Make your crypto work for you:
HODLing your crypto or your fiat (like us oldies)? You could wait for it to go up, down, or sideways -- so why not have a guarantee of passive income while you HODL. There are a whole array of crypto-based platforms that offer interest income on your assets, so I'm writing a brief guide on some popular options for other novices like me!
1. Compound.finance: One of the most established names in game. Compound offers pooled lending and borrowing of WBTC, ETH, DAI, BAT, USDC, Augur, 0x.
Pros: Lenders pool funds and lend to a variety of borrowers, which distributes risk of default. Easy integration with Coinbase wallet (not coinbase.com), Metamask, Ledger, and Argent.xyz. Decent interest rates for DAI.
Cons: low interest rates for other coins. Interest rates fluctuate based on total supply and demand of coins in the pool. Large discrepancy between lending and borrowing APR (platform profit?).
2. MyConstant.com: This platform offers peer-to-peer fiat lending and borrowing secured by crypto-collateral. APR and term are competitively offered by lenders and borrowers and matched on a marketplace. Fiat simply held in platform earns 5% APR and can be withdrawn anytime (similar to a savings account).
Pros: Lenders can earn rates as high as 8-12% APR, compounded continuously and paid at the end of the loan term. A high number of coins are accepted as collateral. Very responsive customer service team. Fiat is stored FDIC-insured bank accounts.
Cons: Poor transparency of collateral and no 3rd party auditing of smart contract code (hacking/malicious code risk). No option for lenders to choose or monitor collateral. Some complaints of delayed transfer/withdrawal/funding transactions.
3. Nexo.io: A large, well-known fiat and crypto lending and borrowing platform. Earn up to 8% interest on fiat: USD, EUR, GBP. Earn up to 8% interest (unclear if APY or APR) with crypto: USDT, TUSD, USDC, PAX, DAI deposited to the platform. Deposits are used to fund crypto-collateralized loans originated by platform. Value of collateral is approximately double the value of loaned money.
Pros: High overall interest rate. Audited by Deloitte and insured by Bitgo and Lloyd's of London. Instant deposits and withdrawals without fees.
Cons: Minimum fiat deposit is about 1000 units of fiat currency, which may not be accessible to some consumer investors. Interest is compounded daily not continuously.
4. SALT.lending: A platform that allows borrowers to deposit crypto as collateral and borrow against it. Established since 2016.
Pros: Excellent user experience and functionality in monitoring loans, topping up collateral, partial collateral liquidation to cover missed payments. (A missed payment means you won't lose your entire crypto-collateral to liquidation.)
Cons: No option to earn interest on deposited crypto or invest by loaning to others.
5. Blockfi.com: Lending platform that offers up to 8.6% APY interest income on crypto deposited to platform. Interest is compounded and paid on a monthly basis. Accepts BTC, ETH, GUSD (Gemini USD).
Pros: High APY on BTC ETH, and GUSD.
Cons: Has withdrawal limits for BTC, ETH, and GUSD and withdrawal fees for BTC and ETH.
Publish0x contains a wealth of articles about emerging blockchain and cryptocurrency technologies, but there are often clear conflicts of interest in reviews, testimonials, informational pieces. This article has not been sponsored or incentivized by any outside corporation or private interest. I do not hold equity in any of platforms mentioned above at the time of writing this article. I use the services of MyConstant and Nexo.
(Cover image by Ibrahim Rifath; used with permission from Unsplash.com)
Read my other popular articles:
1. Mistakes of a Novice Investor: https://www.publish0x.com/miscellaneous/mistakes-novice-investor-xmjwwy
2. How can we improve the Publish0x community? : https://www.publish0x.com/miscellaneous/how-can-we-improve-publish0x-community-xxvnzk
3. Review of Constant: a borderless, block-chain based P2P lending platform: https://www.publish0x.com/miscellaneous/review-constant-borderless-block-chain-based-p2p-lending-pla-xqqzlk