In the fast-evolving world of digital finance, crypto staking and lending has emerged as a powerful tool for users seeking to maximize their asset utilization without selling their holdings. Platforms like Bitget offer structured, secure, and user-friendly solutions that allow investors to pledge their crypto assets as collateral and borrow other digital currencies—unlocking liquidity while maintaining long-term investment strategies.
This article explores the mechanics, benefits, risks, and practical applications of crypto staking and lending, with a focus on how platforms such as Bitget streamline the process for both novice and experienced users.
Understanding Crypto Staking and Lending
Crypto staking and lending allows users to lock up (or "stake") a certain amount of cryptocurrency—referred to as collateral—to borrow another type of digital asset. For example, you can pledge Bitcoin (BTC) and receive USDT in return. In exchange, borrowers pay interest over the loan term.
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This method enables holders to access liquidity without triggering taxable events from selling their assets. It's particularly useful during market downturns or when new investment opportunities arise. The process is typically over-collateralized, meaning the value of the pledged assets exceeds the borrowed amount—this protects lenders and maintains system stability.
On centralized platforms like Bitget, these loans are offered with fixed interest rates over predetermined periods, simplifying financial planning compared to volatile decentralized alternatives.
Key Risk Metric: Loan-to-Value Ratio (LTV)
The Loan-to-Value ratio (LTV) is a core concept in crypto lending. It measures the risk level of a loan by comparing the borrowed amount to the value of the collateral:
LTV = Value of Loan / Value of Collateral
As market prices fluctuate, so does your LTV. To manage risk, platforms enforce three critical thresholds:
1. Initial LTV
This determines the maximum amount you can borrow based on your collateral. For instance, if BTC has an initial LTV of 65%, staking $1,000 worth of BTC allows you to borrow up to $650 worth of another asset.
2. Maintenance LTV (Replenishment Threshold)
When your LTV reaches this level, the platform will notify you that additional collateral is needed. This acts as a warning signal that your position is approaching high risk due to price movement or accrued interest.
3. Liquidation LTV
If your LTV hits this threshold, automatic liquidation begins. The system starts selling parts of your collateral to repay the debt and prevent further losses.
Staying below the maintenance threshold ensures greater control over your portfolio and avoids forced sales during market volatility.
How Does Bitget Staking and Lending Differ from DeFi Lending?
While decentralized finance (DeFi) lending offers permissionless access, it comes with technical complexity and smart contract risks. Centralized platforms like Bitget provide a more accessible alternative with several advantages.
| Feature | Bitget Staking & Lending | DeFi Lending |
|---|---|---|
| Interest Rates | Fixed for term | Variable, often volatile |
| User Requirements | No external wallet needed | Requires Web3 wallet |
| Transaction Fees | No gas fees | Gas fees apply |
| Ease of Use | Simple interface, no blockchain interaction | Complex on-chain operations |
| Security Risks | Primarily user-side operational risk | Smart contract, oracle, and liquidation risks |
| KYC Required | Yes | Typically anonymous |
Bitget eliminates common pain points like high gas costs and complex wallet setups, making it ideal for mainstream users who want efficiency and reliability.
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Supported Cryptocurrencies for Staking and Borrowing
Bitget supports a wide range of major cryptocurrencies as collateral or borrowable assets, including:
- Bitcoin (BTC)
- Ethereum (ETH)
- Tether (USDT)
- And many others
You can check the full list directly on the platform. However, same-asset borrowing is not allowed—you cannot stake BTC to borrow BTC. Instead, you must use a different asset as collateral (e.g., ETH or USDT) to obtain BTC.
Borrowing limits depend on two factors:
- Your personal account borrowing limit
- The available funds in the lending pool
The lower of these two values determines your maximum loan size. Currently, the minimum loan amount is 200 USDT equivalent, calculated using real-time index pricing. These limits may be adjusted as the service evolves.
What Can You Do With Borrowed Crypto Assets?
Once funds are disbursed, you have complete freedom to use the borrowed assets:
- Trade on spot markets
- Invest in yield-generating products on Bitget
- Transfer out to external wallets
- Hedge positions or diversify holdings
Meanwhile, your staked collateral remains securely locked within the lending system until repayment. This separation ensures transparency and security throughout the loan lifecycle.
Step-by-Step: How to Borrow Crypto via Bitget
Getting started is simple:
- Visit the Bitget Staking and Lending page.
- Choose the cryptocurrency you'd like to borrow.
Click “Borrow” and select:
- Loan term
- Borrowed asset
- Collateral from your spot account
Review key details:
- Interest rate
- Initial, maintenance, and liquidation LTVs
- Confirm the transaction.
Upon confirmation, your collateral is transferred into the lending system, and funds are instantly credited to your account.
No blockchain confirmations or waiting times—just fast, seamless access to capital.
How Is Interest Calculated?
Interest accrues hourly for precision and fairness:
Interest = Loan Amount × Hourly Rate × Number of Hours
Key points:
- Minimum billing period: 1 hour
- Rounded up: Any partial hour counts as one full hour
- Updates occur at each full hour mark
This granular approach gives users better control over cost management, especially for short-term financing needs.
What Happens During Liquidation?
Liquidation occurs when your LTV exceeds the liquidation threshold, usually due to:
- A drop in collateral value
- Rising loan value from accumulated interest
At this point, the system begins selling your collateral in the spot market to repay the debt.
Here’s how it works:
- 50% of the collateral is sold at market price
- Proceeds are converted into the borrowed currency to reduce debt
- Process repeats until LTV falls below initial threshold
- If remaining collateral drops below $100, full liquidation occurs
A 2% liquidation fee is charged on the amount sold. Any leftover assets after repayment are returned to your spot wallet.
To avoid this scenario:
- Monitor your LTV regularly
- Add more collateral proactively
- Repay part of the loan early
Proactive management helps maintain stability even in volatile markets.
Frequently Asked Questions (FAQ)
Q: Can I withdraw my collateral during the loan term?
A: No. Your collateral remains locked until you repay the full loan amount plus interest.
Q: Are there penalties for early repayment?
A: Bitget generally allows early repayment without penalty. Interest is charged only for the time used.
Q: What happens if I miss the repayment deadline?
A: Late payments incur interest at 200% of the original rate on overdue amounts. Timely repayment avoids extra charges.
Q: Is KYC required to use staking and lending?
A: Yes. Identity verification is mandatory for security and regulatory compliance.
Q: Can I change my collateral after opening a loan?
A: Not directly. You can repay the current loan and open a new one with different collateral.
Q: How quickly are loans disbursed?
A: Loans are processed instantly after confirmation—no blockchain delays.
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