How to Earn 5% Interest on Ethereum with BlockFi

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Contributor, Benzinga
Updated: January 18, 2022
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Cryptocurrency exchanges are attracting new investors everyday. In a frenzy of increased participation, altcoins have helped propel the market forward. And as Bitcoin readies for its next move, everyone is looking for the best place to trade their favorite crypto.

Within a growing field, BlockFi stands out as a reputable and secure trading platform. And with fantastic offerings for earning interest on crypto, BlockFi has quickly become a go-to exchange for investors in the know. 

But how does earning interest on crypto work, anyway? And which cryptocurrencies can you earn interest on? This step-by-step guide will show you exactly how to earn interest on your crypto.

How Does Earning Interest on Crypto Work?

Earning interest on cryptocurrency isn’t really any different from earning interest on fiat. When you hold your assets on an exchange, you provide liquidity to the platform. In return for the favor, they will often offer interest on your stored currency. And as exchanges compete for your attention, the offers for interest on your crypto have grown substantially. 

BlockFi Overview

Whether you’re new to crypto or have traded for years, BlockFi offers service for any level of expertise. And with a best-in-class compliance program, BlockFi comes highly rated by a growing number of serious investors.

BlockFi stands out from its competition as a trusted, transparent, U.S.-based exchange. And with stunning offers of interest now being offered on your crypto, BlockFi has solidified its reputation as a top-tier trading platform.

Interest Rates on BlockFi

By opening a BlockFi trading account, you can buy and sell a growing number of popular cryptocurrencies. And with a BlockFi interest account (BIA), you can enjoy access to market-leading yields. 

Using a tiered interest structure, BlockFi offers differing rates of interest based on the size of your account. And, while interest rates can fluctuate based on the yield the exchange can generate, right now BlockFi is offering 5% on up to 1 Ether (ETH) held on the exchange. 

And it's not just Ethereum. With a BIA, you can choose from a number of assets to earn interest on. The top 5 cryptocurrencies on BlockFi and their associated interest rates are listed below:

Bitcoin (BTC)4.5% APR
Ethereum (ETH)5% APR
Litecoin (LTC)4.75% APR
ChainLink (LINK)3.5% APR
USDC (USDC)8% APR

Of course BlockFi isn’t the only platform offering interest on cryptocurrencies. Other platforms that offer staking for interest include eToro, Crypto.com and Voyager. For experienced traders, a decentralized exchange (DEX) like Uniswap (UNI) can offer even higher yields than its centralized counterparts on ETH and ERC-20 tokens. 

Finally, with 32 ETH, you can earn rewards while staking to become an Ethereum validator. Just remember, you won’t be able to withdraw your ETH until future updates are deployed on the network.

How to Earn Interest on BlockFi

If you’re ready to take advantage of the rewards offered through a BIA, getting started is really pretty easy. Just follow the steps outlined here to start passively earning interest on your crypto:

Step 1: Open an online account.

The first thing you’ll need to do to earn interest on your crypto is to open an account with BlockFi. Go ahead and drop your email and password where asked.

Make sure you have identification handy. You’ll need to verify your identity before you can trade or earn crypto. As a U.S.-regulated exchange, BlockFi’s Know Your Customer (KYC) process conforms to industry standards. Also, make sure you charge your smartphone. You may need to snap a selfie to complete this process.

Step 2: Purchase cryptocurrency.

With your account verified, the next step to earning interest through BlockFi is to purchase crypto on the exchange. But be prepared to wait. The ACH process for connecting your account can take additional time, depending on your bank's policies. Once you’ve connected your account, you can purchase a number of terrific assets on the platform. 

After making your purchase, the exchange will send a confirmation email. Just click the button within this email to confirm your transaction. Congratulations.You’re ready to earn interest on your crypto!

Step 3: Earn interest on your crypto.

With your BIA activated, you can start earning interest within 1 day of depositing your crypto. Interest compounds monthly and there are no minimums or maximums. Perhaps best of all, you can withdraw your crypto at any time. BlockFi even offers 1 free withdrawal per month.

Risks of Earning Interest on Crypto

Earning interest on crypto is inherently risky. Holding your crypto on an exchange leaves your assets vulnerable to hacks and cyber attacks. With crypto heists becoming more common, choosing a reputable platform has never been more important.

To pay clients interest on their crypto, an exchange will engage in a number of activities, including lending assets. And usually, a cryptocurrency exchange is not subject to FDIC or similar protections.

BlockFi holds over $10 billion in client assets on its BIA platform. To protect against future default, BlockFi maintains a credit reserve provision of 0.05% to 0.06% across all loans outstanding. Nevertheless, unexpected losses can occur at any time in the cryptocurrency market. And should it become necessary, BlockFi terms permit the exchange to slow withdrawals, giving time for the exchange to recall loans. To date, BlockFi has never implemented this feature and all withdrawals have been honored on demand.

Is Earning Interest on Cryptocurrency Worth It?

Earning interest in the cryptocurrency market comes with its own unique set of risks. Weighing your own comfortability is crucial before placing your fiat in the hands of a trading platform. Ultimately, the decision to earn rewards on your cryptocurrency is a personal one. 

For a growing number of investors, passively earning crypto has become a tried and true investment strategy. And as the offers for earning interest continue to expand in the altcoin market, the deals presented by exchanges like BlockFi become harder to pass up.

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