Exploring Notcoin's Mining Craze: TON Loan Interest Soars to 365% -What arbitrage opportunities are there?

In the midst of the excitement surrounding the launch of Notcoin's new mining token on platforms like Binance Launchpool and OKX Jumpstart, the borrowing interest rate for TON tokens has surged to an annualized rate of 365%. This sudden spike in interest rates has led to speculation about potential arbitrage opportunities in the market.

OKX Jumpstart's Notcoin New Coin Mining Rules:

OKX recently announced the launch of the Notcoin new coin mining activity on Jumpstart, accompanied by specific rules:

• The participation period for OKX's Notcoin new coin mining runs from May 13th at 14:00 to May 16th at 16:00.
• Mining on OKX involves pledging TON tokens, with higher pledges resulting in higher returns. However, there's a personal pledge limit of 4,000 TON.
• OKX Jumpstart excludes users from mainland China, Hong Kong, and South Korea.
• The Notcoin launch pool on OKX consists of 1,283,990,271 NOT tokens, representing 1.25% of its total supply.

TON Loan Interest Rates Soar to 365%:

Due to the immense popularity of Notcoin mining, the interest rate for borrowing TON tokens on OKX has surged to an annualized rate of 365%. At present, OKX lending is unable to fulfill TON token borrowing requests due to overwhelming demand. Meanwhile, Bybit offers TON loans at an annual interest rate of 283.8%.

The borrowing interest rates for Bybit (on the left) and OKX (on the right)

Why Borrow TON Despite High Interest Rates?

Many wonder why individuals would borrow TON at such exorbitant interest rates to participate in mining activities. Examining the returns from previous OKX Jumpstart rounds reveals that projects offered annualized returns ranging from several hundred to several thousand percentage points, with an average annualized return rate of 998%. However, even the lowest-performing project had a 294% annualized return rate. This suggests that pursuing mining amidst high borrowing costs is not a guaranteed profit-making strategy, necessitating careful risk analysis.

Arbitrage Potential with TON Loans?

Despite the high borrowing costs on exchanges, the largest lending protocol on the TON blockchain, @evaaprotocol, offers TON loans at an annual interest rate of 72.66%. This significant disparity between on-chain protocols and exchange lending rates may present arbitrage opportunities. However, users should consider factors such as asset deposit requirements, transaction fees, and security risks associated with the protocol before engaging in arbitrage activities.

In terms of price, TON has surged by 5.8% in the past 24 hours, likely influenced by the Notcoin mining activity. As per data from Tradingview, TON is currently trading at $7. 24USD.