In a move that seems to echo the way in which traditional banks reward customers with interest by putting their money into markets, OKEx has now begun offering a similar system.
OK Piggybank is the name the Hong Kong-based exchange has given to its margin loaning rewards scheme. The way it works is that the cryptocurrency exchange will lend out user assets to margin traders and then pay back a percentage of interest to the customer. OKEx will keep 15 percent of all profits that it claims will go towards funding insurance for “societal losses” and the remaining 85% will be distributed among OK Piggybank users.
OKEx has been beta-testing the system for over a month now and officially launched the full version to all its users today, December 26th, at 09:00 (UTC +1). Only coins that are available for margin trading on OKEx are supported and include Bitcoin (BTC), Ripple (XRP), Ethereum (ETH), Tether (USDT), EOS, Litecoin (LTC) and Ethereum Classic (ETC).
Deposits and withdrawals are instant and there is no minimum deposit required.
In a medium post announcing the launch, OKEx lauded the new scheme as a way for crypto “HODL’ers” to profit on their investment even in times of a market downturn.
Echoes of Old Banking
While the scheme sounds like a good idea on paper, it shows an increasing trend by cryptocurrency exchanges to use old-school marketing ploys usually associated with traditional financial institutions. There are already a number of blockchain-based financial platforms offering loans in cryptocurrency and anyone who was around in 2008 should remember the effects that uncontrolled debt can have on the global economy.
Going forward, it will be interesting to see how such a system holds up against leveraged losses in the event of a heavy market crash and whether or not crypto exchanges will continue to adopt the same risky financial practices that led to the creation of Bitcoin in the first place.
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