After the SEC targeted the passive returns services offered by centralized exchanges and DeFi platforms, attention turned to popular Bitcoin exchanges.
While Coinbase stated that their services do not violate any securities laws, similar statements came from Binance.
While the attention was turned to passive income products, Binance CEO stated that there was a confusion of concepts and defined these products in simple terms.
As Binance CEO explains:
“Lending, staking, yield, earn and saving There is a confusion of terms with terms such as
There are subtle but important differences between them. This is how I usually understand and define them.
Staking; It means locking your coins onto a blockchain to get rewards by helping verify blocks. You are in control of your money and staking rewards are usually managed at the protocol level and are highly predictable.
lending; It applies when you lend your cryptocurrencies to someone else to earn interest. You are not in control of the funds. If the platform you are lending to goes bankrupt, you will lose your principal. The risk here is very different from staking.
Annual percent return (Yield); It generally refers to the interest rate on an annual basis. There aren’t many of them here.
Earn, saving style products; These are available in combination with any of the investment products described above. Terms and definitions on different platforms may change accordingly.”
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