This is an overview post about services where you can deposit your Bitcoin and earn interest. Remember: “Not your keys, not your coins”. Once you transfer your Bitcoin away from an address you have private keys for, it's strictly speaking no longer your Bitcoin and you have to trust the third party not to lose it or steal it. I may or may not use any of these services.
Last update: November 1, 2020
The services listed here appear to me as legit and I would trust them about the same as any bank. Which is to say I would not trust them with my life savings, but would be OK with them holding few percent of it. Always do your own research.
The post will be updated from time to time, as rates change and services appear and disappear.
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- This is not DeFi (Decentralized Finance). These are centralized companies with various levels of regulation and you funds may be frozen or confiscated, if some judge somewhere deems it right. You are getting various levels of benefits (interest) and are taking a potential risk of losing all your deposited Bitcoin. I leave up to you, whether that risk/reward ratio is acceptable.
- The main business of the services listed here is usually lending against crypto. That means you deposit some crypto-currency as collateral and take out a cash loan, usually in form of some stable-coin, such as Tether, USDC or PAX. This is however not the topic of this overview.
- All of the services will perform some form of KYC/AML checks with you. You will need to provide your ID and maybe answer some questions such as “Where did you get your Bitcoin?” If this bothers you (I totally get that), these services might not be for you.
- Always enable 2FA with an auth app, such as Google Authenticator or LastPass Authenticator. SMS is not good 2FA.
- Some of the services have their own tokens and will reward you with higher interest rates if you hold a lot of the token. I am not a fan of utility tokens, so I don't recommend doing that, but who am I to tell what to do with your money?
- If you are using the perpetual swap strategy to earn the funding rate, which I described in a separate article, you may increase your yield of the Bitcoin you do not hold on BitMEX by depositing it at one or more of the services listed here. Of course, by doing that you increase your counter-party risk.
- Most services offer interest on many other cryptocurrencies (not my thing) and also stable-coins. The stable-coin interest rate is usually much higher than crypto rates, at least in sideways and bull market, because people are borrowing USD to leverage crypto. In bear market, it's the other way around and crypto interest rates are higher, because people borrow crypto in order to short it.
- If you find something missing or wrong, let me know in the comments or by contacting me.