Binance lending using USDT to borrow USDC has reached the limit and has been drained, 😂

Binance Circular Loan: Circular lending without exchange rate risk~

Taking USDT as an example, in fact, at the start of the circular loan, any collateralizable asset can be selected for operation, turning waste into treasure!

In the circular loan with a quoted 20%+ APR, the method used is to deposit USDC to borrow USDT, and then exchange USDT for USDC. This method has a relatively high annual return, but there will be exchange rate risk when exchanging USDC.

Therefore, community member bellypig66 provided another idea, which is to deposit USDT to borrow USDC, then deposit USDC to borrow USDT, and then cycle this process.

This method avoids exchange rate risks and is a perfect circular loan under favorable interest rate conditions.

Unfortunately, due to the insufficient interest rate differential, the annual return is not high enough, but the idea can be referenced and can also be applied on-chain.

🤔 Core Logic:

1️⃣ Deposit USDT to borrow USDC, depositing USDT also earns interest, and the borrowing rate for USDC is fixed at 4%;

2️⃣ Deposit USDC to borrow USDT, depositing USDC also earns interest, with a subsidy of 10%;

3️⃣ Since the interest for depositing and borrowing USDC is fixed, the interest from depositing and borrowing USDT determines the circular return;

4️⃣ The operation only involves collateralized lending, without the need for exchanges, so there is no exchange rate risk;

⚒️ Operation Process:

1️⃣ Deposit USDT to borrow USDC;

2️⃣ Deposit USDC to borrow USDT;

♾️ Repeat steps 1️⃣ and 2️⃣, cycling 2-3 times or until there is no interest rate increase;

If USDT is used as the initial collateral asset, then the return is relatively low; however, if using altcoins or BTC for operation, it can be quite comfortable.

Additionally, after borrowing USDC, if one can accept the risk of USDC exchange rate decline, adopting the quoted circular loan strategy is also very appealing.

Note: The above is for information sharing only and not investment advice. Please do your own research!

DeFi Enthusiast: BitHappy