Offering cryptocurrency loans can be quite a profitable business, assuming one knows what they are for exactly. On the Poloniex exchange, there is an option to control loans manually. However, someone developed an automated tool for doing so, which goes by the name of Poloniex Lending Bot. This article will discuss the differences between the two.
2. Poloniex Lending Bot
Every type of cryptocurrency trading or lending that can be automated usually doesn’t need to be. Poloniex Lending Bot offers a convenient solution to offer bitcoin loans on the popular exchange, but there are some caveats. It is quite a convenient solution to use, and the source code is available on GitHub for everyone to take a look at.
Moreover, the Poloniex Lending Bot will ensure user balances on the exchange – those that are eligible, at least – are always lent out and earn passive revenue. As most people who use Poloniex are well aware of, there is quite a competitive loan market out there, although the returns may not always be spectacular. Then again, making your money work for you in a completely passive way is never a bad thing either.
Unfortunately, Poloniex Lending Bot cannot do much about issuing loans at very low rates when the market spikes. Additionally, the bot negates any opportunity to benefit from high long-term rates. Moreover, there is a 10% fee for using the bot, which can negate some of the profits earned rather quickly. It is a convenient lending bot, granted, but it should not necessarily replace manual, lending activities for anyone who knows what they are doing.
1. Manual Loans
It has to be said, keeping tabs on Poloniex loans in a manual fashion is not necessarily easy. While it is true everything can be monitored from the web interface with relative ease, it becomes a bit messy when issuing loans for multiple cryptocurrencies. Focusing on just one is the convenient solution, yet it also means missing out on opportunities in other markets.
Keeping in mind how Poloniex supports lending for Bitcoin, Ethereum, Dash, Monero, Litecoin, Ripple and a handful of other currencies, one could justify the use of a lending bot. However, not every Poloniex user wants to dabble in altcoins for lending purposes. Manually gauging which market is popular at the beginning of the day and issuing loans accordingly is a viable strategy.
This also means one needs to buy small amounts of said coin to effectively issue the loan. If the coin suddenly plummets in value, that can cause losses in a cryptocurrency portfolio. Then again, a lending bot would not be able to protect users from falling currency values either by any means. It all comes down to how one’s portfolio looks and what one plans to do with it. Manually issuing loans is manageable, as one gets to keep all of the profits–minus any fees Poloniex may charge.
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