Lending Platforms

[Eric123]

Does anyone use crypto lending platforms to earn interest on this Bitcoin.  I'm not sure I trust them but 8.6% interest sounds tempting?  Any thoughts.

[SquaryBone]

Interested as well. Had the same thought a few days ago.

[Skippy]

Even if you get 8.6% yearly on your Bitcoin or any crypto, JUST REMEMBER:

• Volatility of these crypto assets is HUGE. 8.6% can be a daily jump in one direction. So most of all you should think what you buy first and not about getting interest.
• Secondly, 8.6% is NOT MUCH to risk keeping your crypto on some shady website. NOT WORTH RISKING THE VALUE OF THE CRYPTO. ONLY use the BIG ones. EG. Bitfinex offers marging funding with rate of 0.0063% daily on Bitcoin (2.3% yearly returns?)

https://support.bitfinex.com/hc/en-us/articles/213918969-What-are-the-risks-associated-with-offering-funding-

https://www.bitfinex.com/stats

NEXO is the only one I have used, but they only support EUR and stablecoins. Not crypto at the moment, but they do advertise that in the future crypto is supported. Still I would consider twice. Not your keys, not your crypto. 

Edited November 26, 2019 by Skippy

[faz]

 

[faz]

uphold credearn pay nine percent interest on xrp and ten percent on their own coin lba .

[Zedy44]

Not with Bitcoin, but I use Credearn and USDC on Uphold right now.  Celsius network is another option and probably a bit safer than Cred given a few people have had issues with Cred and their automatic re-enrollment mechanism at the end of each term.  I still think the lack of tax clarity in the USA makes using these lending services a gamble and potential tax liability headache in the long term.  Maybe citizens of other countries will fare better with their local tax laws or lack-thereof. 

[Eric123]

@Zedy44 I saw a video on Celsius Network and that got me interested.  Since I'm HODLing anyway figured maybe make some $.  In the video I saw the head of the Co said they were insured with Lloyds of London for $100 million per account, but I'm still iffy on the counter party risk.

 @Zedy44 what tax consequences are your foreseeing?  I would think you would declare it as income. 

 

[xrp_sea]

If a lending platform is offering 8.6% interest I would wonder why. That's far above any rate you'd get for parking your fiat anywhere. What are they doing with it to make that business case work? If your crypto private keys aren't in your control, then it's really not yours. If the lending company goes bankrupt you lose everything. Remember, Mt Gox?

[Zedy44]

7 hours ago, Eric123 said:

@Zedy44 I saw a video on Celsius Network and that got me interested.  Since I'm HODLing anyway figured maybe make some $.  In the video I saw the head of the Co said they were insured with Lloyds of London for $100 million per account, but I'm still iffy on the counter party risk.

 @Zedy44 what tax consequences are your foreseeing?  I would think you would declare it as income. 

 

You’ll want to look closely at the insurance coverage from LoL I think it is limited in its actual scope. Similar to Cred that uses an insured custodial service with limited liability. For me the big draw to Celsius network is the lack of any long term commitment required and the CEO is a successful entrepreneur whose got a track record of building businesses around early adoption of technology.

I guess my tax concerns would be over how the funds are paid. If you are getting paid in USD that’s fine and that’s how I use Cred right now for simplicity sake, but if it’s paid in anything else are you going to have to report that separately for the cost basis each week for each non-USD payout?

[Zedy44]

4 hours ago, xrp_sea said:

If a lending platform is offering 8.6% interest I would wonder why. That's far above any rate you'd get for parking your fiat anywhere. What are they doing with it to make that business case work? If your crypto private keys aren't in your control, then it's really not yours. If the lending company goes bankrupt you lose everything. Remember, Mt Gox?

The spread that banks and FI get on your deposits is probably pretty significant, but the depositer only receives a fraction of the interest. I think these crypto lending platforms are doing similar borrowing as the many other personal loan companies out there except they collateralize with crypto. Higher risk, higher reward.

They are also likely reinvesting some of the funds broadly outside of digital assets to ensure some minimum stable rate of return.  For example look at how Robinhood collates all users deposits and reinvests the money to turn profit. The zero commission trade is all the hype, but it’s really just misdirection. The spread is wider in such an environment so the platform never loses on a “free” trade and the real money maker is in the idle deposits they can use as they see fit. Remember there’s no FDIC insurance on any of these lender accounts. It’s not regulated the same as a bank account. 

 

[LexLuther76]

I use NEXO for borrowing @ 5.6% against BTC/XRP. They seem very trustworthy. Looking forward to getting the dividends for holding their tokens.
Used Celsius for a week, and got a very bad vibe from them, and pulled everything out. All the animal people on their website made me feel like it was an episode of Arthur on PBS.

For earning, I like compound.finance the best, Great for lending DAI and USDC. And you hold their tokens directly in your eth wallet.

[pucksterpete]

22 hours ago, Skippy said:

Not crypto at the moment, but they do advertise that in the future crypto is supported.

What do you mean by this?

[Skippy]

2 hours ago, pucksterpete said:

What do you mean by this?

https://medium.com/nexo/earn-interest-and-protect-your-stablecoins-with-nexos-1-to-1-conversion-guarantee-dbdefa8a8152

Quote

Both individual and corporate Nexo Wallet Holders can now earn interest of 8% on their stablecoins — USDT, DAI, PAX, USDC, and TUSD, while BTC, ETH, XRP and other stablecoin options will be added soon.

[pucksterpete]

I always like to test a new platform, so I did with NEXO......

Quote

Hello,
As a test, I deposited 11 XRP into my NEXO account. I wanted to see if I would be able to withdraw all 11 XRP.
Your system is saying that I am only allowed to withdraw a total of 10.938019 XRP
You say that you don't charge fees, which I believe is correct.
So, can you tell me what the 0.061981 XRP (drops) is being held for?

A day later for NEXO's response

Quote

Thank you for contacting us.

Unfortunately, you had experienced a technical issue that our Technical Department is currently working on resolving. Our system is not letting you withdraw your entire crypto balance, and always leave "dust" in the address. Regrettably, we have not been provided with an exact timeframe on when this problem will be resolved. Apologies for the inconvenience caused and please rest assured that we do not charge any fees from our end.

Please do not hesitate to contact us in case you have any further questions.

As the world’s largest and most trusted lender, we thank you for choosing Nexo and becoming part of our mission to decentralize global finance!

Best regards,
Nick