Crypto News

BlockFi May Soon Reduce Interest Rates To 0 or Negative, Alternatives?


BlockFi – the centralized lending / borrowing service for crypto-assets particularly Bitcoin, recently lowered down it’s interest rate or Annual Percentage Yield (APY). The custodial service stated on it’s website that it’s because of the rising Bitcoin prices and falling demand for borrowing BTCs. It’s one of the services heavily promoted by many crypto-influencers, a surprising behavior considering BlockFi isn’t decentralized, carries custody / insolvency risks, but is explained by the service’s referral link and commission based business model.

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The declaration made on the recent blog posts for rates coming into effect from April 1 ‘21 also hints at interest rates eventually reaching zero or worse even getting negative. BlockFi states under the second paragraph “Putting Principles Into Practice” that “On the flip side, a deflationary currency like BTC should theoretically have 0 or even negative interest rates. That’s because the purchasing power of that deflationary currency should hold over time.”

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It means that in the future lending your Bitcoins with BlockFi might not pay any interest at all or they might even charge people for providing this custody service. Luckily, if you want to earn yield on your BTCs in a decentralized manner, DeFi services can take over the role of their centralized counterparts with better risk profile and higher interest rates. Let’s look at these two DeFi services offering better yield than BlockFi.

THORChain – 3% to 8% APY

THORChain – the project offering direct conversion of crypto-assets without relying on any wrapper or custodial service recently launched it’s multi-chain main-net. The current APY for staking in Bitcoin pools is around 3% – 8 % against BlockFi effective 0.5% – 2%. It must be noted that THORChain is decentralized and doesn’t require users to lose custody of their assets. 

THORChain is the first protocol to offer this functionality with transparency, logic verification, wide node distribution, permission-less and unrestricted access to liquidity, hardened price oracles, incentive driven mechanism, non custodial staking and direct asset swaps.

Badger Finance – 10% to 60% APY

Badger Finance is another alternative, offering yields but on wrapped Bitcoin (WBTC) which can carry custodial risks. However, the APY offered through the Yearn/Badger vaults for depositing the WBTCs are sky-high. They are 60% at $100M deposits, 10% at $400M and 25% at $1B mark. The procedure used for earning yield is transparent and Yearn/Badger are widely known and respected crypto-teams. There is a possibility that interest rates can come down, however they are likely to be still more than BlockFi offerings. 

This post may contain promotional links that help us fund the site. When you click on the links, we receive a commission – but the prices do not change for you! 🙂

Disclaimer: The authors of this website may have invested in crypto currencies themselves. They are not financial advisors and only express their opinions. Anyone considering investing in crypto currencies should be well informed about these high-risk assets.

Trading with financial products, especially with CFDs involves a high level of risk and is therefore not suitable for security-conscious investors. CFDs are complex instruments and carry a high risk of losing money quickly through leverage. Be aware that most private Investors lose money, if they decide to trade CFDs. Any type of trading and speculation in financial products that can produce an unusually high return is also associated with increased risk to lose money. Note that past gains are no guarantee of positive results in the future. 


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