Binance launched a limited-time "4% Loan, 12% Savings" dual promotion in August, where investors can complete an end-to-end arbitrage by pledging mainstream assets like BTC and ETH on the exchange.
The annual interest rate difference of up to 8 percentage points seems lucrative, but seizing the overlapping time window from August 15 to September 10 requires considering some details and risks.
Activity Conditions: 4% Lending Stacked with 12% Savings
According to the Binance announcement, the USDC lending promotion will start at 16:00 Taiwan time on August 15 and end at 07:59 UTC on September 16, with a fixed annual interest rate of 4%.
The ongoing USDC savings activity offers a maximum annual yield of 12%, running from August 11 to September 9, with a single account subscription limit of 100,000 USDC (over 100,000 to 300 million will have a 2% annual rate).
The two promotional periods overlap for about 25 days, providing a closed interest rate arbitrage strategy.
Arbitrage Process: Pledge, Borrow, Subscribe, Redeem
The operating logic is not complicated:
- First, use mainstream coins like BTC and ETH as collateral to borrow USDC at a 4% annual interest rate, with the current pledge rate around 78%. To borrow 100,000 USDC, you'll need about 1 BTC.
- Second, invest the obtained USDC in the savings project to receive a 12% annual yield (currently around 11.6%).
- Third, redeem the USDC after the activity ends and return the principal and interest.
- It's worth noting that Binance has recently included USYC and cUSDO in the collateral range, increasing fund allocation flexibility.
Key Risk is Price Fluctuation
The most obvious risk is a price drop in the collateral triggering LTV liquidation. If BTC or ETH experiences a sharp correction, investors not only cannot lock in the arbitrage spread but may also lose their principal due to forced liquidation.
Additionally, centralized platforms carry liquidity risks such as system failures and withdrawal restrictions. Regulatory changes or even a temporary USDC de-pegging could compress the interest spread or extend the recovery period, though the probability is low.
Operational Recommendations
If deciding to pursue this arbitrage, set a conservative pledge rate and reserve additional USDC or collateral as a buffer. Closely monitor coin prices and lending rates. When calculating net profit, include transaction fees, redemption waiting time, and exchange costs.
Roughly calculated, borrowing 100,000 USDC and investing during the 25-day overlapping period could yield around 500 USDC in profit. Whether it's more profitable than funding rate arbitrage depends on market reactions.
* The above is not investment or arbitrage advice, for reference only. Please research carefully and make financial decisions independently.
