Navigating the world of centralized exchange (CEX) lending can be overwhelming. With complex rules, varying interest mechanisms, and hidden risks, users often face unexpected outcomes—especially when product details aren’t transparent. In recent incidents, borrowers reported significant losses due to unclear terms. The truth is, CEX lending isn’t just about depositing collateral and borrowing assets; each platform has unique features that can drastically affect your financial outcome.
This guide breaks down the lending systems of Binance, OKX, and Bybit, helping you understand key differences in collateral handling, loan terms, liquidation rules, and interest models. Whether you're a borrower or a lender, this analysis will empower you to make informed decisions.
Binance Flexible Lending
Binance’s lending model stands out for its borrower-friendly design—especially because collateral continues to earn yield even when pledged.
Collateral Requirements
You can only use assets subscribed to Binance’s "Stable Earn" flexible products as collateral. Currently, 137 cryptocurrencies—including USDT—are eligible. If your Stable Earn holdings aren’t sufficient, you can transfer additional digital assets from your spot wallet into a Stable Earn product and then pledge them.
👉 Discover how flexible collateral options can boost your borrowing power
Loan Mechanics
- Supported Borrowable Assets: 218
- Structure: Each "collateral - borrow pair" operates independently (e.g., USDT collateral + ETH loan).
- Isolated Risk: Each position has separate calculations for loan-to-value (LTV), margin calls, and liquidation thresholds.
- No Fixed Term: As long as the LTV stays within limits and supported assets are available, you can hold indefinitely—no forced repayment dates.
Initial and Liquidation Thresholds
- Initial LTV: Typically 78% (i.e., $100 worth of collateral allows up to $78 in loans).
Max LTV (Liquidation): 90%
- If any single position hits 90% LTV or the outstanding loan value drops below $200, full liquidation occurs.
- Liquidation involves repaying all debt using equivalent collateral.
- A 2% liquidation fee is charged on the borrowed amount.
Interest Structure
Interest rates update every minute and are added to your outstanding balance each minute. While Binance doesn’t disclose exact rate calculation methods, two key dynamics shape borrowing costs:
- Higher demand → higher interest
- When redemption limits are hit (e.g., during high withdrawal volume), interest spikes to incentivize repayment
⚠️ Note: This mechanism was central to the CYBER controversy, where users couldn’t withdraw due to liquidity caps despite promised flexibility.
Unique Feature: Collateral Still Earns Yield
Assets pledged as collateral continue earning both real-time and tiered annual returns from the Stable Earn program—except BNB, which loses Launchpool rewards.
For example:
- WLD borrowing rate: 24.06%
- ETH Stable Earn yield: ~1.16%
- Net effective borrowing cost at 78% LTV: ~22.9%
Keep in mind: The displayed net APR assumes full utilization of the initial LTV. Partial borrowing requires manual recalculations.
OKX Flexible Borrowing
OKX offers a more dynamic and depositor-friendly system with flexible combinations and market-driven interest.
Collateral Options
OKX supports 149 collateral coins, including USDT. Unlike Binance, these assets do not generate additional yield while pledged.
Loan Flexibility
- Borrowable Assets: 127
- Multi-Collateral Support: You can combine multiple assets (e.g., BTC + ORDI + BCH) into one borrowing position.
- Adjustable Within Limits: Modify your collateral mix as long as it stays above the safety threshold.
Loan-to-Value (LTV) and Liquidation
- Initial LTV: Generally 70%, lower than competitors—offering more buffer room.
- Liquidation Formula:
(Collateral Value × Discount Rate - Loan Value × Maintenance Margin - Liquidation Fee) / Collateral Value - Liquidation Threshold: ~98.5% across most assets
However, discount rates vary widely:
- High-tier coins (BTC, ETH, USDT, USDC): 0.9–1.0 depending on amount
- Lower-tier altcoins (NOT, 1INCH, ACE): 0.5 under $50K; **0 above $50K**, effectively capping borrowing at $50K
🔔 Important: After liquidation, remaining funds go into the platform’s risk reserve fund—not returned to users.
Interest Model: Market-Based Matching
OKX uses a peer-to-market model:
- Interest updates hourly
- Rates are determined by supply and demand matching via "Savings" users setting minimum rates
Example:
- User A deposits 1,000 USDT at 1% minimum rate
- User B deposits 1,000 USDT at 10% minimum rate
- Borrower takes 1,500 USDT → gets 1,000 at 1%, 500 at 10% → average rate: ~4.33%
This creates potential for "interest spikes"—lenders may earn unexpectedly high returns during demand surges.
👉 See how market-driven rates can maximize your lending returns
Special Rule: Automatic Coin Swap Mechanism
To protect platform stability:
- When borrowing demand reaches 100% of available supply, OKX activates automatic coin conversion
- High-borrowers are grouped into tiers; top-tier borrowers get auto-swapped first
- You may have coins converted without direct action if system thresholds are met
Users receive email alerts but cannot view overall borrowing utilization publicly (to prevent manipulation).
Bybit Pledged Borrowing ("Simple" Version)
Bybit offers a straightforward approach with minimal complexity.
Collateral Eligibility
Supports 153 collateral types, including USDT. No yield earned while pledged.
Loan Setup
- Borrowable Assets: 157
- Isolated Positions: Like Binance, each “collateral - borrow” pair is separate
- Initial LTV: 80%
- Liquidation LTV: 95% (some assets at 93%)
Liquidation Process
Upon liquidation:
- Full repayment via collateral
- 2% liquidation fee deducted from collateral
- Remaining balance returned to your designated account
Interest Terms
- No fixed repayment date
- Hourly rate adjustments based on market conditions
- Interest accrues hourly until repayment or liquidation
Key Takeaways & Comparison
| Feature | Binance | OKX | Bybit |
|---|---|---|---|
| Collateral Earns Yield | ✅ Yes (via Stable Earn) | ❌ No | ❌ No |
| Multi-Collateral Support | ❌ No (per pair) | ✅ Yes | ❌ No |
| Initial LTV | ~78% | ~70% | 80% |
| Liquidation LTV | 90% | ~98.5% | 95% |
| Interest Update Frequency | Every minute | Every hour | Every hour |
| Unique Risk Mechanism | Redemption caps under high demand | Auto-swap under high utilization | Standard liquidation |
Bottom Line:
- Binance favors borrowers—especially those who want their collateral to keep generating yield. However, depositors risk temporary lockups during high demand.
- OKX benefits lenders with responsive markets and strong risk controls, though borrowers face opaque systemic risks like auto-swaps.
- Bybit offers simplicity, ideal for users seeking predictable terms without complex edge cases.
Frequently Asked Questions
Q: Can I lose more than my collateral in CEX lending?
A: Generally no—CEX platforms use over-collateralization and charge fees only from pledged assets. However, you may lose part of your collateral due to liquidation fees or unfavorable swap rules (e.g., OKX's auto-conversion).
Q: Why does OKX have an automatic coin swap?
A: It prevents systemic risk when borrowing demand exceeds supply. By converting large loans into available assets, OKX maintains liquidity and protects smaller users.
Q: Does Binance really let my collateral earn interest?
A: Yes—if it's part of the Stable Earn program. But note: some benefits like BNB Launchpool rewards are forfeited when used as collateral.
Q: Which platform gives the lowest borrowing cost?
A: It depends on market conditions. Binance often shows lower displayed rates, but OKX’s competitive matching can offer better deals during low-demand periods.
Q: Are there geographic restrictions?
A: Yes. For example, Binance restricts EEA users from borrowing unregulated stablecoins like USDT due to MiCA regulations.
Q: How do I avoid unexpected liquidations?
A: Monitor your LTV closely, maintain buffer space below the threshold, and consider platforms with higher liquidation levels (like Bybit’s 95%) for extra safety.
👉 Start exploring flexible lending opportunities with transparent terms today