The quest for guaranteed BTC returns and lending with poloniex (beginners guide)

I know what you're thinking...

guaranteed returns? you must be new
poloniex? you must be new

You are correct in all of your assumptions!

I am fairly new to the crypto game. It is for exactly this reason that I decided to give lending with poloniex a try. I don't know enough about the markets to make well informed trades or get into anything too complex. I'm also aware that poloniex has had some issues/bad press lately, however they have a great long term track record, and I've also heard that while their customer support sometimes takes a while to respond, they are great once they do.

Let me tell you why I decided to go this route...

Cryptocurrencies are highly volatile, as I'm sure you know. Lending is the safest way I've found to make steady long term returns. It's not unheard of to expect a 35%+ APR (compounding) yearly using the method I'm about to describe. That number is actually fairly conservative.

For those of you who don't know, lending on poloniex is essentially loaning currency to margin traders. When the market rises or falls drastically, margin traders want loans, and they want lots of them - this causes the interest rate you receive on the loan to be quite impressive. Loan rates operate on the principle of supply / demand, just like crypto.

Right now loans are at around .08 - .09% DAILY. That translates to roughly 29 - 33% APR (compounding). The formula that will tell you exactly how much is:

(interest rate) * 365

poloniex also takes a cut of 15% of your profits. Obviously not ideal, however it's a small price to pay in my opinion, for the closest thing you're going to get to guaranteed returns in the unpredictable, volatile market we all know and love so much.

Another thing to consider is that in addition to the interest you'll make on lending, your currency has the potential to rise at the same time (obviously). Some people simply hold on to it and do extremely well. Lending takes that a step further.

So lets take a closer look at the poloniex interface...

Once you've signed up, logged in, and pressed the lending button, you'll be presented with the following:

LOAN DEMANDS
This is where margin traders are essentially saying "I will pay up to (X)% interest, for a loan with a duration of (Y) days, and I need (Z) BTC". Often you will see rates that are very high, up to 5% or more. This doesn't really matter as much to us, as lenders. We are more concerned about offers.

LOAN OFFERS
This is the list of active offers that are currently available to margin traders. The lowest offer will be filled first. You can either undercut the list, or put in a higher offer and wait for it to be filled. Too high of an offer may sit indefinitely, however.

OFFER BTC (or whatever currency you're loaning)
Pretty self explanatory based on the descriptions above. This is where you are putting in your offer. Minimum amount of BTC is .01. You can also choose to put the offer back up once the loan is paid back, if you wish, by checking "renew".

I'm just doing some testing, so I don't have much in the game as of yet, but I was pretty happy with the interest rates I was able to get based on what I have seen over the past 12 hours or so:

I hope you enjoyed my post. Let me know what you think in the comments, and if you end up giving lending a try, let me know how it goes for you!