Nexo vs BlockFi

James HeadshotAuthor: James Page
Last Updated: November 2020

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If you tell someone they can earn money just by depositing their crypto holdings on a crypto platform, they’ll reject the idea altogether. “Seriously, what’s the catch?”, you’ll hear them say. The truth is, there is no catch.

Thousands of crypto investors around the world earn passive income by storing their assets in a crypto interest account provided by a crypto lending platform. These platforms lend their assets to reputable companies and businesses while your capital grows in your account and you can request a withdrawal whenever you want.

Today we’ll discuss Nexo and BlockFi, two well-known crypto lending platforms that make traditional financial services a possibility for the global crypto market clientele as well. These platforms have been designed by experts who’ve spent more than 10 years in the fintech sector, working for others before they could launch their own projects.

About the Platforms

Nexo

Nexo is a beginner-friendly crypto loan and interest platform which was launched in 2017 as a subsidiary of Credissimo, a European online lending company founded in 2007.

Credissimo is well-known in the fintech world for pioneering the Bitcoin loan repayment option and the first automated lending Chatbot. The company is fully regulated and has received fintech awards for its numerous financial innovations, including two Forbes Business Awards in 2017.

Throughout the years, Credissimo has provided instant consumer loans and e-commerce financing to millions of users worldwide. Ten years later, three company members, Antoni Trenchev, Georgi Shulev, and Kosta Kantchev, have decided to expand their services on the crypto market, creating Nexo, the first platform to offer instant crypto-backed loans.

Nexo is a platform dedicated to finding sustainable and forward-moving solutions based on blockchain technology. Their team believes that digital assets are the future and aim to design fully-automated products that customers can use in the digital economy. Their core principles in this process are inclusivity, transparency, and efficiency.

Apart from crypto loans, Nexo also provides a crypto interest account since 2018, after a successful Nexo token ICO in which the company raised $52 million.

BlockFi

BlockFi is one of the leading crypto interest and lending platforms in the world. It’s a licensed US company founded in 2017 in New York City. As a result of the popularity of its services, the company has opened additional new offices in New Jersey, Poland, and Argentina.

What makes BlockFi a great platform is the expertise of its team spearheaded by its CEO and company co-founder Zac Prince, his colleague, co-founder, and current SVP of Operations, Flori Marquez, and BlockFi’s Chief Risk Officer Rene Van Kesteren.

This trio, together with the rest of the BlockFi team, undertook a joint mission to create a fintech space where traditional banking services can merge with blockchain technology and crypto assets. BlockFi was the first US platform to bring the option for crypto-backed loans.

On top of that, BlockFi provides a Crypto Interest Account with very attractive interest rates for crypto investors who want to make some passive income. Recently, the platform has added fee-free crypto trading services.

As if this wasn’t enough to win you over, BlockFi has the trust company and global exchange Gemini as its primary custodian. Gemini is managed by the Winklevoss twins and regulated by the NYSDFS.

To give BlockFi incentive to keep working on fintech solutions and services, institutional investors like Valar Ventures, Morgan Creek, ConsenSys Ventures, Galaxy Digital, Fidelity, Akuna Capital, SoFi, and Coinbase Ventures offer their support and organize periodic funding rounds.

BlockFi vs Nexo: The Comparison

Bitcoin and Other Cryptocurrencies

Unlike BlockFi, Nexo is not a trading platform and you can’t purchase any cryptocurrencies through the platform. To make crypto-backed loans or store crypto to earn interest, you need to buy assets from a third-party platform first.

You can deposit the following cryptocurrencies to your Nexo interest account: Bitcoin (BTC), Ether (ETH), Litecoin (LTC), Ripple (XRP), Bitcoin Cash (BCH), Paxos (PAX), EOS, Chainlink (LINK), Monero (XLM), and Tron (TRX), and stablecoins like Tether (USDT), USD Coin (USDC), TUSD, DAI, and HUSD. Paxos Gold and the Binance Token (BNB) will become available soon.

On the other hand, on BlockFi users can make crypto-to-crypto trades with the most popular digital assets including the two largest cryptocurrencies by market capitalization, Bitcoin and Ethereum, altcoins like Paxos and Litecoin, and a couple of stablecoins: PAX Gold, USD Coin, Gemini Dollar, and Tether (only non-US users).

For the time being, you can’t purchase these assets with fiat currencies but you can use a stablecoin instead to increase the monetary stability of your trade and reduce the risk of loss. For example, the Gemini Dollar is pegged at a 1:1 ratio to the US Dollar. The best thing about these trades is that there are no added fees.

Crypto Interest Accounts

What makes crypto interest accounts so desirable for investors? The ability to make passive income while simply holding onto their digital assets. These services haven’t been created for some tech-savvy whiz. They’re accessible to every retail investor.

You just need to purchase an amount of crypto and deposit them into the platforms’ interest account (typically via exchange or a digital wallet) and watch as your yields multiply.

In the previous section, we gave you a list of the cryptocurrencies and stablecoins you can store in both Nexo’s and BlockFi’s account but you might be asking yourselves whether there are any differences between the interest services of these two platforms?

For one thing, they offer slightly different interest rates (as you’ll see below). On Nexo, when you deposit crypto, the assets are automatically transferred to your Savings Wallet. The interest is credited to you on a daily basis.

On BlockFi, you earn your interest on the first day of the month. Once you’ve received interest for the first time, you immediately start earning compound interest as well. BlockFi also lets you choose the cryptocurrency you want to be paid in. This means that you can earn interest in ETH even if you keep BTC in your account.

Interest Rates

Nexo has a very straightforward interest rate schedule, i.e. regular cryptocurrencies yield a 5% APY while stablecoins yield a lucrative 10% APY.

However, if you hold at least 10% of your Savings Wallet balance in the platform’s native token NEXO, you can earn even higher interest rates. Another advantage of holding NEXO tokens is Nexo’s policy to share 30% of its profits as dividends to NEXO holders.

BlockFi has a more complex schedule but offers high-yielding interest rates as well. However, what really made the platform stand out in the eyes of its customers during these troubled financial times in the wake of the COVID-19 pandemic is that BlockFi decided to raise some of its interest rates. As a result, BlockFi managed to keep its customers on board.

The current interest rates are as follows:

BTC (Tier 1) 0 – 2.5 6% APY
BTC (Tier 2) > 2.5 3.2%
ETH > 0 4.5%
LTC > 0 5.0%
USDC > 0 8.6%
GUSD > 0 8.6%
PAX > 0 8.6%
PAXG > 0 4%
USDT > 0 7%

Fees and Limits

Neither Nexo nor BlockFi induces a minimum or maximum deposit for their interest accounts.

Nexo allows traders to top up their accounts whenever they want and request withdrawals at any time too. Although there are no additional fees, you’re required to cover the expenses for the bank transfer. Typically, your withdrawal request will be processed within 24 hours.

BlockFi gives users only one free withdrawal per month, i.e. one for crypto withdrawals and one for stablecoin withdrawals. Any additional withdrawals incur the following fees:

  • 0.0025 BTC for Bitcoin withdrawals with a maximum limit of 100 BTC per week.
  • 0.0015 ETH for Ethereum withdrawals with a limit of 5,000 ETH per week.
  • 0.0025 LTC for Litecoin withdrawals with a limit of 10,000 LTC per week.
  • $0.25 USD for stablecoin withdrawals with a limit of 1,000,000 stablecoins per week.
  • 0.0025 PAXG for Paxos Gold withdrawals with a limit of 500 PAXG per week.

In the past, BlockFi charged its users with a withdrawal termination penalty if they requested a withdrawal prior to the last day of the month. A lot of traders were put off by this fee so the platform decided to do away with it.

Crypto Loans

If your country is not on the sanctioned list and you don’t live in Bulgaria or Estonia, you can use the Nexo Crypto Credit. You can deposit the following cryptocurrencies as collateral: BTC, ETH, XRP, LTC, XLM, BCH, EOS, LINK, TRX, stablecoins, PAXG, NEXO, and BNB. The value of the crypto credit is calculated by the loan to value ratio.

By deciding to borrow fiat credit and use your crypto holdings as collateral, you can make instant capital and still keep your digital assets. If you sell them, you run the risk of missing out on a great price surge and will have to pay capital gains tax on top of that.

On Nexo’s website, the company has stated that they have more than 40 applications from companies that applied for their crypto lending services. The assets are lent to reputable investors as Nexo takes great care to verify their identity and potential to return the loan.

BlockFi users can lend BTC, ETH, LTC, or PAXG to borrow USD. If the price of the assets you’ve put aside as collateral falls by more than 50%, you’ll need to top up the collateral or reduce your debt.

Security

The leader of multi-signature encryption technology, BitGo, provides Nexo with cold storage wallets to keep customers’ assets as safe as possible. Moreover, Nexo covers up to $100 million in losses in partnership with the London-based insurance company Lloyd.

Similarly, BlockFi also outsources its custody solutions to its primary custodian Gemini, an NYDFS regulated exchange, and the first one to complete the SOC 2 Type 1 examination. Gemini is the one holding the assets in cold storage.

Both BlockFi and Crypto.com comply with AML policies and perform mandatory KYC checks to verify the identity of their customers. As far as account security goes, both platforms offer two-factor authentication and withdrawal address whitelisting.

Ease-of-Use

Nexo and BlockFi are web-based platforms and they can only be accessed online. You can’t download them as a desktop app but you can install their mobile apps to your Android or iOS devices. In terms of user experience, reviews have been almost unanimous that both platforms are great for beginners and experts alike. The account setup process is quite straightforward, their features are automated, and customers are in full control of their money.

Customer Support

Customer support is available on Nexo via their Telegram channel and you can easily submit a ticket with your queries and complaints via email too. Their website features a help center with FAQ and articles explaining every service they offer in more depth.

BlockFi is no less determined to build customer loyalty. Their team remains quite active on social media and the co-founder Prince is always open for public interviews. So far, users have been satisfied with how they’ve managed to address and solve their issues.

Pros and Cons

Nexo Pros

  • A great variety of prominent cryptos and stablecoins.
  • No deposit or withdrawal fees and limits.
  • Attractive rates on interest payments.
  • Includes insurance of up to $100 million per wallet.

BlockFi Pros

  • Supports a decent number of digital assets.
  • No minimum deposits on interest accounts and no deposit fees.
  • Attractive interest rates and compound interest.
  • Customer funds have insurance coverage via BlockFi’s primary custodian Gemini.
  • Users can choose the cryptocurrency they want to earn interest in.
  • Users can withdraw their funds whenever they want and get one free withdrawal per month.

Nexo Cons

  • Doesn’t offer compound interest.
  • Only NEXO holders enjoy higher interest rates.
  • You can’t make crypto to crypto trades.

BlockFi Cons

  • Charges withdrawal fees.
  • Supports fewer cryptocurrencies for crypto-backed loans.
  • Interest is calculated and distributed to customers’ account balances monthly instead of weekly or daily.

Final Thoughts

We’ve come to the end of our guide on these two crypto interest and crypto lending platforms. Our task was to provide you with useful and unbiased facts and assist you in the decision making process.

Both Nexo and BlockFi are big players in the current market, primarily due to the high-interest rates, the no-fee policy (except for BlockFi’s withdrawal fees and bank transfer expenses), their transparency, institutional support, and state-of-the-art security.

However, we must point out that Nexo is better-suited to investors interested in crypto lending because of the options, prices, and flexibility. The BlockFi Interest Account, on the other hand, is incomparable to Nexo’s, not only in terms of interest rates – while Nexo offers great rates it does ask its customers to hold NEXO tokens in return – but because of the ability to earn compound interest too.

If you’re curious to find out more about BlockFi, we encourage you to check out our detailed review.

FAQ

What are the benefits of crypto lending?

Crypto lending can be done by businesses and institutions or retail crypto traders who would lend their assets as collateral on platforms like BlockFi and Nexo which then find borrowers for them. In exchange for lending their crypto holdings, users can borrow fiat currencies themselves. If you make a crypto loan, you don’t have to pay capital gains tax on the fiat money you’ll borrow. This is not the case if you decide to sell them instead.

What are stablecoins?

Stablecoins and digital tokens pegged to another currency, typically fiat currencies. For example, Tether (USDT) is pegged at a 1:1 ratio to the US Dollar. Their purpose is to minimize the volatility risks you’re otherwise exposed to when trading with regular cryptocurrency. Most crypto traders use them as an alternative to cashing back their crypto into fiat.

How do Nexo and BlockFi differ from DeFi lending platforms like Celsius Network and Crypto.com?

All four platforms provide crypto interest accounts and crypto loans but they vary mainly in terms of interest rates and fees. BlockFi is among the rare platforms that don’t have a native token for users to purchase in order to get higher interest rates. Plus, BlockFi offers compound interest too. Nexo is the only platform out of the four to pay daily interest to its users and incur zero withdrawal fees.

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About The Author

James Page

James Headshot

James is the main editor. With a passion for finance and anything blockchain, cryptocurrency is right up his alley. He's responsible for most of the content on the site, trying his best to keep everything up to date and as informative as possible.

Disclaimer: Digital currencies and cryptocurrencies are volatile and can involve a lot of risk. Their prices and performance is very unpredictable and past performance is no guarantee of future performance. Consult a financial advisor or obtain your own advice independent of this site before relying and acting on the information provided.