Coinlend Home Page (Image: BIUK)

How to Automatically Lend your Bitcoin

Having put your Bitcoin on a trading exchange like Bitfinex we can set it to lend out the Bitcoin for interest. Rates of interest vary widely between exchanges and coins, and over time. However, they can be surprisingly generous – for example you can currently lend Bitcoin on Bitfinex at an annual rate of up to 40%.

Cryptocurrency lending, however, is typically over short durations – for example a non-compound annual rate of 36.5% really means a rate of 0.1% per day for a certain number of days. In fact crypto loans are typically quoted as being for a minimum of 2 days and in my experience nearly always last exactly 2 days.

That could make things very inconvenient if every 2 days you had to start another loan manually. However, there are bots that you can do this for you – I always use CoinLend and I highly recommend it. Not only does it work really well – it’s an online bot with nothing to install – but it’s completely free!

Start by going to CoinLend.org and creating a new account by selecting Setup Bot. Enter your email address and a password and selecting Register. Then login.

Coinlend Home Page (Image: BIUK)
Coinlend Home Page (Image: BIUK)

You will be taken to the Bots screen where you can set up bots for three different exchanges: Poloniex, Bitfinex and Quoine. Bitfinex seems to consistently give the best interest rates so that’s the one we’ll use.

Coinlend Bot screen (Image: BIUK)
Coinlend Bot screen (Image: BIUK)

Go to your Bitfinex account and login. Then select the Manage Account (a head-and-shoulders icon) in the top right of the screen, then API. An Application Program Interface (API) is a software call that allows a third party program – our bot – to communicate with the Bitfinex exchange directly without us needing to be involved.

Bitfinex API screen (Image: BIUK)
Bitfinex API screen (Image: BIUK)

Click on Create New Key. Make sure the following permissions are ticked and no others:

  • Read: Account History, Margin Funding and Wallets.
  • Write: Margin Funding.

Make doubly sure that Write permission is off for Withdraw so that this API cannot be used (by Coinlend or some other party) to withdraw your funds. Enter a name at Label Your API Key such as Coinlend lending key. Select Generate API Key. Check your email and confirm creation of the new key.

Your new API Key, and a secret key to access it, will now be shown in Bitfinex – copy both of these somewhere safe to record them.

Bitfinex API screen with keys (Image: BIUK)
Bitfinex API screen with keys (Image: BIUK)

Copy both keys into the Bitfinex Bot section of the Coinlend Bots tab and click Save. If you’ve done this correctly you will get a confirmation message, it will display Bitfinex credentials valid, and the button will go green and say On.

Coinlend Bot screen - Bitfinex On (Image: BIUK)
Coinlend Bot screen – Bitfinex On (Image: BIUK)

Coinlend will generally start working very quickly, almost immediately. To see your loans underway just switch to the Loans tab and wait a minute or two – here it’s showing our first loan has gone out, and it’s at 16.62% (the display defaults to annual, compounded interest):

Coinlend Loans screen (Image: BIUK)
Coinlend Loans screen (Image: BIUK)

You can also confirm your loan status by going to Bitfinex and selecting Funding -> Bitcoin. Your active loans will be shown under the PROVIDED pane – click the drop-down icon to open. The interest rate shown in Bitfinex is the daily one – so here it’s 0.04214 per day.

Bitfinex Funding screen (Image: BIUK)
Bitfinex Funding screen (Image: BIUK)

If you want the interest rate shown in Coinlend to be the same then you can change this on the Settings tab – the options are Daily, Yearly, Compounded.

Tip: If you think you might want quick access to your Bitcoin then in Coinlend in the Bots/Bitfinex Bot tab under the On/Off button select Settings -> BTCExtended and switch on the option for Always lend at the minimum duration of 2 days, and then Save Settings. This setting doesn’t always ‘stick’ so check it by going back into Settings and repeat if necessary – once it has set successfully the Extended button will show orange.

And that’s it done – the Coinlend bot will keep lending out your Bitcoin until you set the Bitfinex bot to Off on the Bots tab. Your Bitcoin stake will grow, and all for free.

2 thoughts on “How to Automatically Lend your Bitcoin”

  1. Interesting concept lending out your Bitcoin. What’s to stop someone not paying back a loan – as I assume there is no collateral on them?

    1. No, the way it works is that margin traders on Poloniex use borrowed funds for margin trading. Their funds are used as collateral for the loans and to settle debts to lenders. Obviously they can’t withdraw borrowed funds, only use them in margin trading.
      Poloniex tracks trades and if they start to go bad it instigates a forced liquidation before the trader would run out of funds to cover the loans. It’s a pretty effective system, and they claim to have never had a single default. Certainly I’ve never lost a penny (satoshi) in lending.
      Amazingly I currently have one of my loans paying 0.4592% interest (daily – so about 200% annual if compounded).

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