Looking for ways to earn interest on crypto assets without losing sleep isn’t a bad idea. After all, a few things in life can make a farmer smile more than sitting back to watch his crops grow and yield food seamlessly.
Although there are several legitimate ways to make money with cryptocurrency, many investors are looking for opportunities to invest their idle assets without doing much. Who doesn’t want to sit back, relax, and watch their money grow as if on trees?
In this article, we provide a shortlist of the best platforms to earn interest on crypto. But first, why are so many investors searching for ways to earn passive income on their cryptocurrency assets?
Why Is It a Good Idea to Earn Interest on Crypto?
It is no longer news that interest rates are steadily declining in the last decades, particularly due to constantly changing government policies. The interest rate in most countries now sits close to zero percent. Many believe that this decline is the primary reason why yield seekers are turning to the cryptocurrency market.
As a result, the prospect of earning interest in cryptocurrency has increasingly gained popularity among new-age investors. However, the most popular crypto assets for investors looking to earn passive income are highly liquid assets with real demand.
Most Used Assets to Earn Crypto Interest
- Bitcoin (BTC).
- Ethereum (ETH)
- Tether (USDt)
Best Platforms to Earn Interest on Crypto
This article provides exhaustive information about the ten best platforms where you can earn interest on your crypto effortlessly. We compiled this list based on the following features that investors usually look out for, namely:
- Interest Rate
- Security
- Customer Support
- Reputation
- Fees
1. BlockFi
BlockFi launched in March 2019 but has rapidly grown into one of the most used platforms to earn interest on crypto assets. The sudden rise to fame is apparent because of the lending company’s illustrious list of venture capital backers, including Winklevoss Capital, Morgan Creek, and Galaxy Digital.
BlockFi offers a less complex way for investors to earn interest on Bitcoin and other cryptocurrencies, making the process as simple as depositing assets on what they term the BlockFi Interest Account (BIA).
BlockFi is based in the United States and is fully regulated under local laws.
Pros
- The platform is open to anyone that holds crypto irrespective of their investment status (accredited or unaccredited investors).
- BlockFi lets users withdraw their funds at any time, even though the withdrawal process takes approximately one day, barring any issues.
- The platform offers up to a 4.5% interest rate on ETH and a 6% interest rate on bitcoin (These rates vary based on market demand for these assets.)
- BlockFi uses a popular regulated crypto custodian, Gemini Custody. Thus, users can trust that their funds are secure at all times against hackers.
- BlockFi is liquidity-friendly. Users can borrow up to 50% of the amount they deposit on the platform with an attractive 4.5% interest rate on the borrowed funds (the minimum deposit to unlock loans is $10,000).
- BlockFi offers compound interest on deposited assets. Let’s assume that you made an initial deposit of $1,000 worth of BTC and earn $5 interest on that initial deposit for the first month. If he did not withdraw the paid interest, the next interest he will earn for the following month would include the $5 he earned earlier. In other words, the 6% APY will now apply to ($1,005) and so on.
Cons
- Like most crypto startups, BlockFi is not insured by the U.S. Federal Deposit Insurance Corporation (FDIC) and, therefore, cannot enjoy the same public confidence as traditional financial institutions.
- BlockFi only supports a few cryptocurrencies at the time of writing, including BTC, ETH, LTC, PAX, GUSD, USDC, and USDt (for non-US customers).
- BlockFi interest rates are regressive. For investors who make a deposit of less than 5 BTC, the interest rate reduces by 3.2%.
- Although interest accrues daily, users must wait for the first working day of each to receive payouts.
2. Celsius Network
Celsius Network is another platform that lets you earn interest on cryptocurrencies. Established in 2017, the London-based digital asset lending platform introduces financial freedom with over 30 cryptocurrencies.
To earn up to 12% annual interest on crypto via the Celsius platform, all you need to do is deposit any of the supported cryptocurrencies to your Celsius app wallet. The platform also has a native token known as “CEL,” which offers slightly higher interest than other assets.
Pros
- Celsius Network doesn’t charge any fee for withdrawals.
- You can withdraw at any time without concerns about penalties or extra fees.
- Celsius offers holders of its native token (CEL) an additional edge to earn interest on their crypto and, besides, gain access to other utilities on the platform. While holding CEL is not a requirement to deposit interest accruing funds, you can choose to get your interest paid in their native token.
- Celsius supports more cryptocurrencies (38 at the time of writing this article.)
Cons
- Users can only access their platform via mobile devices.
- While the platform does not require KYC for account creation, users must complete KYC requirements, even SSN, especially for U.S.-based users.
- Like other crypto lenders, interest while using Celsius Network isn’t consistent. Rates usually depend on market demand for locked-up assets.
3. Nexo
Swiss-based company Nexo.io allows you to earn interest on crypto and borrow over 40 fiat currencies. The company claims to be licensed in Europe and thus compliant with laws that govern regulated financial institutions.
Established in 2017, Nexo supports users in 200 countries globally and also has a native token called NEXO. Users get discounted rates on their loans if they stake NEXO, and also enjoy higher interest rates by opting to receive interest payouts in the token.
Pros
- Nexo has a partnership with a licensed digital custodian, BitGo to store crypto that users deposit. This partnership is crucial to NEXO since BitGo has achieved the cryptocurrency security standard level III as proof that it has surpassed the strictest level of security.
- Nexo allows users to borrow up to 50% or more of the amount they deposit on the platform.
- Nexo supports a handful of cryptocurrencies, including Bitcoin, ETH, and stablecoins.
- The company has a responsive customer support team and an active community.
Cons
- Nexo supports fewer fiat currencies.
- Nexo offers little transparency into its operations and the company hasn’t been audited by any known auditors.
4. Hodlnaut
Holdnaut is a Singapore-based cryptocurrency lending platform launched in 2019 to help investors improve returns on their holdings. As with most lending platforms, the company generates paid interest from lending user funds to trusted regulated institutions. Users can deposit in any of the supported cryptocurrencies: Bitcoin, Ethereum, DAI, USDC, USDT, and WBTC. Interests are paid out weekly, while there are no lockup periods unless users choose to do so in order to earn higher interest.
Pros
- There is an in-built swap feature for converting coins.
- The platform has a highly responsive customer support desk.
- Interest is paid out weekly instead of monthly, as some platforms do.
- There are no lockup periods, so users can withdraw funds at any time.
- There is an added insurance protection for customer funds via a partnership with Nexus Mutual.
- There is an in-built calculator for estimating yield on deposited assets.
- Improved fixed-term loan offerings for large holders.
Cons
- The platform only supports six cryptocurrencies (at this time).
- There is also no support for depositing fiat (at this time.)
5. Blockchain.com
Around the crypto space, Blockchain.com is one of the oldest companies. The Luxembourg-based company was launched in 2011 and now has over 53 million wallets in its custody. Initially, users can safely buy, store, and trade cryptocurrencies. Recently, though, the exchange introduced an option for users to earn interest on bitcoin and a few other crypto-assets.
To earn interest on your bitcoin on Blockchain.com, you need to open an Interest Account on the website. Users earn around 4.5% to 6% per annum on their Bitcoin deposits, depending on the amount.
Pros
- Blockchain.com is a reputable company in the cryptocurrency space.
- The process is as simple as depositing assets to your Blockchain.com Interest Account.
- Blockchain.com provides an interest calculator so you know how much interest to expect over a given period.
- Pegging the annual interest between 4.5% to 6% allows Blockchain.com to offer consistent rates.
Cons
- Blockchain.com requires investors to reach the “Gold Level” of verification before they can run an interest-earning account.
- There is also a $300 benchmark before you can start earning interest on bitcoin.
- The Blockchain.com electronic wallet adds support for a limited number of cryptocurrencies, which includes BTC, BCH, ETH, Paxo Standard Stable Coin (PAX), and Stellar(XLM).
6. Binance Savings
Binance launched in 2017 and is currently one of the largest cryptocurrency exchanges in the world. To further improve liquidity across its platform, Binance allows clients to earn interest on crypto via its lending products. Users can earn interest on cryptocurrencies including Bitcoin (BTC), Binance USD (BUSD), Tether (USDT), and Ether (ETH) to mention just a few.
Binance lending products are categorized into two types which are:
- Fixed Deposit
- Flexible Deposit
Fixed Deposit
Under this category, an investor is required to lock in or stake funds for a certain period of time to attract a determined amount of interest. This option is best for long-term investors; however, you cannot gain access to withdraw your funds until the subscription period expires.
Flexible Deposit
This category is where investors earn interest on crypto while saving crypto. The service is flexible because you can choose to pull your funds at any time you wish. This type of savings will appeal to traders, especially; however, it attracts lower interest rates than the fixed deposit category.
Pros
- Binance is a reliable cryptocurrency exchange.
- The exchange presents a variety of savings and lending options for investors to choose from, depending on the individual’s choice of either a long-term lending basis or flexible deposit fit for traders.
- Binance lending products support more cryptocurrencies than other platforms reviewed so far.
Cons
- Users must complete Binance’s KYC process before they can use the lending service.
- Users risk an impermanent loss when they save assets that offer higher yields, but often drop in market price.
7. Crypto.com
Crypto.com is another digital asset platform that allows you to earn interest on your crypto is Crypto.com. The Hong Kong-based firm launched in 2011 and now allows users to earn up to 12% interest on stablecoins and 8% on other crypto assets.
Crypto.com now has over 1 million users and offers a credit card in addition to its cryptocurrency exchange business.
Pros
- Crypto.com pays out interest every seven days, not monthly.
- Users can earn interest using different supported cryptocurrencies.
- The high-interest rates earned on the Crypto.com platform make it an essential substitute for regular bank accounts.
- Users can increase their earnings by staking CRO, the platform’s native token.
Cons
- Flexing lending rates are low at 2% per annum for supported cryptocurrencies.
- Crypto.com doesn’t compound interest on what users earn.
- The platform places a minimum deposit requirement of $250 for most coins.
8. CoinList
CoinList is a San Francisco-based company founded in 2017. Its primary service includes letting investors buy into crypto projects before they become publicly available. But in 2019, CoinList launched a service that lets users earn interest on crypto by borrowing it to others.
The platform supports borrowing and lending of 12 digital assets
Pros
- Throughout the duration of the loan term, despite how long it takes, both parties remain anonymous to each other.
- CoinList offers users the pleasure of choosing from a variety of 10 different crypto assets, including BCH, ALGO, BTC, ETH, and the like.
Cons
- CoinList Lend can only afford a 30-day long loan term for borrowers and nothing more than that. It is, therefore, not a favorable loan for long-term borrowers.
- Borrowers on the CoinList Lend platform are subjected to high interest rates.
9. TradeStation
Based in Florida, TradeStation Crypto is the offshoot of the trading technology giant, TradeStation Group Inc.
Launched in 2019, TradeStation Crypto allows investors to earn up to 4% interest on eligible crypto assets, plus you do not have to lock up their crypto assets in order to earn interest on bitcoin. Users only have to deposit their funds and can withdraw anytime.
Pros
- Fees associated with earning interest on crypto on TradeStation crypto is highly competitive when compared to market competitors.
- The service platform is renowned for being highly resourceful and with plenty of educational information where investors can access tutorial videos on crypto investment plans. An example is Crypto-ML(Machine Learning).
- TradeStation allows users to compound interests on their earning.
Cons
- TradeStation payouts are incredibly low, 0.25% per annum on Bitcoin deposits.
- The platform supports few cryptocurrencies.
10. Non-Custodial Staking
A non-custodial staking platform allows an investor to lock up his digital assets in a wallet on a blockchain to ensure that the blockchain works properly and is highly secure. In turn, users earn interest in the deposited cryptocurrency as a reward. Stakers are rewarded with freshly minted coins, with the annual rates varying for each project.
Non-custodial staking in cryptocurrency grants individual investors the liberty to manage and control their private keys and not give it up to a third party as is the case with the other platforms we have considered so far.
Here are some popular PoS cryptocurrencies that you can stake to earn rewards
- Solana (SOL)
- Tezos (XTZ)
- Zilliqa (ZIL)
- Cosmos (ATOM)
- Tron (TRX)
- Cardano (ADA).
You can stake any of these cryptocurrencies by simply holding them in a non-custodial wallet and then delegating it for staking purposes. This option is available on popular mobile and hardware wallets including, Ledger, Trezor, Trust Wallet, etc.
Pros
- The non-custodial staking allows a coin holder to contribute to the growth and security of the network.
- You also have the liberty to choose your own validator and how long you wish to stake your asset.
- Since non-custodial staking allows you to take custody of your wallet details and funds, investors are at a lower risk of losing data to a breach of trust.
Cons
- Non-custodial staking requires sufficient knowledge of cryptocurrencies to properly set it up.
- The process of safely managing keys can be overwhelming and puts the user at the mercy of hackers.
Risks Associated With Earning Interest on Crypto
There will always be two sides to a coin; thus, an investor should mindfully lookout for risks associated with earning interest on crypto. The principle applies to any platform that you choose.
Some risks involved when you choose to earn interest on crypto includes:
Third-Party Failure: Similar to depositing cash into your bank account, you practically assume the place of an unsecured creditor of the bank since the bank gives out your money to borrowers. In the same vein, no cryptocurrency platform holds your coin with them.
More often than not, platforms that allow you to earn interest on crypto will lend out your assets to other institutions. This lending and re-lending process leave your assets at the mercy of borrowers who may not pay back the loan.
Market Volatility: By nature, cryptocurrencies are volatile. Uncertain market changes could lead to a sudden drop in price and you may not be able to withdraw your assets to react to the price movement. If you take out a loan, such price action also means that you run the risk of being liquidated if the collateralized assets fall below a certain threshold.
Lack of Audit and Regulation: While many crypto lenders exist today, some of them are not properly audited nor regulated in the jurisdiction where they operate. This means that users do not know the company’s financial standing and could easily lose their funds in the event that the company declares bankruptcy (a case in point is the demise of the crypto lending service, Cred).
At the same time, some companies may not be authorized to provide their services or offer certain products to users in your location. For instance, Nexo and BlockFi don’t offer USDT as a borrowing option to U.S clients.
A failure to confirm that the service you choose to use is open to customers in your jurisdiction could result in a loss of funds.
Final Thoughts
In this article, we explained why you may choose to earn interest on crypto assets, primarily because of falling interest rates globally. We also reviewed nine different platforms where you can deposit or stake your crypto assets to start yielding interest.
In the end, one must remember that crypto is a relatively new industry and that there are risks associated with using any of the above methods.
