Buying cryptocurrency does not mean you need to hold the coins and wait for the price to go up so you can sell them for a profit. There are many other things you can do with these digital assets on Platforms like Nexo and BlockFi.
These two platforms allow you to borrow against your digital assets or deposit them to earn interest yields. But, many investors tend to have difficulties deciding between these two, given they offer some of the best terms, rates, and yields compared to other crypto lending platforms.
Nexo vs. BlockFi: Introduction
This BlockFi vs. Nexo article looks at the two companies side by side to help anyone looking to lend out their crypto or use them as collateral for loans decide which one to use.
- Nexo Overview
Nexo has been in the crypto lending and borrowing business since 2017. However, its founders have over a decade of industry experience.
Interest accounts became available on the platform in 2018 after the company’s relatively successful ICO (initial coin offering). They now have over 2 million users and are available in at least 200 jurisdictions.
The company is licensed and regulated in the EU, where it also has its headquarters.
- BlockFi Overview
BlockFi has been in the cryptocurrency industry since 2017 but only started offering interest accounts as a product in 2019.
BlockFi is one of the few crypto lending platforms licensed and regulated in the USA, and it currently has its headquarters in New Jersey.
Additionally, the company has a solid financial backing with top-tier companies and venture firms like Coinbase and Galaxy Digital contributing to their financing over the years.
Supporting Crypto Assets & LTV
Nexo and BlockFi will allow traders to get collateralized loans or deposit various crypto assets to earn interest rates. But, the actual number of supported assets and the LTV you can borrow varies among the two platforms.
Nexo has over 2o supported cryptocurrencies and Stablecoins that include primary ones like BTC, XRP, ETH, LTC, and EOS. Borrowers can use at least 21 different digital assets as collateral to get loans when on the platform.
The Nexo LTV ratio ranges between 15% and 90% depending on the specific assets you use as collateral. The LTV is constantly changing as the price of the asset changes. However, Nexo always lists their current LTV ratios for all the assets they accept as collateral.
BlockFi supports at least 10 digital assets. They include six primary cryptocurrencies like BTC, ETH, LTC, LINK, PAX, and PAXG and four supported Stablecoins; USDC, USDT, BUSD, and GUSD.
When it comes to their crypto-backed loans, BlockFi gives you three LTV options, which are 20%, 35%, and 50%.
Interest Rate Accounts, Lock-in Terms & Payouts
Both BlockFi and Nexo have interest accounts that allow users to earn interest yields on their idle crypto assets by depositing them on their platforms.
The Nexo interest accounts allow lenders to deposit up to $2 million to earn interest yields immediately. You can get compound interest using fiat, crypto, or Stablecoins, including BTC, EUR, and USDT.
Nexo interest yields depend on the specific asset you have, ranging between 3% and 12%. If you deposit Bitcoin or open Ethereum interest accounts, the yield is 8% APY, while supported Stablecoins like USDT gives you up to 12%.
There is no lock-in period on this platform, meaning you can withdraw or add more assets to your interest rate accounts anytime. Better still, the company provides compound interest with a unique daily payout.
With the BlockFi interest account, the lenders can deposit anything under $1 million in fiat or its crypto equivalent to their interest yield accounts.
The yields you get when you deposit funds depend on the number and actual asset as the company uses a tiered system to calculate the interest you will earn.
However, it goes up to 4.5% for crypto coins and up to 7.5% for Stablecoins. Also, keep in mind that the yield rate reduces when you add more assets. For example, if you deposit up to 0.25 BTC, you earn 4% APY, while anything less than 50,000 USDC earns 7.5% APY. Anything over 5 BTC earns just 0.25% APY.
The lock-in terms for the BlockFi interest account are pretty flexible as they range anywhere from 0 to 30 years, but the investors can withdraw their funds anytime they want. However, the yield is paid monthly (typically at the beginning of the month).
Products & Features Comparison
There are many products for investors on both the BlockFi and Nexo platforms designed to cater to both lenders and borrowers.
Nexo has two main products, which are the high yield interest accounts and the Nexo credit line. Also, they have a cryptocurrency exchange platform that allows traders to exchange up to 15 different crypto assets.
The Nexo credit line allows crypto holders to get collateralized loans against their assets at reasonable interest rates. You can borrow over 40 fiat currencies using at least 21 different crypto assets as collateral.
Interest rates on the Nexo credit line range between 6.9% and 13.9%, depending on the user level given the company uses a tiered system. Users on the platinum level, which is the highest only pay 6.9% per annum while the basic or regular users pay 13.9%.
When using BlockFi, the main products that you get are interest-earning accounts, crypto-backed loans, crypto exchange, and a credit cards reward program. The interest accounts allow you to get some yield on any idle assets you have.
With BlockFi’s crypto-backed loans, the borrowers use their cryptos to get collateralized loans. The interest on these loans depends on the specific asset you use for collateral and the LTV.
For example, if you take a loan against BTC at 50% LTV, you pay 9.75% per annum, and the lower the LTV, the lower the interest rate, as the rate for 20% LTV loans is just 4.5%.
The credit card rewards program gives you back 1.5% of what you deposit using a Visa card in the form of bitcoin, while their crypto exchange product works more like regular trading platforms.
Fees are not the primary income source for large crypto lending platforms like BlockFi and Nexo, but both still have them, which you need to know before deciding which one to use.
Besides the interest rates you pay when taking the collateralized loans on BlockFi, they will also come with platform fees such as a 2% origination fee, meaning if you take the 50% LTV loan, you will pay the 9.75% interest rate plus the 2% fee.
Other fees you need to know about are the withdrawal fees. BlockFi charges these fees according to the crypto assets you are withdrawing. For example, the fee for BTC is 0.00075 BTC per withdrawal.
From this BlockFi vs. Nexo comparison, the two companies are similar in many aspects, but each has distinct fees policies. Unlike BlockFi, Nexo tries to eliminate as many fees as possible as they will not charge any origination, prepayment, or installment fees.
Nexo also does not have fines like other platforms, and so you can choose to pay your loans early, pay them in installments, or as a lump sum with no charges.
Additionally, the platform provides up to 5 free withdrawals per month for the platinum users and at least one free withdrawal for the basic ones. However, gas fees are still applicable for all crypto assets when withdrawing.
Safety & Security Features
Security is one of the essential factors that define a crypto lending platform, given the high-risk nature of the industry and ever-increasing cases of these companies getting hacked.
The good news is that both BlockFi and Nexo understand the risks involved and take adequate measures to keep the user’s account safe. However, each company has its unique security measures for account holders.
Nexo is very keen on ensuring the safety of user data and funds, and they take several measures to ensure you do not have any worries when depositing funds with them. Like many other top companies, this crypto lending space uses a combination of several security measures.
Key among their security measures include two-factor authentication that helps ensure only the actual account holders get access. Additionally, they have a biometric account login to set up facial recognition for extra security levels and easier account access.
Other security measures include bank-grade storage for user assets as they keep the crypto assets in class 3 vaults and strict adherence to KYC and AML standards.
One more thing you should know is that Nexo will only lend out your assets to institutional investors in the form of over-collateralized loans to minimize the risk of loss.
Like Nexo, BlockFi relies on two-factor authentication to keep a user’s account safe. Additionally, BlockFi users have to go through PII verification that helps to ensure that it is actually you using the account.
This licensed and regulated company conforms to the highest security standard set by the US authorities and will keep most of the assets in cold storage to keep them out of reach.
Additionally, BlockFi uses Gemini as the custodian for their assets, which is one of the securest crypto exchanges in the world today with SOC 2 Type 1 security compliance.
What’s more, the company has strong institutional backing, with names like Morgan Creek, Tiger Global, and BainCapital Ventures giving it solid financial backing.
Insurance coverage always gives you an extra layer of security. It ensures you will not lose anything in your savings account or what you use as collateral to get a loan no matter what happens. Hence, it is always vital for all retail investors to ensure that any platform they choose has insurance coverage.
Nexo account holders need not worry about insurance coverage as the company has one of the largest schemes out there. They have a cover of up to $375 million for all crypto holdings by partnering with reputable companies like Ledger Vault and Bitgo.
BlockFi does not have direct insurance coverage for the crypto holdings, but their custodian Gemini does have some insurance policy to protect the investors. Any funds the company deposits with Gemini have FDIC insurance with up to $250,000 coverage for every investor.
Minimum Deposits & Withdrawal Limits
Most crypto lending platforms will have minimum and maximum account balance restrictions to keep things running smoothly. These restrictions determine how much you need to deposit in your interest accounts to earn yield, and they vary from one company to the other.
The minimum balance you will need to deposit with Nexo to start earning yields in the interest accounts depends on the specific asset you deposit.
If you are depositing BTC on the Nexo interest account, you need at least 0.001 BTC, while for ETH, it is 0.01, and for USDT, it is at least $1. However, Nexo does not specify the maximum account balance.
The withdrawal limit on your Nexo interest account depends on your verification level. Starter investors with the lowest level of verification can withdraw funds to a maximum of $20,000 per day, while advanced ones can withdraw up to $500,000.
BlockFi offers greater flexibility when it comes to deposits and withdrawals. The minimum deposit for their interest accounts is $0, as there is no minimum balance required to use their platform.
However, it should be obvious you need to have some funds in your interest accounts to get yield or use as collateral for crypto loans.
When you want to withdraw funds, the limit depends on the particular asset. For instance, you can withdraw up to 100 BTC, 5,000 ETH, or 65,000 LINK every 7 days.
Account Sign-Up Process & KYC
Signing up on the Nexo and BlockFi platforms should only take a few minutes. But, as you get into it, you need to note both Nexo and BlockFi have mandatory KYC verification that aims to keep the platforms secure. Also, each has a user-friendly interface that will make sign-up even more straightforward.
Signing up on Nexo
- Go to https://nexo.io/ and click “Create Account” on the top right corner
- Add your email and create a strong password
- Verify your email
- Set up the 2FA before you start using the account
- Do KYC verification
- Add funds to get a crypto loan or to open a savings account
Signing up on BlockFi
- Go to https://blockfi.com/ and click on “Get Started”
- Enter basic information like name and email and a strong password
- Agree to terms and policy
- Verify your email address
- Go through the KYC verification process
- Deposit to start lending or borrowing
Most crypto lending platforms try to present themselves as global companies you can use from anywhere to gain competitive advantages. However, this is not always the case.
That said, Nexo and BlockFi are as global as it gets. You can use Nexo worldwide except for a few countries like North Korea, Cuba, Syria, Afghanistan, and Bulgaria, primarily because of the regulations there when it comes to cryptos.
BlockFi is also available worldwide, including in the USA, but you cannot use the platform from countries under sanctions or in the US watch list.
BlockFi vs Nexo: Pros & Cons
- Readily accessible customer support
- Assets are FDIC insured
- US registered and regulated
- It does not require you to use a native coin
- Generous sign-up bonus
- Lower interest rates for most collateralized loans
- A smaller number of supported coins
- Yields are paid once a month
Nexo Pros & Cons
- Higher interest account rates
- Daily interest payments with compound interest
- Massive insurance policy
- Provides fiat interest account
- More crypto and fiat currency options
- Requires you to use the Nexo native token
- High-interest account rates are only for the loyal members
Is Nexo Safe?
Yes, Nexo is a safe platform for you whether you want to take a loan or open an ‘interest account.’ The company uses highly advanced security features. They range from protocols meant to keep user account safe like 2FA and biometric login to others like cold asset storage and insurance.
Is BlockFi Safe?
Yes, BlockFi, is very keen on keeping its platform safe. They also use multiple security protocols like 2FA, mandatory KYC verification, address allowing, and cold storage. Additionally, they have a secure custodian, Gemini, for most of their assets.
Q: Is a Nexo Interest Account Better than What BlockFi Offers?
It depends on what you want to deposit. However, you can expect to make up to 12%APY with a Nexo interest account, while the maximum you get on BlockFi is 7.5%.
Q: How Do You Earn Interest On Crypto Lending Platforms?
You first need to signup up on your preferred crypto lending platform. The next step is to add funds and deposit them to the interest account to earn interest yield.
Q: Are Crypto Interest Accounts Legal?
Yes, but this depends on the specific platform you are using. Many authorities were skeptical about some of the first crypto lending platforms, but they are now legal in many places provided they get licensed.
Q: How Can You Borrow Cash or Stablecoin from Nexo?
Once you have the account set up and deposit the fiat or cryptocurrency you want to borrow against, you only need to click on the “Borrow” button in your wallet and follow the prompts.
Q: Is Nexo More Beginner-Friendly than BlockFi?
Newbies should not have any difficulties getting started with either BlockFi or Nexo. However, Nexo seems more beginner-friendly when taking out collateralized loans, while BlockFi has the edge for savings accounts.
Nexo and BlockFi have some of the best savings accounts and collateralized loans compared to most other platforms out there. However, each will have certain aspects that set it apart from the other.
When choosing between these two companies, retail investors and others need to look at things like the supported assets, interest rates, yields, and platform security.
That said, Nexo offers a wider variety of features and products, while BlockFi has some of the lowest interest rates, and so it is up to you to decide what you value most.
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