If your looking to see how often BlockFi pays interest you landed on the right article. First off the opportunity to receive interest on your holdings can range from 3% to 8.6%. Honestly that’s awesome and one of the reasons I personally use this platform to hold a portion of my crypto. Let’s go a bit deeper on this topic.
Intro to Staking Crypto
If you have invested in cryptocurrencies before or did some light readings on it, you may have heard about the term staking quite often. Staking is a popular term in the cryptocurrency world owing to the importance that it carries. It allows cryptocurrencies to verify the authenticity of transactions while at the same time earning rewards for the participants.
What do we mean by the term staking? It essentially refers to setting aside your crypto asset so that it can be used to confirm transactions and generally support the blockchain network.
Any cryptocurrency that uses the proof of stake methodology when processing payments has the staking option. The solution saves on energy unlike the proof of work model that normally need mining using power-intensive computers. Venturing into crypto staking is a brilliant approach to earning passive income. Choosing cryptos that have higher interest rates can prove more transformative. However, always make sure that you thoroughly understand crypto staking working before you get started.
To understand how crypto staking works, you need to first appreciate the way new tokens are added to the blockchain and transactions verified. Normally, proof of work model would be used in which case high-powered computers are used in the mining process. Do not think of mining as the typical process for getting minerals. Instead, it means solving cryptographic equations to gain cryptocurrencies and verify transactions.
As mentioned, proof of work has more setbacks, making it necessary to look for better alternative solutions. That is where proof of stake comes into play. To use proof of stake, you need to start by purchasing cryptocurrency that supports the model. You can then decide the amount you wish to stake. Different exchanges such as BlockFi support the staking process. When you stake, you still own the coins. However, these coins are at work and you can unstake them when you wish to start trading. Please note that the staking process does not happen immediately. Some cryptocurrencies require you to meet certain minimum number of days and amount.
Who Is BlockFi?
BlockFi is a crypto exchange that offers different services, including trading cryptocurrencies, holding interest earning accounts, and obtaining loans against your cryptos. The platform does not charge any transaction fees and you do not need to meet any minimum balances.
Intermediate and newbie cryptocurrency participants would find this platform helpful. Some of its benefits include:
- It is based in the United States and follows all the required regulations
- Does not have commission fee
- There are no monthly fees or minimum deposits
- It is available worldwide
As you anticipate starting to use the platform, there are some top perks for BlockFi that you may want to know about:
- Receive Interest On Your Holdings
BlockFi has an Interest Account that pays interest in percentage form, starting from 3% to 8.6% compounding interest. All that you have to do is commit your cryptocurrency holdings to it and you are good to go. BlockFi Interest Account does not require and minimum balance and it does not have hidden fees.
- Use Your Portfolio To Borrow
Sometimes you may need cash but not willing to sell your cryptoassets. BlockFi makes things simple for you by facilitating borrowing of funds against your portfolio. You can receive USD with interest rate as low as 4.5%. Most investors appreciate borrowing and not selling because that saves them from the hassle of reporting capital gains that would take away more in taxes. Additionally, the interest of borrowing may be tax deductible, further reducing your tax bill.
BlockFi is based in the United States and abides by all the regulations expected of cryptocurrency exchanges. The platform’s custodian – Gemini – is strictly regulated by the New York State Department of Financial Services. Additionally, BlockFi does not need Investor Offering or utility tokens to get funds. Instead, it earns through its lending products which in turn empowers the platform to pay stable interest rate.
- Trade Automatically
You have the opportunity to schedule recurring trades as long as there are funds in your BlockFi Interest Account. You can use these to buy cryptocurrencies at your preferred frequency – monthly, weekly, or daily. That ensures your account’s value increases on its own even when you are not actively trading all the time.
Coins Available for Staking On BlockFi
The following are the coins that you can stake on BlockFi:
Interest Rates for Staking On BlockFi
Just like banks and other financial institutions pay interest when you save money with them, you can get interest on BlockFi for staking your cryptocurrency. When you deposit your fiat currency at the bank, the financial institution lends this money to a borrower at a certain rate. The institution proceeds to share with you proceeds of their transaction by paying some interest on your deposits. The same approach applies to BlockFi cryptocurrencies that support staking.
The interest rate at BlockFi is calculated as compounding interest and this varies between 3% to 8.6% as per your cryptocurrency holdings. The currency type and the market values have a crucial role in dictating the interest rate as well.
It is worth noting that the APY that cryptocurrency participants receive is determined by the size of their account balance and the cryptocurrency in question. That’s because BlockFi operates based on tiered fee structure. Check the below table to understand this better:
- BTC tier One – 0 – 0.25 BTC balance attracts 4% APY
- BTC tier Two – 0.25 – 5 BTC balance attracts 1.5% APY
- BTC tier One – More than 5 BTC balance attracts 0.25% APY
- ETH tier One – 0 – 5 ETH balance attracts 4% APY
- ETH tier One – 5 – 50 ETH balance attracts 1.5% APY
- ETH tier One – More than 50 ETH balance attracts 0.25% APY
When Is Interest Paid On BlockFi? – End Of The Month
BlockFi pays interest at the first business day of each new month. See the chart below.
How Does Borrowing Money On BlockFi Work?
If you have a personal emergency or in urgent need for cash, you can easily borrow money on BlockFi against your portfolio holdings. This is a powerful feature as you do not have to sell your cryptocurrencies when borrowing the funds.
The platform has interest rates as low as 4.5% and these loans come in three perks:
- Same-Day Funding – You will receive the funds the same day that you borrow
- Repayment Without Penalty – You get a chance to repay the loan at your earliest convenience without incurring any penalties
- Flexibility – BlockFi allows you to borrow as much as 50% of your asset value
BlockFi has undoubtedly established itself as a formidable cryptocurrency exchange that adds value to the lives of crypto participants. For starters, you can stake your coins and earn interest by meeting all the requirements. Secondly, you stand a chance to borrow money against your cryptoassets in the event you need funds urgently. If you would like to learn some tips on using BlockFi click here.