Binance Wallet Unveils Web3 Loan: Non-Custodial Borrowing for All

Key Points:

• Binance Wallet has introduced Web3 Loan (non-custodial) feature which enables users to take out loans directly on decentralized protocols such as Venus.

• The new tool enables users to unlock liquidity for trading or yield strategies without selling their underlying assets, avoiding potential tax triggers

• To honor the integration, users interacting with Venus Protocol vaults have been declared a 400,000 USDT reward campaign to honor the integration.

In a major expansion of its decentralized finance (DeFi) ecosystem, Binance Wallet has officially introduced Web3 Loan, a native on-chain borrowing feature. 

Binance made the announcement in a blog post on Wednesday, the tool allows users to access liquidity directly from established third-party protocols without ever leaving the wallet interface.

The feature, in addition to the technical integration, provides a useful bridge to users who have felt in the past that they were asset rich, but cash poor. 

With the option to lock their tokens as collateral to earn some stablecoins, Binance is offering a very advanced feature that would have previously been offered only to institutional investors or high-end DeFi users.

The market position maintenance is one of the major benefits to the average user. In a volatile market, selling an asset such as Bitcoin or Ethereum to satisfy a temporary liquidity requirement is likely to lead to seller remorse in case the price of the asset skyrockets soon.

Through a Web3 Loan, the user can have his/her cake and eat it too: hold on to the asset used as security, and enjoy the upside of any growth in value, but at the same time spend the borrowed money making new contacts in the market or finding personal uses.

Liquidity Without the “Sell” Button

The most significant benefit of Web3 Loan feature is to earn by borrowing. Using conventional crypto management, it is common to have to sell some part of the portfolio to access cash or even stablecoins- something which can cause one to miss out on the upside and also create capital gains taxes that one does not want. 

With this new on-chain borrowing feature, investors will be able to retain their long-term market positions and at the same time access capital when they need it immediately or when new opportunities arise.

The Web3 Loan is a critical capital efficiency tool to the contemporary investor. Users can commit their assets as a collateral to get a line of credit in a form of stablecoins such as USDT or USDC instead of locking it away in a wallet. 

Such a liquidity can be reinvested into other high-yield DeFi strategies, which is basically using the same dollar to work in two locations simultaneously.

Moreover, since these transactions are on-chain through smart contracts, they eliminate the long process of credit verification and geographical limits of conventional banking.

Empowering Users Through Non-Custodial Security

The transition to a decentralized borrowing system provides a core enhancement of the user sovereignty. A Web3 Loan is non-custodial as opposed to centralized lending products where the company seizes the funds of users. 

It implies that although the Binance interface will enable the transaction, the custody of the collateral will be controlled by transparent and audited smart contracts. 

This eliminates counterparty risk that a centralized entity may fail or become unable to access accounts; this ensures that the users are not afraid that they have lost control over their digital wealth.

Strategic Incentives and The Venus Campaign

In an effort to make the new Web3 Loan feature go viral, Binance has unveiled a Venus loan campaign that is exclusive. The program will also be used to reduce the entry barrier into the industry by providing special rates on borrowing and a huge prize money.

Venus is operating with more than 2.2 billion dollars in its core pool, which means that even large-scale borrowers can get the liquidity they require without significant slippage.

The campaign will have a total of 400,000 USDT as outlined in the announcement. The rewards are available only under the conditions of the user performing their borrowing with the help of the particular Venus vault in the wallet.