Interview with Christopher Bensch, CFO of CoinLend.
Christopher Bensch (bachelor of tax law) is working in the sector of taxation and business management since 2005. He worked for a tax consultants bureau and for the tax authority as a tax auditor. Christopher is responsible for the organization, consultation and customer support, moreover, he is the Chief Financial Officer of Coinlend.
What is Coinlend?
Coinlend is an online service to automate the margin funding process for all major margin funding cryptocurrency exchanges. This means you connect the exchanges via API credentials to Coinlend and the Coinlend AI will take care of the lending of all currencies on that exchange and therefore generate a passive income.
Who is the team behind Coinlend?
At the moment we are three people at Coinlend: Jan, Christopher, and Henrik. Jan and Christopher founded the company in 2017. Jan worked for big software companies like SAP and handles all the technical stuff. Christopher has his background in tax law and handles all the financial aspects. Henrik worked for ASUS before and doing the marketing for Coinlend.
What are the advantages of using Coinlend vs investing manually in margin trades?
Margin funding done manually is very time-consuming. Loans usually have a duration of 2 days and often they are paid back even earlier. If a user has a relevant amount of funds, he will end up managing hundreds of loans. Once the exchange is connected to Coinlend, our AI will take care of the process and generate loans on all connected platforms for a user 24/7.
How passive is investing in margin lending via Coinlend?
After the bot is set up once, it is 100% passive. The user can play around with the settings and lending strategies to optimize his returns, but this is totally optional.
How does Coinlend determine the length of the loans?
If the rates are lower then average, the bot will create loans with short durations (minimum duration usually is 2 days). If the rates higher than usually the bot will create loans with longer durations (30 days / 60 days are the maximum durations at Bitfinex / Poloniex). All these parameters can optionally be adjusted by the user.
What are the risks of lending crypto?
The main risks are the platform risk, the default risk and the credentials risk:
- Platform Risk: That’s the biggest risk of margin funding. To lend your cryptocurrencies or fiat currencies, you have to hold them on an exchange. If you hold your funds on an exchange, there is some risk involved that the exchange will be hacked and customer funds will be stolen. The platforms take countermeasures like hot and cold wallets to minimize those risks these days. Additionally, Coinlend supports and encourages the distribution of funds to multiple platforms.
- Default Risk: Another risk is the defaulting of loans. The margin traders which borrow the funds have to provide a security to borrow the funds. At Bitfinex that security is 33% of the position size. If the security is exhausted, the position will automatically be closed and the loan is paid back by the exchange. A flash crash and a failed margin call could result in a loss for the lender. The exchanges created saving pools to cover such an incident and so far, this incident never happened at any exchange.
- Credentials Risks: The third risk is the generation and providing of API credentials to third-party services like Coinlend. Since we don’t need withdrawal permissions for the API credentials at Coinlend and we guide the user step by step through the API credentials generation process, we ensure withdrawal permissions are not provided to the API credentials. On top of that, all API credentials are stored AES 256 encrypted in the Coinlend database.
In your opinion, why do interest rates vary between platforms? (Why is Celcius at 4% and Bitfinex at 0.1%)
The interest rates are very volatile. The low rate at Bitfinex is not usual. The average rate for Bitcoin at Bitcoin in 2018 was at 7% for example. And the different platforms have different business models. All the exchanges utilize margin funding to generate profit for the lenders. Celsius, on the other hand, provides P2P loans for their users and therefore provide lower (in average) but more constant rates. The rates on the margin funding exchanges tend to be lower in times of low trading volume and higher in volatile times.
What are the other platforms that you will be adding in the future?
BitMEX is next on our list. After that, we covered all the relevant lending platforms. If new ones will emerge in the future, we will support them as well.
What are the three projects you most closely follow in the crypto space?
Lightning Network, MimbleWimble and Celsius
What are the benefits of using the pro version of Coinlend?
With the premium version of Coinlend, the user will benefit from an increased polling frequency (the bot will contact the API more often), the user will have access to additional settings, our lending strategies and advanced reports.
What is the price structure of the pro version of Coinlend?
We have premium accounts and we charge a fee of 3% for the interest generated by the bot. Then we have business accounts which are only available for users with more than 100.000$ in funds. These users will be charged 5% of the generated interest and can benefit from personal consulting from Coinlend experts.
What are the first steps for a newbie margin lending investor?
A good start to get an overview is our FAQ: https://www.coinlend.org/#!FAQ
Creating some loans manually on the exchanges is usually also a good way to get a better understanding and feeling of the margin funding concept.
We thank Christopher Bensch for the interview.
- The answers have been provided by the interviewee.
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