Designing and Launching a Lending Product for a Crypto Exchange

You are the product manager at a cryptocurrency exchange that wants to begin offering lending services to its users. Explain what you would do: which lending product you would build first and for whom, how you would design and launch it, and how you would tell whether it is working. ```hint Follow the borrowed coins Lending connects people who supply assets with people who borrow them, and the exchange stands between the two. Before picking features or a launch market, decide where lent assets are allowed to go and what protects lenders if a borrower cannot repay. ``` ### Clarifying Questions - Does "lending services" mean letting users earn interest by lending out assets they hold, letting users borrow against the crypto they hold, or both? - Would the exchange lend only between its own users, lend to institutions such as market makers, or route deposits into on-chain lending protocols? - Which countries are in scope, and does the exchange already hold licenses there that cover lending or interest-bearing products? - Which assets should the product support at launch: stablecoins and the largest coins only, or any token listed on the exchange? ### What a Strong Answer Covers - Why lending fits the exchange's users and business, and a single launch goal that follows from it. - Lender and borrower segments with their distinct needs, and a reasoned choice of which product and segment come first. - The design choices that set the risk: collateral and liquidation rules, how rates are set, lock-up terms, and where lent assets are deployed. - Regulatory, counterparty, liquidity and market-crash risks, informed by how centralized crypto lenders have failed before, with mitigations. - A phased launch with adoption metrics and guardrails such as bad debt and lenders' ability to withdraw. ### Follow-up Questions - A sudden price crash pushes many borrowers toward liquidation within an hour while the exchange is under heavy load. What should the product do, and what should have been built beforehand? - A regulator in your launch market says that paying interest on deposited crypto may count as offering a security. How does your plan change? - How would you set the interest rate paid to lenders so the product attracts deposits without the exchange taking on risk it cannot cover?