Don't invest unless you're prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.
Estimated reading time: 2 min
Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.
What are the key risks?
1. You could lose all the money you invest
The performance of most cryptoassets can be highly volatile, with their value dropping as quickly as it can rise. You should be prepared to lose all the money you invest in cryptoassets.
The cryptoasset market is largely unregulated. There is a risk of losing money or any cryptoassets you purchase due to risks such as cyber-attacks, financial crime and firm failure.
2. You should not expect to be protected if something goes wrong
The Financial Services Compensation Scheme (FSCS) doesn't protect this type of investment because it's not a 'specified investment' under the UK regulatory regime – in other words, this type of investment isn't recognised as the sort of investment that the FSCS can protect. Learn more by using the FSCS investment protection checker.
The Financial Ombudsman Service (FOS) will not be able to consider complaints related to this firm or Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA regulated firm, FOS may be able to consider it. Learn more about FOS protection here.
3. You may not be able to sell your investment when you want to
There is no guarantee that investments in cryptoassets can be easily sold at any given time. The ability to sell a cryptoasset depends on various factors, including the supply and demand in the market at that time.
Operational failings such as technology outages, cyber-attacks and comingling of funds could cause unwanted delay and you may be unable to sell your cryptoassets at the time you want.
4. Cryptoasset investments can be complex
Investments in cryptoassets can be complex, making it difficult to understand the risks associated with the investment.
You should do your own research before investing. If something sounds too good to be true, it probably is.
5. Don't put all your eggs in one basket
Putting all your money into a single type of investment is risky. Spreading your money across different investments makes you less dependent on any one to do well.
A good rule of thumb is not to invest more than 10% of your money in high-risk investments.
If you are interested in learning more about how to protect yourself, visit the FCA's website here.
For further information about cryptoassets, visit the FCA's website here.
ETHLend is a decentralised, peer-to-peer lending service based on the Ethereum platform. Through the use of smart contracts, it aims to provide secure and transparent lending where borrowers can use cryptocurrency assets as collateral for loans.
The ETHLend token (LEND) is the native token of the borrowing platform and has a range of uses. Read on to find out how LEND works and how you can buy and sell LEND in the UK.
A step-by-step guide to buying LEND
Want to buy LEND tokens? Follow these simple steps:
Step 1. Create an account on a cryptocurrency exchange where you can trade LEND
LEND is available in currency pairings with Bitcoin (BTC) and Ethereum (ETH). To create an account, you’ll need to provide your name and email address and create a password. Depending on the exchange you choose, you may need to provide additional information, for example, proof of ID, to verify your account. It’s also recommended that you set up two-factor authorisation for increased account security.
Step 2. Deposit funds into your account
Many cryptocurrency exchanges only permit trading between cryptocurrencies, which means you often can’t directly deposit fiat currency, such as GBP or USD. This means you’ll usually need to own or buy BTC or ETH before you can purchase any LEND.
The steps you need to follow to deposit funds will depend on the exchange you’re using. For example, on Kucoin you select “Assets” in the top menu, choose your desired currency and click “Deposit”.
Step 3. Buying LEND
Now you can exchange BTC or ETH for LEND. While the process varies slightly from one exchange to the next, you’ll generally have to search for your chosen trading pair (such as LEND/BTC) and enter the number of LEND. It’s then a simple matter of entering the number of LEND you want to buy, choosing a market or limit order and clicking “Buy LEND”.
How to sell LEND
The process for selling LEND is more or less the same as the process outlined above, with the simple difference that you’re looking to sell instead of buy. It’s also worth pointing out that cryptocurrency exchanges only offer certain pairings, so it may not be possible to immediately exchange your LEND for your desired fiat currency or cryptocurrency.
Which wallets can I use to hold LEND?
LEND is an ERC20 token and can be stored in any Ethereum-compatible wallet that supports these tokens. Examples include:
With a goal to democratise global lending markets, ETHLend held its initial coin offering (ICO) in November 2017, raising US$16.2 million. ETHLend is a peer-to-peer lending platform connecting borrowers and lenders from around the world.
ETHLend runs on the Ethereum platform and allows users to borrow ETH by using ERC20 LEND tokens as collateral. ETHLend also makes it possible for users to use Ethereum Domain Names (EDN) as collateral instead of digital tokens.
Borrowers can use ETHLend to:
Access the ETH they need to participate in ICOs
Engage in margin trading by increasing their leverage
Fund an ICO
When a borrower submits a loan request, this creates a smart contract on the Ethereum blockchain. The borrower then enters data into the smart contract, including the loan amount, term and interest rate, as well as the number and digital address of the tokens to be used as collateral.
Once all the details are finalised, the tokens to be used as security are transferred to the smart contract. Lenders can then browse the available loan requests on the ETHLend website and choose the borrower that best meets their lending criteria.
If the borrower defaults on the loan, the tokens used as collateral are transferred to the lender.
What to consider when buying LEND
Before you buy LEND or any other cryptocurrency, it’s important to be aware that trading cryptocurrencies is complex and speculative. You should fully understand all the risks involved before you buy.
If you’re considering buying LEND, make sure you consider the following factors first:
LEND token use. LEND token holders receive a 25% reduction in fees on the ETHLend platform. The tokens also provide users with access to certain features, for example, featured loan listings.
Rewards for active lenders and borrowers. ETHLend will use 20% of the fees the platform generates to purchase LEND tokens on the market and airdrop them to lenders and borrowers.
Rewards for introducers. ETHLend will also purchase LEND tokens to distribute to users who introduce new customers to the platform.
Demand for tokens. The value of LEND tokens will, therefore, be greatly influenced by the level of success the ETHLend platform achieves. The more users and ending volume it attracts, the more valuable the tokens may become.
Market competition. ETHLend isn’t the only company offering lending and other banking services based on the blockchain, so you’ll need to consider the competition it will face from companies such as SALT and WeTrust.
Future developments. You’ll need to consider ETHLend’s future plans to get a better idea of whether LEND tokens might rise or fall in value in the months and years ahead. You can find this information in the Roadmap section of the ETHLend website.
Frequently asked questions
At the time of writing, CoinMarketCap listed the circulating supply at 1,018,154,231 LEND. The total supply of lend is 1,299,999,942.
Yes. CRE (credit tokens) are also used on the ETHLend platform but are designed to represent a borrower’s reputation, potentially allowing access to unsecured lending.
*Cryptocurrencies aren't regulated in the UK and there's no protection from the Financial Ombudsman or the Financial Services Compensation Scheme. Your capital is at risk. Capital gains tax on profits may apply.
Cryptocurrencies are speculative and investing in them involves significant risks - they're highly volatile, vulnerable to hacking and sensitive to secondary activity. The value of investments can fall as well as rise and you may get back less than you invested. Past performance is no guarantee of future results. This content shouldn't be interpreted as a recommendation to invest. Before you invest, you should get advice and decide whether the potential return outweighs the risks. Finder, or the author, may have holdings in the cryptocurrencies discussed.
Tim Falk is a freelance writer for Finder. Over the course of his 15-year writing career, he has reported on a wide range of personal finance topics. Whether you're investing in stocks and ETFs, comparing savings accounts or choosing a credit card, Tim wants to make it easier for you to understand. When he’s not staring at his computer, you can usually find him exploring the great outdoors. See full bio
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