4 Best BlockFi Alternatives
Cryptocurrency lending products have been one of the most lucrative ways to generate passive income, increase the value of digital assets and investment portfolio over the past two years.
But as the fall in cryptocurrency prices has taken a heavy toll on some lending and borrowing platforms specializing in these volatile assets, it is now essential to fully understand how these lenders operate and what the risks are involved.
Amid a sharp sell-off sparked by fears of an impending financial crisis, many crypto-focused lenders have been forced to take drastic action after they were unable to shell out money to pay off their debts.
Celsius, once considered one of the “big 3” lending platforms, froze all withdrawals, exchanges and transfers. Vauld and Babel Finance have also suspended all transactions on its platforms and are exploring potential restructuring options.
Other high-profile players are struggling to stay afloat during the turmoil. BlockFi and Voyager both suffered significant losses and received bailout loans from FTX’s Sam Bankman-Fried. Meanwhile, leading hedge fund Three Arrows Capital has gone into liquidation after defaulting on huge loans.
With the fall of big brands like Celsius and BlockFi, it has become crucial to fully understand how each crypto lender works and assess the reliability of their infrastructure.
This guide reviews some crypto lending platforms that are still holding up in the market, along with general information about their respective offering.
Singapore-based Cake DeFi is a platform that stands out for its stated commitment to security and transparency, making it one of the best crypto lending alternatives to Celsius and BlockFi.
Despite continued falls in cryptocurrency prices, Cake DeFi has amassed over $1 billion in total client assets and nearly one million registered users. The platform opens up a barrage of opportunities for investors to earn stable passive income through staking, lending, and liquidity mining.
Despite the simplicity of use, Cake DeFi pays a lot of attention to the security of customer funds. Multiple security and AML checks are always performed.
The Cake DeFi staking program allows users to earn 31.5% APY on their idle digital assets. Those who deposit in loan lots receive returns at the rate of 6.5% APY within four weeks. Additionally, liquidity mining depositors can earn up to 75% interest in one year.
As more dominoes continue to fall in the tumultuous crypto asset market, Cake DeFi believes the industry as a whole should do more to secure and protect its community assets.
Earlier in June, the company issued a statement to allay customer fears after the insolvency of major crypto lenders rocked the cryptocurrency world. The multi-regulated platform said current market conditions had little to no impact on its day-to-day operations and explained why Cake’s business is immune to events affecting other platforms. -forms.
Explaining what really sets them apart from Celsius and other competitors, Cake said it was transparency and regulation.
As a Singapore-based fintech company, client assets are segregated into trust or custodial accounts, which are designated for the exclusive benefit of Cake clients. This operation ensures that all funds in these segregated trust accounts are available to be returned to customers in the event of insolvency or bankruptcy of the business.
Standard regulatory requirements also include, among other protection standards, adequate capitalization and annual filings readily available to applicants.
Additionally, Cake DeFi acts as an agent or intermediary for the services it provides. Simply put, this means it provides users with “safe passage” or access to decentralized finance (DeFi) products.
On top of that, Cake’s operations live in a self-auditing state as all services are performed on the blockchain. As a distributed database, all transactions, yields, master nodes and other key information are fully accessible and transparent.
While the crypto community suggests Celsius’ collapse could mean big money for customers, Cake warns that CeFi platforms such as Celsius, Binance, and Crypto.com are arguably likened to a “black box” that offers limited transparency and control to others. entities other than its staff.
On the regulatory side, Cake DeFi recently obtained a license from the Registrar of Legal Entities of Lithuania. The approval allows the company to provide crypto trading services in Lithuania and other European countries.
A clear sign of strength, Cake DeFi paid out $317 million in rewards to its users at the end of the first quarter of 2022. The platform also launched a venture capital arm with $100 million to invest in startups on Web3, the metaverse, the NFT space, gaming, esports and fintech.
Nexo is a fast growing cryptocurrency platform with competitive lending and borrowing rates. The platform allows users to operate their dormant crypto assets and have a predictable source of passive income, with up to 18% annual interest.
Nexo offers investors simple plans to earn interest from their crypto deposits. However, the specific annual percentage return (APY) you earn depends on your loyalty level and chosen token.
The platform offers a so-called “Earn in Kind” feature, which means users will earn their interest in the same base currency. For example, Ethereum deposits will earn ETH. The other option is to earn in NEXO’s native token which gives the holder an additional 2% bonus.
Then we have Crypto.com, which is more focused on offering competitive lending rates for stablecoins, as well as crypto credit and debit cards with rewards. You can post your assets as collateral and take out crypto loans to meet your financial needs, use them for margin trading on the Crypto.com exchange, or hedge on other exchanges.
Crypto.com allows users to borrow loans in cryptocurrencies including USDC, USDT, BTC, and ETH. That said, the platform offers even higher returns when you decide to lock your stablecoins for a month (up to an APY of 8%) or three months. This latter option increases the yield to 10%, based on a 3-month lock-up period and a minimum wagering requirement of 40,000 CRO tokens.
Regarding distribution frequency, Crypto.com pays interest to users on a weekly basis, allowing them to reinvest the funds in another loan agreement.
Hodlnaut is another platform that offers investors a way to earn interest on their cryptocurrencies by lending their holdings to those who trade on margin, long-term hodlers, among others.
Singapore-based Hodlnaut was founded in 2019 as part of holding company Antler. The annual compound interest rates paid by Hodlnaut range from 1.0% to 13.86%.
Hodlnaut offers digital asset loans to institutional clients with loan amounts starting at $50,000. Lock-in terms are open with a three-month minimum, while loan-to-value ratios are typically 70% or less.
You can also swap and trade all supported tokens on the Hodlnaut platform.
Although these crypto lending platforms are only a small selection of what is available on the market, they are some of the best. In fact, there are enough options available to meet every need, be it security, yield, interest rate or transparency.
Despite the fact that some offerings, like Cake DeFi, are still young, it is rapidly gaining momentum and has already established itself within the community.
As stated above, Cake DeFi stands out in terms of yields, available tokens, and security, as well as customer service, regulation, and other basic metrics. This notion of compromise is obviously crucial after the stock market crash exposed flaws in the business models of many cryptocurrency lenders.
The current turmoil increases the risk of loss of confidence across the cryptocurrency and DeFi industries, which could create a downward spiral. The main trigger was obviously the bankruptcy and apparent insolvency of major crypto lenders. However, some argue that the ongoing “crypto winter” will benefit the DeFi space and cryptocurrency in the long run by weeding out weaker players.