BlockFi Interest?

[jerry0]

So someone told me about this site as they buy btc/eth there.  They told me you could get 6 percent as interest if you put btc there.  And around a bit less if its ETH.  But if you have the stablecoin there... you get 8.6%.
I checked the site and see that... but what is the catch here?  I see its not fdic insured by backed by gemini.



So that means if you have one btc... leave it there instead of a wallet... you going to get 0.06 btc by the end of the year?  Do they pay it weekly?  Monthly?  Daily?  And it compounds obviously right?



Now the thing im more curious about is the interest on the balance.  It says you get 8.6%.  First off... you need to convert your btc to the stable coin first?  Or you deposit usd from your bank to blockfi?  So example, let say you want to have I0,000 in the blockfi account.  Then if you keep that amount there for whole year... you get 860 dollars?  So if someone has a million dollars and put it there... you going to earn 86,000 usd in interest?  Or does that interest rate change daily/weekly?  That doesn't make sense since well banks pay you almost nothing for interest... u might one percent at almost if you are lucky.  So what is the catch here?  I read its a stable coin so USDC and GUSD always stays around a dollar right?  I see they offer usdt tether at 9.3%.  This seems ridiculous with the rates since tether is always around a dollar.  So its not like you get interest but say the coin drops down in price... sure you get interest but if the coin drops in price a lot... you actually lose money.



Can someone explain all this?



Because this seems way too good to be true?  I do see its backed by gemini.  But couldn't someone with a million dollars just have that there and make 86000 usd a year?  Like at end of year... sell all that usdc or gusd and converted it to fiat and pay that small fee and thats its?



Because couldnt someone with a decent amount of money in the bank just put their money in blockfi and buy the stablecoin and make interest since theres in fluctuations as compared with altcoins?


But what really shocks me is you getting interest on btc with more btc.  Like if you put a btc there... u get 0.06 btc a year... as oppose to keeping it in a wallet.  Imagine someone had ten btc... then they going to earn
0.6 btc a year risk free?

[aoluain]

Yes the interest as advertised is real, for BTC the interest is 6%. the interest is accumulated every day
and added to the balance after 1 month, then you earn 6% interest on that also.

So its like compound interest but only compounded per month.

There is no catch because they also offer loans to people wanting to borrow and afaik they are at a rate of 9%.

[o_e_l_e_o]

but what is the catch here?

The risk. Take a look at some excerpts from their Terms of Service below:

Except where prohibited or limited by applicable law, in consideration for the cryptocurrency earned on your account, you grant BlockFi the right, without further notice to you, to hold the cryptocurrency held in your account in BlockFi’s name or in another name, and to pledge, repledge, hypothecate, rehypothecate, sell, lend, or otherwise transfer, invest or use any amount of such cryptocurrency, separately or together with other property, with all attendant rights of ownership, and for any period of time and without retaining in BlockFi’s possession and/or control a like amount of cryptocurrency, and to use or invest such cryptocurrency at its own risk.

You will indemnify and hold us and our affiliates harmless from any losses, damages, suits and expenses, of whatever kind, including reasonable attorneys’ fees, which we may incur in connection with or arising out of your use of your Crypto Interest Account or our activities in connection with such account, your violation of any law, regulation, order or other legal mandate, or the rights of a third party, or any act or omission by your agent, representative or third-party service provider while using your Crypto Interest Account, regardless of whether the specific use was expressly authorized by you.

First of all, you have to leave your coins in the complete control of a third party. History has shown us time and time again how well that usually turns out. Platform hacks, account hacks, poor security, exit scams, insolvency, leaks, you name it. Not only are you giving your coins over to BlockFi, but they are then giving your coins out to any number of third parties without any notice to you, or even telling you who they are giving your coins to. There are no requirements for BlockFi to hold a similar amount of collateral. If any of these third parties make bad investment decision, fail to repay their loans, lose your coins, etc., then the unknown third parties and BlockFi will bear no responsibility whatsoever and you can wave goodbye to your coins.

[aoluain]

There is more risk for the borrower though, Blockfi only offer 50% loan
to value Collateral backed loans. If you want to borrow .5BTC you have
to give them 1BTC if the value of you borrowing goes down you would
have to increase your collateral or risk losing your 1BTC

Blockfi charge the borrower 4.5% interest on that .5BTC and they are
also lending out the 1BTC collateral at 4.5%

They also make a nice revenue from their fees > https://blockfi.com/fees/
by having a lending account the fees for Bitcoin are as below:

Withdrawal Limit: 100BTC per 7-day period   FEE: 0.0025 BTC

¹ BTC withdrawals are subject to a maximum withdrawal amount of 100 per rolling 7-day period. ETH withdrawals are subject to a maximum withdrawal amount of 5K per rolling 7-day period. Stablecoin withdrawals are subject to a maximum withdrawal amount of 1M per rolling 7-day period.


² Although there is no longer a minimum balance required to earn interest, accounts are still subject to Gemini’s withdrawal minimums: 0.003 BTC and 0.056 ETH. Withdrawals for balances smaller than these amounts may take up to 30 days to process.


***All BIA clients are entitled to one free crypto withdrawal per calendar month and one free stablecoin withdrawal per month. Each free withdrawal can only be applied to one currency each month. For each subsequent withdrawal request within that month, applicable withdrawal fees will be applied.

[jerry0]

Okay.  But has anyone here gotten the stablecoin and then kept it there for a year... then cashed out?  So someone with I0,000 dollars... put that there... end of year have a l0,860 in stablecoins.  Then immediately sell that l0,860 stablecoins for l0,860 usd fiat?  Then withdraw to their bank?


If thats the case, wouldn't it make sense to do this with bigger amounts?  Again someone with a million dollars could earn 86000 dollars this way a year? 

[WhyFhy]

Okay.  But has anyone here gotten the stablecoin and then kept it there for a year... then cashed out?  So someone with I0,000 dollars... put that there... end of year have a l0,860 in stablecoins.  Then immediately sell that l0,860 stablecoins for l0,860 usd fiat?  Then withdraw to their bank?


If thats the case, wouldn't it make sense to do this with bigger amounts?  Again someone with a million dollars could earn 86000 dollars this way a year? 

Yes
Simply put , yes.
They also give you adjusted %on swaps, interest accumulated displays in usd amount. But is based on whatever coin you pick, they offer gusd,btc,ltc,eth and paxg (gold)

You can only borrow half of what you own.

Withdrawls take 4 days.

They are a custodial coin holder there is risk.
 And honestly , they have a very limited and simple dashboard.

I've been testing them out. But not a year. Few weeks in.

[Jawhead999]

Okay.  But has anyone here gotten the stablecoin and then kept it there for a year... then cashed out?  So someone with I0,000 dollars... put that there... end of year have a l0,860 in stablecoins.  Then immediately sell that l0,860 stablecoins for l0,860 usd fiat?  Then withdraw to their bank?


If thats the case, wouldn't it make sense to do this with bigger amounts?  Again someone with a million dollars could earn 86000 dollars this way a year? 

Ask yourself, can you take a risk to loss all your money for $860 in a year? If you can, go for it.

BlockFi is some third parties that can control your money, if you send/deposit your money to them... they can use it for whatever they want. Or if they got hacked, your funds can be loss too.

IMO I don't think why you need to earn interest by invest in third parties while Bitcoin can give you better ROI.

[aoluain]

Okay.  But has anyone here gotten the stablecoin and then kept it there for a year... then cashed out?  So someone with I0,000 dollars... put that there... end of year have a l0,860 in stablecoins.  Then immediately sell that l0,860 stablecoins for l0,860 usd fiat?  Then withdraw to their bank?


If thats the case, wouldn't it make sense to do this with bigger amounts?  Again someone with a million dollars could earn 86000 dollars this way a year? 

Ask yourself, can you take a risk to loss all your money for $860 in a year? If you can, go for it.

BlockFi is some third parties that can control your money, if you send/deposit your money to them... they can use it for whatever they want. Or if they got hacked, your funds can be loss too.

IMO I don't think why you need to earn interest by invest in third parties while Bitcoin can give you better ROI.

Obviously we must be mindful of the term "only invest what you are willing to lose"

I have Bitcoin, Ethereum and Litecoin on Blockfi for the last week, small amounts
initially to get accustomed to the workings of it.

Bitcoin ROI currently is in its own league but the Bitcoin amount isnt growing only
its FIAT value. Blockfi offers an avenue into passive earning.

For those who lend Bitcoin to Blockfi the interest generated is paid in BTC, not FIAT

[jerry0]

Yea i know if you lend btc in blockfi... interest is btc and not fiat.


But isn't it better to invest in stablecoin since when you get it... you sell it for fiat?


Example someone with l00,000 dollars and buy stablecoin or usdt of that amount would earn 8600 dollars... that is a ton.

[o_e_l_e_o]

Example someone with l00,000 dollars and buy stablecoin or usdt of that amount would earn 8600 dollars... that is a ton.

And $100,000 is a ton to lose when one of the many, many intermediate steps or third parties messes up.

Especially if you are using a stablecoin like USDT, then you have just added a bunch of additional risks on top of all the risk I explained above. USDT is centralized and coins can be frozen at will, and there is nothing you can do about. Tether is likely insolvent, as they printed $700 billion out of thin air to bail out the other arm of their company - Bitfinex - which are yet to pay them back. Tether is not backed up 1-to-1 with USD like they claim. I wouldn't even hold $1000 of USDT in my own wallet, let alone $100,000, and let alone $100,000 in someone else's wallet.

Now, take all the risk that Tether itself brings, and add that to the all the risks of holding a large amount of money with a third party (scams, hacks, phishing, frozen accounts, etc.), and then add all that to all the risks of this third party lending out your money to any number of unknown third parties (scams, hacks, phishing, theft, insolvency, misplaced/lost keys, non-repayment of loans, poor investment decisions, etc.) and the fact that if any one of these things goes you have zero recourse whatsoever and your funds will be lost.

If you are happy with all those risks and potentially losing $100,000, then go ahead. I for one wouldn't touch it, especially when you can make better fiat returns just by holding bitcoin securely yourself.

[WhyFhy]

Example someone with l00,000 dollars and buy stablecoin or usdt of that amount would earn 8600 dollars... that is a ton.

Snip

The have
Usdc&
Gusd
Not teether.
They also have paxg
@OP aim for a million on GUSD @8.6% and make about 7.1k a month if your not worried about the service being custodial.

[ChrisPop]

If you are happy with all those risks and potentially losing $100,000, then go ahead. I for one wouldn't touch it, especially when you can make better fiat returns just by holding bitcoin securely yourself.

Agree with you regarding Tether. Holding a stablecoin whose backing is insured by a third-party exposes you to unnecessary risks - why not just hodl the fiat instead...

You can't really make better fiat returns by just holding BTC. Blockfi pays interest in-kind so you actually get a surplus of 6% annual return on top of the against-fiat appreciation.
Yes, there are risks involved and everybody needs to decide for themselves if this type of investment is for them. Although they are not regulated by FDIC, a lot of investment firms allocated capital in this venture. So you can't look at like at a Seychelles island, off-shore bucket shop. They're also properly licensed in U.S. for providing money transmitting services so they have to respect certain regulations regarding who they work with.

[WhyFhy]

If you are happy with all those risks and potentially losing $100,000, then go ahead. I for one wouldn't touch it, especially when you can make better fiat returns just by holding bitcoin securely yourself.

Agree with you regarding Tether. Holding a stablecoin whose backing is insured by a third-party exposes you to unnecessary risks - why not just hodl the fiat instead...

You can't really make better fiat returns by just holding BTC. Blockfi pays interest in-kind so you actually get a surplus of 6% annual return on top of the against-fiat appreciation.
Yes, there are risks involved and everybody needs to decide for themselves if this type of investment is for them. Although they are not regulated by FDIC, a lot of investment firms allocated capital in this venture. So you can't look at like at a Seychelles island, off-shore bucket shop. They're also properly licensed in U.S. for providing money transmitting services so they have to respect certain regulations regarding who they work with.

again , blockfi does not use teether

[o_e_l_e_o]

The have
Usdc&
Gusd

These might not be insolvent like Tether is, but they can still be frozen by the token issuers. Remember in this case your coins aren't just sitting in BlockFi's wallets - they are handing them out to unknown third parties. If one of these third parties does something which raises suspicion, then the stablecoins could be frozen, and as per the Terms of Service I linked above, you will not be refunded and you will have no recourse.

You can't really make better fiat returns by just holding BTC.

You can make better fiat returns if you are comparing holding bitcoin to "investing" a stablecoin, as jerry0 did in his example.

If a year ago I bought $100,000 of GUSD at $1 each, I would have 100,000 GUSD. If I then gave them to BlockFi to gamble "invest" on my behalf, then today (assuming nothing went wrong) I will have 108,600 GUSD worth $108,600.
If a year ago I bought $100,000 of bitcoin at $8,000 each, I would have 12.5 BTC. If I then held them in my own wallet, then today I would definitely still have 12.5 BTC worth $437,500.

[ChrisPop]

If a year ago I bought $100,000 of GUSD at $1 each, I would have 100,000 GUSD. If I then gave them to BlockFi to gamble "invest" on my behalf, then today (assuming nothing went wrong) I will have 108,600 GUSD worth $108,600.
If a year ago I bought $100,000 of bitcoin at $8,000 each, I would have 12.5 BTC. If I then held them in my own wallet, then today I would definitely still have 12.5 BTC worth $437,500.

I see what you were referring to now. But then again it all resumes to managing risk:

• In terms of historical returns, nothing beats Bitcoin for sure.
• Perhaps it is wiser to have some fiat compounding as well and not keep everything in BTC.
• I think a % based portfolio allocation strategy should be employed. For me these lending platforms are somehow similar to P2P lending where you lend money to different projects, so I think even a 30% allocation in any of these digital finance platforms (as long as they are not insured by a financial authority, is too aggressive)

[jerry0]

Example someone with l00,000 dollars and buy stablecoin or usdt of that amount would earn 8600 dollars... that is a ton.

And $100,000 is a ton to lose when one of the many, many intermediate steps or third parties messes up.

Especially if you are using a stablecoin like USDT, then you have just added a bunch of additional risks on top of all the risk I explained above. USDT is centralized and coins can be frozen at will, and there is nothing you can do about. Tether is likely insolvent, as they printed $700 billion out of thin air to bail out the other arm of their company - Bitfinex - which are yet to pay them back. Tether is not backed up 1-to-1 with USD like they claim. I wouldn't even hold $1000 of USDT in my own wallet, let alone $100,000, and let alone $100,000 in someone else's wallet.

Now, take all the risk that Tether itself brings, and add that to the all the risks of holding a large amount of money with a third party (scams, hacks, phishing, frozen accounts, etc.), and then add all that to all the risks of this third party lending out your money to any number of unknown third parties (scams, hacks, phishing, theft, insolvency, misplaced/lost keys, non-repayment of loans, poor investment decisions, etc.) and the fact that if any one of these things goes you have zero recourse whatsoever and your funds will be lost.

If you are happy with all those risks and potentially losing $100,000, then go ahead. I for one wouldn't touch it, especially when you can make better fiat returns just by holding bitcoin securely yourself.

Well the thing is i heard about tether for years.  People say its not safe... but right now if you have a lot of tether... well you can just sell it for fiat.  I mean... tether has always been around a dollar correct?  I think once saw it a while back at 0.98?  So wouldn't that mean there should be no concern though?

[jerry0]

Example someone with l00,000 dollars and buy stablecoin or usdt of that amount would earn 8600 dollars... that is a ton.

Snip

The have
Usdc&
Gusd
Not teether.
They also have paxg
@OP aim for a million on GUSD @8.6% and make about 7.1k a month if your not worried about the service being custodial.

Yea... i was more referring to these coins as oppose to tether.  USDC and GUSD... i mean these are pretty much as safe as you can get for a stablecoin right?  I mean unless gemini gets bankrupt... isn't having GUSD pretty safe?



Yea... so if someone has a million dollars and put it in gemini and buy Gusd for example... well they are going to earn 8.6 percent interest or 86000 usd a year right and they don't have to be concerned of fluctuations... but being custodial... isn't it still safe since well its with gemini?

[jerry0]

If a year ago I bought $100,000 of GUSD at $1 each, I would have 100,000 GUSD. If I then gave them to BlockFi to gamble "invest" on my behalf, then today (assuming nothing went wrong) I will have 108,600 GUSD worth $108,600.
If a year ago I bought $100,000 of bitcoin at $8,000 each, I would have 12.5 BTC. If I then held them in my own wallet, then today I would definitely still have 12.5 BTC worth $437,500.

I see what you were referring to now. But then again it all resumes to managing risk:

• In terms of historical returns, nothing beats Bitcoin for sure.
• Perhaps it is wiser to have some fiat compounding as well and not keep everything in BTC.
• I think a % based portfolio allocation strategy should be employed. For me these lending platforms are somehow similar to P2P lending where you lend money to different projects, so I think even a 30% allocation in any of these digital finance platforms (as long as they are not insured by a financial authority, is too aggressive)

I get what oeleo is saying here.  Had you kept the btc as oppose to sell it for say GUSD... the value you have now with btc will be higher than the interest you earn with just buying the stablecoin gusd.  But the thing here is you have to look at the price of btc.  With Gusd... its a constant 8.6 percent.  So if someone is risk averse... why not take that?  I mean 8600 dollars on l00,000 usd is a lot of money in a year.  Again if someone had a million dollars... thats 86000 usd dollars. 



Like if you want constant income stream coming in... wouldn't it make sense to put it in a stable coin like Gusd?  Like imagine having a million dollars in the bank... send it to gemini... buy a million in stablecoin... gusd... then make 86000 usd a year. 

[ChrisPop]

Yea... so if someone has a million dollars and put it in gemini and buy Gusd for example... well they are going to earn 8.6 percent interest or 86000 usd a year right and they don't have to be concerned of fluctuations... but being custodial... isn't it still safe since well its with gemini?

How much trust can you put in a company? Gemini is a trusted institution in the crypto space and they are a licensed business with quite a lot of security credentials, but that does not mean it is fail-proof. As long as your deposit is not covered by FDIC you can't consider it as being 100% safe. That's why I encourage you to practice good risk management and don't put your whole net worth into the savings account.  Can you afford to lose the whole hypothetical $1M in the case of a hack or in the unfortunate situation Gemini goes bankrupt?

[iluvbitcoins]

What about non-custodial lending platforms?
There's no risk of them running off with your assets.
Other risks still involved.