Hodlnaut vs CoinLoan vs BlockFi

In April 2021, Bitcoin surged to a new all-time high above USD$63,000. As quickly as it rose, a major sell-off occurred and Bitcoin dipped more than 50% in May. The year is only halfway through, and nobody can anticipate what will happen in the short-term. In times like this, investors that believe in the potential of Bitcoin with the intention to hold long-term are looking for alternative ways to earn more Bitcoin. One way to do that is by depositing the digital assets into a centralized finance (CeFi) platform and earning interest on them.

With a huge variety of CeFi platforms out there, this article discusses three crypto lending platforms to HODL and earn crypto interest.

Hodlnaut

Hodlnaut is a Singapore-based cryptocurrency platform that provides financial services to individual investors. A global VC firm backing early-stage startups, Antler, has included Hodlnaut as a part of their portfolio.

Features

The main feature of Hodlnaut is their interest savings account. Users can earn maximum yield on six different digital assets: BTC, WBTC, DAI, ETH, USDC, and USDT. Hodlnaut offers one of the highest interest rates in the market, where users can earn up to 12.73% on their crypto. Furthermore, there are no lock-in periods and users can start earning interest with just US$1 and users can receive their accrued interest on a weekly basis.

Besides Crypto Interest Account, Hodlnaut also offers corporate loans. Through crypto loans, clients can obtain a credit line using their crypto assets as collateral. With loans starting from $50,000 and flexible loan-to-value, 25%-70%, Hodlnaut can tailor the loans to fit the client’s business needs.

Hodlnaut's effective annual tiered interest rates can be viewed here.

Security and Risks‍

A recognized credential by the Monetary Authority of Singapore, Singapore Fintech Association has certified Hodlnaut as a Fintech company. Currently, Hodlnaut has met all the requirements for Digital Payment Token License and has submitted paperwork to be reviewed for the Singapore Standard Payment Institution License.

Hodlnaut’s platform runs on secure AWS (Amazon Web Services) cloud infrastructure with all traffic SSL encrypted. Furthermore, Hodlnaut uses industry-standard algorithms for password hashing and procedures. Hodlnaut requires its users to verify themselves through a mandatory KYC (Know-Your-Customer) process and enable two-factor authentication (2FA) for account transactions.

To prevent loss of funds, Hodlnaut applies stringent capital requirements for their borrowers. Moreover, it offers a loan-to-value ratio of 25% to 70% to avert risk. In the worst case scenario where default happens, Hodlnaut would take on the loss and pay users from their equity funds.

Crowe Singapore performed a financial attestation in January 2021. The verification confirmed that Hodlnaut has US$106 million of assets under management. As stated on Hodlnaut’s website, the AUM is currently standing at $500 million.

Considering the above pointers, it would be safe to say that you can trust your funds with Hodlnaut. Do take note to do your due diligence and make informed decisions before depositing with any financial institution.

Pros and Cons

✓ Provides one of the highest interest rates on crypto of up to 12.73% APY and weekly payouts

✓ No lock-in period and no minimum deposit, allows easy withdrawals

✓ Dedicated customer support team with a current TrustPilot rating of 4.4

✕ Limited range of asset classes, only support six crypto currently

✕ No ability for fiat to crypto conversion, unable to buy and sell crypto on Hodlnaut

✕ No mobile applications available yet (iOS launch in July 2021, Android app is in the works)

CoinLoan

CoinLoan is a crypto lending platform based in Estonia, Europe that allows users to manage their digital assets. It acts as a custodian of the funds and aims to be a one-stop solution platform that allows everything to be done in one place.  

Features

On CoinLoan, you can access their Crypto Exchange to conveniently buy, sell or swap any of the coins that are listed on their website. They accept fiat deposits with Visa and MasterCard, allowing users to easily buy BTC, XRP, USDT within minutes and on-the-go.

Users can use their crypto as collateral assets to get instant loans. They can borrow up to 70% of the value of the collateral with no checks on credit history and paperwork. Loan durations on CoinLoan vary from 7 days to 3 years. Repayment is done monthly according to a repayment schedule. If there is not enough money in the loan currency on the CoinLoan wallet, the system would liquidate part of the collateral to make payment.

CoinLoan Interest account allows users to earn compound interest on their idle assets with minimum deposit. Interest is accrued daily and deposited directly into the interest account on the first day of every month. There are no lock ups and withdrawal can be done anytime.

CoinLoan’s effective annual interest rates including the compounding effect and 2% CLT staking reward:

Security and Risks

CoinLoan is a regulated financial institution licensed under Estonia Financial Authority. Their complex KYC and Anti-Money Laundering (AML) procedures are compliant with European and international regulations. They use 2FA for any crucial account actions such as withdrawals and password reset.

All crypto assets are stored in offline, cold, multi-signature wallets. Encrypted parts of the keys are geographically distributed in the banks’ safe deposit boxes to prevent potential loss from natural disasters. However, CoinLoan did not provide any further information with more details.

Customers’ assets are stored with a qualified custodian, BitGo with $100 million insurance from Llyod’s. This covers the copying and theft of private keys, insider theft or dishonest acts by BitGo and loss of keys.

Pros and Cons

✓ iOS and Android mobile applications are available

✓ Allows the purchase of crypto on the platform

✓ No deposit or withdrawal fees

✕ Lack of transparency regarding the storage of assets

✕ Higher interest is only available with the staking rewards of 2% CLT

✕ Minimum deposit required to start earning interest

BlockFi

BlockFi is a crypto asset service provider based in the United States. Founded in 2017, BlockFi is one of the major players in the crypto industry. They offer financial services to individuals and businesses to maximize their assets. 

Features

With BlockFi Trading, users can buy, sell and swap between a variety of cryptocurrencies. Interest is accrued the moment the trade is placed and these transactions are normally done instantly with zero transaction fees.

BlockFi offers USD loans collateralized by crypto assets. Users can borrow up to 50% of the value of the collateral and receive them within the same business day. If the value of collateral decreases significantly, this might trigger a margin call. Once 70% Loan-to-Value (LTV) is reached, users have 72 hours to add collateral or pay the loan balance. If it reaches 80%, BlockFi will sell a portion of the collateral to lower the LTV.

BlockFi worked with Visa to launch a new credit card that allows credit card holders to earn an unlimited 1.5% back in bitcoin on every purchase. The card will start shipping out in 2021 to US residents. People who are interested in signing up can join the waitlist.

Users can earn up to 8.6% APY on their crypto assets with their interest account. Interest is accrued daily and paid out on a monthly basis. Assets held in the interest account are loaned out to trusted institutional and corporate borrowers.

BlockFi’s effective annual interest rates including the compounding effect:

Security and Risks

BlockFi has more than $100 million in equity funding with more than $2 billion in assets under management. They are also supported by many companies in the crypto industry which includes Coinbase, Morgan Creek Capital, etc. Gemini Exchange holds BlockFi’s crypto assets in custody, with 95% of the assets in cold storage and the rest in hot wallets.

In May 2020, BlockFi experienced a temporary data breach and exposed some client data. There was an unauthorized intrusion in their systems and the intruder attempted to withdraw client funds. Fortunately, no client or company funds were affected in this incident. BlockFi has also hired a new Chief Security Officer after this hack.

In May 2021, BlockFi mistakenly sent some users Bitcoin instead of USD stablecoins during a promotion. Some users started returning the funds due to BlockFi’s threat of legal action. This incident caused some users difficulty to withdraw and trade.

Pros and Cons

✓ iOS and Android mobile applications are available

✓ Allows the purchase of crypto on the platform

✓ Backed by established companies

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✕ Monthly payouts instead of weekly

✕ Data breach and incorrect credit occurred before

✕ Withdrawals can take up to 3 days 

Conclusion

Depositing cryptocurrencies into an interest account is a great way to grow your crypto portfolio passively. As mentioned, it is essential to do your due diligence before embarking your journey with a new platform. Choose the platform that can fulfil your needs the most.