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Author Topic: Why does BlockFi offer small lenders a high yield?  (Read 99 times)
btc123thatthere
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August 31, 2019, 03:17:17 AM
 #1

https://blockfi.com/rates/
I see that BlockFi offer small lenders a high rate instead of big lenders a high rate.

Can anyone explain to me how this works for them?

I'm used to seeing banks offer a high rate for large amounts, and a low rate for small amounts.

Let's have a brain storm
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CryptopreneurBrainboss
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August 31, 2019, 03:34:32 AM
Last edit: August 31, 2019, 07:54:57 AM by CryptopreneurBrainboss
Merited by Red-Apple (1), btc123thatthere (1)
 #2

That's how it has always been everywhere else. Lower interest rate are giving to high loan while higher interest rate are giving to lower loan. To my understanding, this strategy is employed to bring about decent profit for small loan while not overcharging high loans. Secondly, the stretagy encourages more high loan request instead of small loans which benefits the loan service provider.

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gentlemand
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September 03, 2019, 08:35:03 AM
Merited by btc123thatthere (1)
 #3

Because they got overwhelmed with whales dumping their holdings on them. Looks like the average whale doesn't want to play god mode in the markets after all. They just want a return.

This is to discourage them from doing that. The rates have varied quite radically so they're clearly very reactive.

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September 03, 2019, 06:18:11 PM
Merited by btc123thatthere (1)
 #4

I think it's more related to them looking for a difference in clientele that they can leverage in some ways.

Instead of a couple large providers, they prefer to go for the quantities which is done by offering the lower tier lenders higher interest rates. It helps increase their traffic, makes the lower tier lenders do some marketing in the process because they like to share everything on social media, etc. It's called smart marketing. Great move from that perspective.

I however do not think that Blockfi will be this generous for ever. Once their targets are met they'll reduce the interest rates and people are back to normal.

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September 04, 2019, 10:37:43 PM
 #5

Do you have to go through KYC to lend them money? Even then, I think it should be possible to bypass the low limits by asking the help of family members...

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September 06, 2019, 11:18:56 AM
 #6

malevolent, I don't know; I've only read and heard about it.
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