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BlockFi
Update
With growing crypto adoption and the masses entering the market, we can expect more regulations to be implemented. Recently, BlockFi hired Jonathan Mayers as their new General Counsel to help them stay ahead of regulatory standards in the crypto space as governance continues to develop. Mayers brings decades of experience in legal compliance in the traditional financial market so hopefully he can bridge the gap between the ever evolving crypto space.
Crypto is a financial markets efficiency game changer, making flow of capital easy, cheap, and safe for investors across the globe in both retail and institutional settings
-Mayers
If you are planning on making a major purchase and still want to hold on to your crypto assets, remember that plenty of platforms—such as BlockFi—provide crypto-backed loans. Since many providers do not accept cryptos as collateral, a crypto-backed loan is currently the ideal solution to secure cash while maintaining your crypto exposure.
During these tough economic times in addition to personal debt on the rise, crypto-backed loans can help ease financial burdens without having the need to liquidate your crypto holdings. It is reported that “the total amount outstanding on student loans is $1.67 trillion, with the average per borrower among the class of 2018 totaling nearly $30k.” Private student loans often have interest rates around 10% to 15%, while crypto-back loans from BlockFi can be as low as 4.5%—so it is definitely something to consider.
Even though crypto-backed loans sound like a great solution, there are still risks involved. If the price of your crypto collateral drops below a target price due to market volatility, it will be liquidated to cover your loan so you could ultimately lose your crypto holdings. The crypto space is new and regulations regarding crypto-back loans come with inherent risks.
BlockFi seems to be doing well from their recent report.
In a single week in May, approximately 7,000 new accounts were funded, putting the firm at a 25% month-over-month growth rate. BlockFi is on track to generate $50 million in revenue over the next year.
We finally get a feature all HODLers have been waiting for: the ability to conveniently set automatic trades on a daily, weekly, or monthly basis—available on the BlockFi app and web platform.
Getting started is simple. Here’s how it works:
Set a frequency for your recurring trade—either daily, weekly, or on the 1st or 15th of every month.
Select a stablecoin you want to sell (choose from USDC, PAX, or GUSD).
Select a cryptocurrency you want to buy (choose from BTC, LTC, or ETH).
Please note: Recurring trades are only available for selling select stablecoins (USDC, PAX, or GUSD) in order to buy select cryptocurrencies (BTC, LTC, or ETH) and may be subject to geographic and/or regulatory restrictions.
With this feature, we now have more options to dollar cost average into cryptos and grow our portfolios without having to micromanage several accounts.
Interest Earned
It has been 3 weeks since the last BlockFi report and during that time my portfolio gained 330 USD—a 37% increase. I track my progress with each lending platform using a Google sheet. As of writing this report, the market is very bullish and nearly everything is in the green as Bitcoin approaches 11.9k. So be aware that the Total Interest Paid is affected by market price because I earn in kind. Also note the I took out 2500 USD worth of USDC to invest into other assets but overall my account grew to 31.8k USD from 26.5k USD. Again, the strong crypto market has a huge impact on my current earnings so do not be misled by the numbers.
C1S makes YouTube video updates on my BlockFi account as well so I will not go into much detail here because the video provides many insights.
Conclusion & Prospect
Both BlockFi and Celsius Network are my stable, long-term investment platforms due to their transparency and regulatory compliance. I have my assets scattered among 4 major lending platforms to disperse risk. I was considering adding on more platforms but with the recent growth of DeFi (Decentralized Finance) products, I think 4 interest-earning platforms should be sufficient because I still want to be able to manage and track each one.
I recently took out 2500 USD to invest into DeFi assets and to determine how quickly I can withdraw funds from BlockFi. I initiated the process on a Friday evening around 5:00 PM PST and the transaction completed midday on Monday. I already used up my free withdraw for the month and was expecting a hefty transaction fee but—to my surprise—it only cost 0.25 USD!
Withdrawals are subject to a security hold and processed the next business day if the request is received prior to 5PM EST. All withdrawals are processed by 8:00 PM EST on weekdays.
Correct me if I am wrong, but it seems that BlockFi considers Saturday and Sunday to be non-business days and that is why it took so long. Also, I initiated the withdraw after 5PM EST so it took an extra day due to the holding period.
I have heard complaints about doing KYC (Know Your Customer) when trying to withdraw large amounts—greater than 2000 USD—so be prepared for that. I already did my KYC and hence did not get flagged for moving 2500 USD.
The delay times for withdrawals and possible KYC restrictions are why I consider BlockFi to be my long-term investment—one in which I will rarely being moving funds in or out. As DeFi gains traction, there will no longer be a need for KYC and transaction time will be instant as long as the network is not congested. My bullishness for the DeFi is also why I converted some USDC into Ethereum (ETH) in my previous report, 3 weeks ago. This move has certainly paid off as ETH approaches 400 USD as of writing this article.
With the introduction of automated recurring trades, BlockFi seems to be a great place to dollar cost average (DCA) into cryptos. I was using Voyager app to do so, but now I will be using BlockFi moving forward. The advantage with BlockFi is that the money you will use to DCA into crypto will also be earning interest while it is sitting in your account. For example, I will deposit 1000 USDC and use 10 USDC every day to DCA into a crypto asset. The original USDC deposit will continue to earn a prorated interest rate even as it decreases to DCA into a different crypt asset, which will also start accruing interest. With Voyager app it took money directly from my bank account, but money sitting in my bank does not earn me any interest. By doing this, it is a win-win scenario for HODLers!
I was DCA into Bitcoin through the Voyager app, but I may reconsider switching to ETH because I think DeFi will be a game changer for cryptos and ETH is required for onboarding. Basically, ETH is the ticket to DeFi protocols and everything DeFi-related. With the recent addition of recurring buys to BlockFi, the process of accumulating ETH just became easier.
Each week I will report on a different interest-earning platform that I use—mainly, Celsius Network, Bitrue, Crypto.com, and BlockFi.
