DeFi | BlockFi First Impression

costanza (69)in #crypto • 6 years ago

I'm always looking for ways to earn some passive income even if it's small. DeFi has been somewhat of a buzzword the last year and I finally started to look into it more to possibly put some of my long term crypto holdings to work earning some intrest on them. BlockFi.com is the first platform I'm testing out.

I'm not big on taking up loans and have never been in dept in my life as it doesn't really make all that much sense to me. This makes trying to understand DeFi quite the hard concept to grasp for me. Why would anyone take up a loan when they have to put up collateral paying off interest instead of just using that collateral to do what they need the money for?

The reality, however, is that many people do take up loans meaning there is a return to be made by lending. I started off exploring the DeFi space with BlockFi since it's one of the biggest websites out there. They are quite centralized but give a good % of interest in return for that.

First Impression

My overall first impression of BlockFi is positive and they very much remind me of Coinbase where options and info on the main page are very limited which makes if a perfect entry into the Crypto / DeFi space. Making an account was fairly easy and includes a KYC process which was not all that much of a hassle. Once your account gets approved you are able to make a deposit. I didn't know that the deposits were made to a smart contract and got the ETH transfer from the hotbit exchance rejected because of it. So I did the transfer from my Ledger hardware wallet and it arrived within minutes.

I started out with a relatively small amount of 3.2ETH (10% of the 32 ETH needed for staking once that goes live) and once it is on there it automatically starts earning interest (~4.5% ) which is paid out at the start of each new month if I understand it correctly.

It's pretty much as easy as that, deposit ETH or any of the other supported currencies and automatically collect interest on them. The main question is how safe it all is because it remains highly centralized. For that reason, I'm just keeping my exposure to an amount where I can live with something going wrong. From everything I've read, it seems to be a fairly low-risk which I'm more than willing to take.

The 3.2 ETH right now earns about 0.07$ day of passive income at current prices and it can be followed in real-time on the BlockFi website. My plan is to just leave the 3.2 ETH sitting there instead of my hardware wallet while it collects the compound interests. In the meantime, I will continue to check out more DeFi platforms to possibly lend out more crypto assets and report on them along with other micro crypto-earing opportunities.