible Savings are always redeemable

Users can subscribe and redeem assets anytime while earning daily rewards. This principle means that your assets remain liquid and available to be used at any point.

Locked Savings can be exited at any time

Binance Earn users staked in Locked Savings don’t have to worry about the risks associated with locking their funds. Assets can be removed at any time, but you will lose out on your accumulated rewards.

Reserves for Savings funds 

Subscribed assets to Binance Savings are, in most cases, used for lending to users with borrowing needs. Currently, Borrowers are required to over-collateralize their loans upon issuance, and at any given time only 60% of savings deposits are lent out. 

These actions were taken to try and ensure that Savings users’ deposited assets remain redeemable even when the market price drops sharply. For ETH specifically, the current savings loan-to-value ratio is 33%, which provides Binance Earn with reserves that are intended to address market volatility.

Make Responsible Decisions with Binance Earn

It becomes easier to assess your portfolio’s risk with the correct information at hand. For those of you staked in Binance Earn products, our rundown of how we manage cryptocurrency and risk should prove valuable. If you require more information to help make an informed decision, you can always look directly at our product’s pages.

For additional information, please refer to the follow articles: look

Risk notice:  Cryptocurrency prices are subject to high market risk and price volatility. You should only invest in products that you are familiar with and where you understand the associated 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. Past performance is not a reliable indicator of future performance. The value of your investment can go down as well as up, and you may not get back the amount you invested. You are solely responsible for your investment decisions. Binance is not responsible for any losses you may incur. For more information, please refer to our Terms of Use and Risk Warning.