Crypto has been thrown back into the headlines once again recently with Bitcoin touching above the 50k mark for a short time. And whenever that happens, everyone is suddenly interested in crypto again hehe!
As a crypto bull myself, I must say, I’m always excited to share more about crypto with the people around me! Due to the exposure on crypto in the earlier part of the year, many people have dipped their toes in, usually into BTC and ETH as these tend to be what some might term as the king and queen of crypto (or for a more ‘finance term’, the blue chips).
But did you know, you can actually earn interest on your crypto?
Wait what? Interest?
Yes! Just like the money sitting in your bank earns interest on your money, you can earn interest on your crypto too. And perhaps a more important point: the interest isn’t 0.05%! But of course, you probably won’t be able to do that at your favourite DBS branch! Well, at least not yet 🙂
Many platforms provide solutions that allow you to earn interest on your crypto. Today we will be focusing on centralised platforms which allow you to do so. Stick to the end for a sneaky deal for y’all!
But First, Where Does The Interest Come From?
Interest in crypto can come from many places, but the most common would be lending. All three platforms that we will be looking at use lending at one or their only method of generating yield on their customers’ assets.
Just like paying interest on bank loans or your credit card debt (I hope you don’t have any), people who borrow crypto will have to pay interest on what they borrow. The rates generally vary depending on demand and supply and as such, you should expect the interest paid out by such platforms to vary into the future as well.
Other than simple lending, these platforms may also interact in Decentralised Finance (DeFi) protocols to generate yield. This tends to be much more complicated and would take a really, really long time to explain HAHA. But to put it simply, imagine our current financial system, which is centralised around the banks, government and regulators. Then imagine a version of it where everyone is only recognised by their wallet(s) and there are no central governing authorities. I know, it’s not easy to imagine it, after all, we’ve been living in a centralised world since the beginning of time. But essentially, what this means is that the yields are generally higher in the DeFi space to compensate for higher risks undertaken, which allow these centralised solutions to pay you the rate advertised and keep some profit for themselves.
Before you ask, yes, you can engage in DeFi protocols by yourself, but this requires a much steeper learning curve and more active management. As such, if you’re a set and forget kind of guy, centralised platforms are definitely easier to manage.
Nexo was founded in 2017 in Switzerland and currently serves more than 2 million users over 200 jurisdictions. 2017 might not seem so long ago, but considering the crypto space is only around just over a decade old (since Nakamoto’s 2009 whitepaper on Bitcoin), 4 years is an eternity in crypto, not to mention the huge crash that crypto went through during that period.
Nexo supports 24 digital assets including BTC, ETH, USDC, USDT, ADA and many more! Currently their rates are around 12% for stablecoins (which are tokens that are pegged 1:1 to the USD) and around 8% for BTC and ETH.
However, the one catch here is that to get these rates, you’d have to receive the rewards in the NEXO token as opposed to in the same token that you deposited. And being a cryptocurrency itself, the NEXO token fluctuates in value constantly, which may result in higher or lower returns depending on how lucky you are hehe.
If you choose to receive your rewards in-kind instead (i.e., earning BTC on BTC), then your rates will be 2% less (meaning 10% on stablecoins and 6% on BTC and ETH). This ain’t all bad considering you don’t earn anything at all by leaving your crypto in your exchanges or wallets.
Another plus for Nexo is a 1 free withdrawal a month which is just splendid!
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When it comes to centralised earning platforms, Celsius is always brought up. Celsius, like Nexo, was founded in 2017 in London and currently has almost 1 million users worldwide. Similar to Nexo, Celsius allows users to earn on their crypto (with around 40 digital assets available) with the option of being paid in-kind or in the CEL token.
Currently, as of writing this article, Stablecoins are yielding around 11.21% on stablecoins, 4.4% on BTC and 6.35% on ETH, when paid in the CEL token. When paid in-kind, the yield falls to 8.88% on stablecoins, 6.2% on BTC and 5.35% on ETH. To check out more of their rates, you can check out their site here!
So you might be thinking, if Celsius gives less than Nexo, then why even bother with Celsius?
Well, crypto, being still in quite an infant state, is still prone to hacks and attacks from nefarious entities. As such, some investors might sleep better with diversification in the platforms they use to earn interest on their crypto. This is especially so if your portfolio is quite hefty. Moreover, Celsius does not charge withdrawal fees! (YES, you heard that right, NO withdrawal fees!)
The last platform I want to talk about today is actually a new(er) player on the block and a homegrown project at that. If you’ve been on the web lately looking for centralised earning platforms, you might have heard of Hodlnaut!
Being relatively new to the scene, Hodlnaut definitely has less users and AUM on their platform, but one thing that really distinguishes them from the other two on this list is their rates. Unlike the other two, on Hodlnaut, they only offer a single rate as they don’t have a native token like CEL and NEXO.
This means their rate would be lower right? Well, you might think that, but the rates are actually higher!
Hodlanut actually offers 12% on stablecoins and 7.20% on BTC and ETH!
While their selection may seem small now, the team is working hard to add new assets to earn interest on, with the newly added WBTC. Moreover, they’ve also recently rolled out their iOS app as well, Android users hold tight!
Psst, Hodlnaut has also been giving freebies for new users! Sign up with my referral link and receive $20 if your first deposit is USD 1000 or more!
Photo by Drawkit Illustrations on Unsplash