In a little under a year, DeFi has become a significant component of the cryptocurrency ecosystem. But which platforms pay the most interest?
Decentralized finance is often hailed as a prime use case for digital assets. Lending practices among DeFi platforms follow similar patterns: loans are overcollateralized, meaning the risk of default is negligible and lending is more responsible than that of the fractional reserve banking system used by legacy lending institutions.
As global interest rates hover around zero to negative yield, digital assets can offer an alternative way of generating passive income. Crypto.com’s eye-popping 18 percent annualized returns on CRO tokens locked up for three months by MCO token holders are undoubtedly appealing on the surface.
But these returns can come with risks. CRO tokens, of course, can depreciate in value, easily chipping away at the returns over the lock-up period. With many entrants in the market, a side-by-side comparison of lending rates can help crypto hodlers keep track of where they can earn the highest rates of interest.BlockFi
BlockFi bears the most resemblance to a traditional bank inasmuch as its centralized nature makes it the trusted party between lenders and borrowers. Zac Prince’s company pays 4.1 percent on Ether deposits and 6.2 percent on Bitcoin deposits. Limits are capped at 1,000 and 10, respectively, before the rates drop.
The platform that provides “access to high-interest crypto accounts and low-cost credit products to clients worldwide” also pays 8.6 percent on GUSD.Celsius
Celsius pays 4.1 and 3.15 percent on Bitcoin and Ether deposits, while also supporting Tether at a staggering 12 percent. Unlike BlockFi, Celsius pays interest on deposited crypto and allows users to also borrow directly against those holdings. BlockFi distinguishes between crypto deposited for loan collateral and crypto deposited to earn interest.