Home Cryptocurrency Can You Lose Money On BlockFi? – Pros, Cons, & More

Can You Lose Money On BlockFi? – Pros, Cons, & More

by edward

So, can you lose money on BlockFi? Well, a few years back, the only option that was available in cryptocurrency was storing funds in your wallet and selling them when at a prime value. However, crypto staking has revolutionized the industry and brought in more profitable options. It mimics the conventional form of investors locking up their assets to earn interests.

Staking involves holding up your funds for a certain period which contributes to the blockchain network. Stakers will be reciprocated with rewards such as tokens or extra coins. BlockFi is a crypto platform that allows holders to gain more from their assets. It is regarded as one platform that offers elevated interest rates, as discussed further in this article.

BlockFi permits staking of several currencies where stakers can dwell on a currency they feel is more profitable. First, let’s look at BlockFi and whether you can lose funds when using BlockFi to manage your crypto assets.

Who Is BlockFi?

BlockFi is a platform that helps users initiate numerous cryptocurrency transactions. Initially, the platform majored in BlockFi Interest Account (BIA), but they have diversified to cover even crypto trading. With BIA, users deposit their assets and earn interests through their holdings.

Before their inception, users couldn’t hold their assets nor earn interests. By bringing BIA to the crypto world, BlockFi is regarded as one of the leading platforms in asset management.

The platform has a bright future, especially with their preparations to launch the first-ever bitcoin rewards credit. Users will receive a 1.5% return on every bitcoin they purchase. They are also up to new investment product developments intended to help users transact more on their crypto. The platform has also become prominent due to instant trades, commission-free transactions, and no minimum deposits.

Can You Lose Money Using BlockFi?

BlockFi has demonstrated an impeccable service portfolio, but you should be aware that you can lose your funds on investments made. This is because of the volatility that cryptocurrencies may experience within a short period.

Its operations are similar to saving assets in a bank in that your assets are lent out to other people to get profits. You then expect returns on the amount saved and interests based on the amount you held up. Banks have protections such as FDIC and SIPC insurances which would compensate if things went haywire.

Nonetheless, BlockFi does not have such protections, which subjects you to risk if their business fails or they run bankrupt. Additionally, though the probability is low, hackers may be a possible predator. BlockFi assures its customers that there are robust precautions to prevent third-party activities.

You may consider taking personal measures such as storing the password of your crypto investments offline. This is referred to as saving your credentials in a “hard wallet,” which is unreachable by hackers.

Coins Available for Staking on BlockFi

BIA is an interest-bearing account that allows users to gain interest in currencies such as ETH, BTC, PAXG, LTC, USDC and GUSD. There is no minimum balance required in staking. Also, if you do not have the stated coins, you can use ACH bank transfers to instantly purchase crypto. Currently, BlockFi is valued at over $3 billion and is an excellent option for users in various trading proficiency trading.

Interest Rates for Staking on BlockFi

BlockFi is a crypto platform that is regarded to have the most attractive interest rates. You should, however, note that these rates are prone to change. Below is a table with the current interest rates on staking on BlockFi:

Currency Amount APY
BTC (Tier 1) 0 – 0.10 BTC 4.5%
BTC (Tier 2) 0.10 – 0.35 BTC 1.0%
BTC (Tier 3) >0.35 BTC 0.1%
ETH (Tier 1) 0 – 1.5 ETH 5%
ETH (Tier2) 1.5 – 50 ETH 1.5%
ETH (Tier 3) >50 0.25%
LTC (Tier 1) 0 – 20 LTC 4.75%
LTC (Tier 2) >20 – 100 LTC 1%
LTC (Tier 3) >100 LTC 0.1%
LINK (Tier 1) 0 – 100 LINK 3.5%
LINK (Tier 2) 100 – 500 LINK 0.5%
LINK (Tier 3) >500 LINK 0.1%
USDC (Tier 1) 0 – 40,000USDC 8.25%
USDC (Tier 2) >40,000 USDC 7%
GUSD (Tier 1) >0 – 40,000 GUSD 8.25%
GUSD (Tier 2) >40,000 GUSD 7%
PAX (Tier 1) 0 – 40,000 PAX 8.25%
PAX (Tier 2) >40,000 PAX 7%
PAXG (Tier 1) 0 – 1.5 PAXG 3.25%
PAXG (Tier 2) 1.5 – 5 PAXG 0.2%
PAXG (Tier 3) >5 PAXG 0.1%
USDT (Tier 1) 0 – 40,000 USDT 8.25%
USDT (Tier 2) >40,000 USDT 7%
BUSD (Tier 1) 0 – 40,000 BUSD 8.25%
BUSD (Tier 2) >40,000 BUSD 7%
DAI (Tier 1) 0 – 40,000 DAI 8.25%
DAI (Tier 2) >40,000 DAI 7%
UNI (Tier 1) 0 – 100 UNI 3.25%
UNI (Tier 2) 100 – 500 UNI 0.2%
UNI (Tier 3) >500 UNI 0.1%
BAT (Tier 1) 0 – 4,000 BAT 3.25%
BAT (Tier 2) 4,000 – 20,000 BAT 0.2%
BAT (Tier 3) >20,000 BAT 0.1%

When Is Interest Paid on BlockFi?

Staking at BlockFi gains interest daily and is deposited in your account each month. You will begin accruing interest on the first day you fund your account and receive payouts at the end of the month. After the first interest payout, the next monthly interest will be based on your initial funding and the interest gained.

For instance, if you deposit your account on 20th you will earn nine days of interest. This is calculated in reference to the days that you had the balance in your account.

BlockFi Up To $250 Free

How Does Borrowing Money on BlockFi Work?

BlockFi also allows users to borrow funds and use their crypto assets as collateral. This allows you to maintain their assets and acquire a loan in USD.

The platform declared that from February 2021, one has to maintain a 50% loan to value (LTV) to get a loan. For example, if you want a $25,000 loan, you must have 1.36 BTC to stand in for a 12-month term. Loans are disbursed on the same business day that you issue out your collateral.

Payments can be made in your preference. You may choose to make partial payments or the entire balance. Another advantage is that there are no prepayment penalties or fees.

It would be wise if you always follow up on your collateral to ensure that it does not go below 50% LTV ratio. This is because of the crypto volatility, which may require you to top up more assets if the value goes down.

Final Thoughts

Crypto investments and staking are picking up at an unprecedented rate. This is due to the luring benefits that come along with such transactions. The most substantial merit is gaining interests and other rewards such as tokens and extra coins. Additionally, you can also use the staked assets as collateral when acquiring a loan on BlockFi. As far as losing money on BlockFi goes it is possible especially if you make a bad investment. You could always have your account hacked if your not setting up 2 factor authentication. If you would like to learn even more about using BlockFi click here.


You may also like