BlockFi or Nexo: the best passive income generator ?

blockfi-vs-nexo-review-comparison-safest-best-rates-CeFi

For the last couple of years, I’ve been searching for ways to increase my passive income.

Massive gains can be made trading or holding cryptocurrency; however, it comes with massive risks. Meanwhile, the 0.1% interest from your bank is actually making you lose money due to inflation (currently 5.4% inflation rate in the US) . Nexo and BlockFi position themselves as platforms to earn passive income, up to 12%, on your deposits with “minimal risks”. 

As using my idling cryptos to earn some passive income is an attractive idea, let’s compare both lending platforms: BlockFi vs Nexo.

BlockFi vs Nexo: comparison table

More details can be found in my individual review of both BlockFi and Nexo.

logo empty tables comparison

BlockFi logo secured 7.5 interest rate comparison.interest rate FIRE

Year

2018

2017

Founders 
Place of recruitments

Kantchev, Shulev, Trenchev

Bulgaria

Zac Prince and Flori Marquez 

USA

Interest

Daily

Monthly

Highest Interest Rate Available

12% (with stablecoins if you hold NEXO token and are paid in NEXO)

8.5% (with DAI stablecoin if less than 50k DAI )

Base Interest Rate on USDC or USDT

8%

7.5%

Base Interest Rate BTC and ETH

4%

4%

Compound Interest

Yes (daily)

Yes (monthly)

Lock-in Period

No


No

KYC

Yes

Yes

Withdrawal Fees

1 free per month

1 free crypto/1 free stablecoin per month

Platform

Mobile, PC

Mobile, PC

Security

BitGo as primary custodian

Gemini as primary custodian

Insurance

100m$ on Bitgo

200m$ on Gemini

Income stream

Opaque

Lending to hedge funds, exchanges, institutional traders, and retail customers

Platform token

Nexo Token

None

Other services

Loans, Card

Loans, Card

Note

 

BlockFi vs Nexo: usability, rates, currencies, etc.

Almost similar. Nothing important as a difference, except if you want to earn interest on altcoins, Nexo has many more of them.

Nexo’s daily paid interest makes it sexier if you are only generating passive income for the short term. Its base rate is also higher than the maximum interest rate proposed by BlockFi on USDC for example.

Avantage: Clearly for Nexo

NEXO

NEXO

$0.94

NEXO 4.60%

BlockFi vs Nexo: security

Insurances

A larger insurance for BlockFi. I also trust more Gemini than Bitgo or Ledger. What does it mean in everyday life? Well, nothing is really clear.

Avantage: BlockFi

Boomer Security

I have trouble with Nexo opacity regarding their jurisdiction or their sources of revenue stream (credissimo ?). I am also biased toward thinking that Eastern Europe is probably a good place if you want to do an exit scam.
In contrary, BlockFi’s transparency is not perfect, but much better than Nexo’s one. I am also biased by the fact that Uncle Sam regulations and justice is probably a tad more annoying than Bulgaria’s ones.

Avantage: Clearly for BlockFi

Management of Black Swan (March 2020 crypto flash)

To actually compare Nexo and BlockFi on this point, you basically need to skim their reddit pages. You will see lots of testimonies from their users. You need to take these with a grain of salt, it could be false flags, or just pure manipulations, but here is what came out of my searches: during the crypto flash crash, Nexo had more liquidations than other platforms, as well as probably some technical problems and lack of customer support. On BlockFi’s side, it seems to be quite the opposite (see my more in-depth review of BlockFi on this point).

Avantage: Clearly for BlockFi

Data Breach

BlockFi and Ledger (one of Nexo’s security provider) both got customers data leaked. So, equally as bad, but it was not Nexo directly, unlike in BlockFi’s case.

Avantage: Nexo

Bitcoin

Bitcoin

$19,463.45

BTC 0.59%

Ethereum

Ethereum

$1,339.36

ETH 1.28%

BlockFi vs Nexo: summary

More details can be found in my individual review of both BlockFi and Nexo.

BlockFi

Pros
  • March 2020 stress test
  • High base interest rates
  • BlockFi’s custodian, Gemini
  • No lock-in period
  • General level of transparency
Cons
  • Monthly compounded interest
  • Previous data breach

Nexo

Pros
  • Daily compounded interest
  • High base interest rates
  • Nexo’s custodian, Bitgo
  • No lock-in period
Cons
  • March 2020 stress test
  • Legal transparency
  • Transparency on revenue stream

Conclusion

As we have seen, both platforms have really similar offers. Nexo has as the advantage to offer higher rates for more altcoins, however, BlockFi appears as a more transparent and secured platform.

Still, never forget there ain’t no such thing as a free lunch. No investment ever is 100% safe. It’s just a matter of choosing the best return given the amount of risk that you can sleep with.

In my case I chose to have 50% of my USDC on BlockFi for the security it provides, and 30% of my USDC on Nexo for the higher rates.

In case you liked my take on the BlockFi vs Nexo, or learned interesting things, or want to support me, please feel free to send me a coffee over.

 
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