Tuesday, October 15, 2019

Earn High Interest on your Crypto? I deposit 200 ETH ($50,000 SGD) to find out.

Okay, so I know I've talked about earning interest on stablecoins before, specifically with the DeFi and centralized platforms.

What actually is a very well kept industry secret that most people probably don't know is that you can also earn interest on your crypto!

Yup. I bet you didn't know that, right?


Question: What's the rate that we are exactly talking about here?


6.2% on your first 5 BTC (~$55,000 SGD) is pretty damn good.
4.1% on your first 200 ETH (~$50,000 SGD) is also pretty damn good.
Also 8.6% on GUSD (which is a crypto token that is 1:1 redeemable for actual USD via Gemini) is pretty damn dope.

Interest for the current month is paid out on the 1st working day of the next calendar month.
There is NO minimum deposit.
There is NO lock up.
This isn't a fixed deposit. It's a freaking high yield savings account.

So let's ASSUME that
1 - you max out Tier 1 for BTC and ETH
2 - the interest rate stays constant for the whole year
3 - the price of BTC and ETH does not go up or down

Then you'll be depositing $106,000 and end up with ~$5560 worth of crypto in a year. Obviously, pretty much the average between the 2 rates since the capital amounts are roughly similar. About 5.2% APR.

And that's assuming you don't use put in any USD at all either.

And that's assuming that crypto prices doesn't change. Though, it's a double edged sword in this case. If that worries you, perhaps you're *only* cut out to earn FREAKING 8.6% ON A USD STABLECOIN. Which is still pretty damn good.

Lol, btw guess where I got the current rate and conversions from? DIRECTLY FROM GOOGLE!


Anyway, since they go up to 200 ETH, I thought I'll throw in a bit of my ETH into this BlockFi interest account. So, I have deposited 200 ETH into my account. Perhaps it's rounding error because of my previous deposits and withdrawals, but it displays as 199.9999999 ETH. Oh well, lol.


I'll think about putting in BTC or GUSD later. But actually, I listened to a recent interview with the CEO of BlockFi (yes, I actually do due diligence) and it seems like USDC will likely be an offering by the end of the year.

I'm thinking to put in a nice phat and T H I C C amount of USDC then. Hmmm, what do you guys think? On top of me updating this thread on my 200 ETH deposit, would you also like to see my put in USDC?

I'm thinking maybe $10k, $20k or maybe even $50k. Hmmm, we'll see about that. Let me know!

Also, in the following posts, I'm thinking of doing a walkthrough on how to deposit crypto with BlockFi. When USDC comes out, maybe I'll do a similar guide on how to set up a Circle account and link your bank to USDC to send over to Celsius? Does anyone want to know how to send over GUSD to BlockFi? Personally, I think it's better to just wait for USDC, since I have strong suspicions that GUSD is gonna get shelved by Gemini soon, but that's just my speculation.

Oh yes, risks. What are the risks of this?

Well, everything in life is risk, and then you die. Haha! Okay, but real talk. It is almost entirely custodial risk. You are entrusting BlockFi to not only keep your money safe and later give it back to you (and not get hacked in between), but to also stay solvent in their lending business by having prudent risk management.

By the way, in case you were wondering, BlockFi can afford to pay interest on crypto deposits because they lend out the crypto to borrowers. To date, they haven't lost a single penny. Also based on the recent interview I heard, their Risk Management officer has been doing something very similar to this for 15 years and during the 07-08 financial crisis, his department never lost any money either. Of course, past track record has no bearing on future performance, but I thought it's an interesting thing to mention.

I have actually been lending and earning interest with BlockFi for months now, but I decided to share this little secret that I have with people since (1) I've been doing rather well for myself in crypto lately and (2) they have a referral programme now lol.

So, who might BlockFi be for?

1a) You are interested in earning 4-6% on your BTC/ETH
1b) You are interested in earning 8.6% on USD
2) You understand that there's custodial risk involved (the same class of risk as money in your bank)
3) You go and do your own damn follow-up research!

In that case, sign up with my referral link and follow me on a magical crypto journey!


Obviously there is a lot more to know and learn about BlockFi, but since I am now happily referring people to them (and since I also use them), I will probably be talking about them more in the future.

7 comments:

  1. There are a lot other revenues that gives better % returns, why didnt you consider others?

    For example, MCO gives 4% for flexible and up to 8% for 3 mths lock up etc.

    ReplyDelete
    Replies
    1. MCO just nerfed their rates

      Delete
    2. yup MCO nerfed plus i dont feel that comfortable with how they are funding their interest payments

      Delete
  2. unbelievable. is this a scam ?

    ReplyDelete

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