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    HomeBlockchainAnalyzesKuCoin: The Best Place to Earn Passive Crypto Income? (PART 1)

    KuCoin: The Best Place to Earn Passive Crypto Income? (PART 1)

    The cryptocurrency market is changing and we all need to continue to evolve with it if we want to be successful.

    If you've been following me for a long time, you probably already know that one of my biggest passions is building passive income through cryptocurrency. The thought of being able to make money day or night, even while I sleep, without doing anything is very appealing to me. My goal is to eventually build that passive income to a level that will allow me to have financial freedom. I'm actually writing an ongoing monthly series marking my progress towards my own goals.

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    But as I mentioned above, the crypto market is changing and what was once easy is no longer and I've had to evolve with it.  

    In the past, I made the majority of my passive income from cryptocurrency by lending my bitcoins to various third-party companies and also pledging coins like Ethereum and Polkadot. Lending worked very well for a period of time while these services offered great rates. But in the last year, most of these services have significantly reduced their rates or lowered the tiers to get those maximum rates. I'm making it much harder to earn the same amounts I was before. Even though it's harder, it's still possible; it just requires a lot more time, effort and research now. Let's hope the whole process isn't too passive anymore.

    When it comes to loan and betting, I used almost all services there. None of them have been perfect, some have been better than others, and some have been places that I think should be avoided completely. Whether it's the prices they offer, the fees they charge, their ease of use, the confidence in the service or the features they offer. Each of them had flaws and none of them fully met the needs of what I was looking for.

    The constant changes in the market have me always looking for new and better options. That's why I started looking at KuCoin; a place I have often heard good things about from my readers. I've had a KuCoin account for quite some time, but have used it sparingly in the past. That all started to change once Publish0x started automatically depositing rewards into your KuCoin account after ETH gas prices skyrocketed. So I started using the exchange a lot more and I loved the experience I had there. As an American, it was one of the best places to get new altcoins that weren't available anywhere else. But to be honest, I haven't taken advantage of any of their passive income offerings yet, or at least, I haven't looked into them yet.

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    After I first visited the website of the KuCoin and proceeded to their earning section of the website, I was pleasantly surprised at how many services they offer. While many of the places I've used in the past offered some combination of these services. Few offered all of them. I was hoping this exchange had a chance to be my one-stop shop for everything crypto. Buying, lending, betting and trading.

    But me being the person that I am, and wanting to study everything very carefully before making any decision, I wanted to look at their proposals much more closely.

    **It's important not that this article grew largely in size as I delved deeper into ways of earning passive income from KuCoin and for your convenience, instead take an hour to read the entire article. I've decided to split the article in half and post the second part later this week. **

    So, without further delay, let's go through this together!

    Kukoine loan

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    The method I use to earn most of my passive crypto income is by borrowing cryptocurrency, hence the KuCoin loan offering is very important to me. When deciding whether to lend my coins to a service, there are three different categories that matter most to me. Security, interest rates, and ease of use.

    The lending here is different from the previous services I used. It's more of a lending style, lending directly to the borrower instead of just depositing funds into the lending service and doing all the work behind the scenes. Borrowers post encouraging offers for the amount of coin they hope to borrow, the interest rate they are willing to pay, and also determine the length of the loan. On KuCoin, users who borrow often use the funds for their margin trading. Long or short.

    It's very nice to know and be able to choose where your money goes, rather than it being a mystery.

    KuCoin has published its own very helpful FAQ page that details crypto borrowing and the things you need to know before you do right here.

    Frequently Asked Questions about KuCoin Credit Information

    For anyone who is interested in using KuCoin's crypto loan feature. You can find it here.

    Crypto Lending on KuCoin

    Security and openness 

    As always, the most important thing to consider when deciding whether or not to use a service is the level of security they have. What good is making incredible amounts of money if you can lose it all in an instant. Just as with any third party lending service or exchange, you should always be aware of the famous phrase; "not your keys, not your coins." But for those of us who are keen on building a crypto passive income, this is a risk that many of us are willing to take.

    The key thing I'm looking for here is that lenders are always paid for the coins they lend, that their original funds are returned to them in full. And that if there is a problem, KuCoin takes action and reimburses those affected. 

    I was happy to learn that KuCoin passed the test here. I searched the internet extensively and at length, looking for reviews or complaints from people who had potentially lost their money while lending on the service. I couldn't find a single person who didn't get their money back. Now on to talking about what would happen if a problem arose. If for some reason the borrower gets liquidated and the value of his coins drops below the loan amount. KuCoin has an insurance fund for just this type of situation. From each loan transaction they take 10% of the interest earned and deposit it into their insurance fund. Which is used to pay for any kind of shortfalls that may happen. They also take an additional 5% in transaction costs which go to KuCoin.  

    I have to admit I was really pleased to see them in advance and find out what the fees were, but also where they were going and how they would be used. Having used other services in the past that weren't open about how they make the profits to pay rates, it created some doubt that some of the companies may not be able to remain solvent or profitable in the future. Especially after learning that many of these services use DeFi or perform arbitrage to pay the interest rates.

     

    Interest rates

    Although I would be thrilled if the most important thing to consider for people is the security of the platform, but the reality is that a large percentage of people only care about what the interest rates are and how much money they can make. Especially when so many people have been forced to switch services due to the drop in interest rates over the last year. So how is KuCoin doing with rates?

    Since KuCoin lending is more of a peer-to-peer type, this also means that there is no set interest rate that you will receive for lending your coins. For this reason, there are a wide variety of interest rates to choose from. For example, let's take a look at two coins that I frequently lend. With bitcoin, there are currently rates ranging from 3,65% APR, ranging all the way up to a whopping 73% APR. Looking at USDT, the rates are even better. Starting at 8,03% APR and ranging up to 730% APR. As you can see, you have the opportunity to earn much more than you would if you used some of the other big name lending services. These rates will vary significantly over time.

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    But why are APRs reaching such high levels for lending?

    It is strongly affected by what is happening in the crypto market. For example, when the market is pumping or dumping, more people will be willing to increase their potential profits through margin trading. This will lead to an increase in demand for crypto loans. When the demand increases, it also leads to an increase in loan rates. This is why interest rates can reach such high levels during times of high interest and can also decrease during quiet market times.

    Although the APR is amazing, the daily rate is actually more important in my opinion. Unlike other services where you lend your coins to the service and may be paid a fixed rate. On KuCoin you are lending directly to a borrower. Although there is a maximum loan term, borrowers can pay off the loan early if they choose. For example, if someone borrowed bitcoin for a 28-day term but instead repaid the loan after just one day. This would result in them only having to pay interest for one day; saving the borrower money. Your coins would then be returned to you and remain inactive in your account. For those of us trying to earn as much passive income as possible, we don't want those coins sitting idle and earning no interest.  

    When this happens, there are two options for you. You can take a very proactive approach by frequently checking the status of what you borrow. Once fully paid and returned to your account, you can quickly manually select a new loan offer to accept and continue the process each time you are paid back. Let's hope it's good timing and there aren't too many interruptions between loans.

    If that sounds like too much effort for you, KuCoin offers an auto-lending feature. 

    The auto lending feature works just as you would expect. Once your loan is completed and the funds are returned, it will automatically select a new loan for you that fits the parameters you set. You can choose how much you want to lend, the length of time and how much minimum daily interest you want to receive. Once the system finds an offer that fits all of these categories, it will automatically launch that loan. When that loan ends, the whole process will repeat again. If you're hoping to keep this process as passive as possible; just set it up and walk away. Then the auto-loan feature may be just what you're looking for.

    Ease of use

    With most lending services, the coins that are offered for loan are often the largest coins out there. It is usually limited to a handful of coins, those with the largest market capitalization. But if your portfolio consists of other coins, then you're usually out of luck if you want to borrow them. KuCoin is also different in this respect. They now have more than a hundred coins that you can lend and also borrow, making it very likely that you can give the coin of your choice.

    Another important factor for me when deciding whether to use a lending service is the lockout periods for your coins. Some places will require you to lock up your coins for an extremely long time to get the best rates. KuCoin also does this very well, and the length of the loan doesn't affect getting a higher rate, only the length of time you'll receive interest. They let you choose the duration you like best. From 7 days, 14 days and also 28 days. Each of these options offers amazing rates. Again, another positive for KuCoin.

    While looking from the outside, you may think that having to manually select your own loans or set up the auto-loan feature can be difficult, time-consuming, or even cumbersome. That was my initial opinion before taking a closer look, but after researching it, I had the complete opposite opinion. I found it very empowering to have complete control over how you borrow your coins and how much interest you get for it. Although of course it's not as easy as just depositing it into a service and forgetting about it. It only takes a few extra steps and it's not complicated at all. After your first few times committing to a loan, it will have already become second nature to you. You may even grow to enjoy the level of control you have over the whole process, as I have.

    Advantages

    The big advantage of borrowing cryptocurrency on KuCoin is that you own all the power and have complete control over how you want to do things. As I mentioned earlier, you can choose which loan deal you want to lend by selecting the interest rates, the length of time and the coins you like. If that all sounds like too much effort, they offer an auto-lending feature that really makes this a form of passive income. Allowing your desired levels to be met, meaning you no longer need to keep searching for the next great place to borrow your coins. And then there are the great interest rates that are available for lending.

    While all of these things are amazing in and of themselves, they may be enough to convince me to lend to KuCoin; there was something else that attracted me even more. Knowing exactly how your interest rates will be paid and the fees that are deducted from those earnings, along with the insurance fees. For me at least, this gives me a lot of peace of mind, especially when many competing services are very secretive about how they earn the money to pay their interest, or how they will handle situations if things go wrong.  

    I must admit that I was thoroughly impressed with my experience with KuCoin's Crypto Lend feature. As I said at the beginning of the article, the crypto lending environment has become a mess lately, where interest rates are dropping fast and you have almost no control over your coins or what happens to them once you lend them out to third parties. KuCoin offers an auto-lending option for those who want the whole process taken care of for them and remain 100% passive. But you can also be more proactive and choose who you lend to manually, which can enable you to get even higher rates. The ability to choose how long you want to lock up your coins is another plus that I was very happy to see. Then add in the fact that the amount of different coins that are available to borrow is greater than you'll find in most of the competing services. KuCoin also passed in all three areas of my main criteria of security and openness, great interest rates and also ease of use. Although I was skeptical before looking into KuCoin, my opinion has changed and I am excited to continue using their product more in the future. 

    If you want to know more or have questions. KuCoin has a great article where you can learn more HERE .

    If you want to use their lending service, go here.

    Crypto Lending on KuCoin

    In part 2 of my deep dive on earning passive income with KuCoin, I'll take a look at their betting and trading service. The article will be out later this week, so please look forward to it

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