Is Litecoin’s addition to Binance DeFi staking a double-edged sword

ambcrypto.com:

Litecoin is gradually recovering from the heavy discount it received in the last few months. It might take a while for the market to recover to previous highs.

Holders can still earn some passive income as they wait for the recovery. But is this really a healthy option in light of the recent market events in May?

The Terra UST crash was the biggest eye opener to the dangers that might be associated with staking. DeFi staking and lending platforms have been put to the test by the latest bear market and some cracks have been exposed.

This is why there were mixed reactions when it was revealed that Binance has included LTC into its DeFi staking facility.

Users can now «stake» their $LTC, starting Aug. 3, and earn up to 1.40% APR in rewards.

— Litecoin (@litecoin) August 3, 2022

One respondent noted that the move would make it easier to short LTC. This means LTC’s price action will likely end up being subdued.

Some feel that the low API offered in the facility might not be encouraging enough to persuade people to take the risk. Especially, considering the risks associated with having crypto on centralized exchanges.

Such low yields will only make meaningful returns for investors that stake large amounts of crypto.

However, the low yield might also not be appealing to whales. However, if the staking pool receives a healthy amount of capital, then this might have an impact on the demand. Shorting opportunities might also result in more volatility for the cryptocurrency.

The announcement comes at a time when Litecoin’s demand has increased. Both the total addresses and new addresses holding LTC have increased in the last