How to Earn 4.1% on Bitcoin and 4% on Ethereum Deposits
Maybe 4% doesn’t sound like very much. But when you’re lucky to get 1.5% on your money market fund, that’s pretty damn good!
We have written several times about how to earn passive income from crypto. Back then, crypto interest was realistically available only on deposits of USD-linked stable coins — such as Tether, USDC and DAI — on lending platforms like Nexo and BlockFi.
Now, thanks to the surging growth in borrowing and lending on the blockchain, you can also earn crypto interest on Bitcoin (BTC, Tech/Adoption Grade “A”) and Ethereum (ETH, Tech/Adoption Grade “A”). Here’s how.
Introducing Ledn
Like other lending platforms, Canada-based Ledn is essentially a crypto version of a traditional bank. It offers savers interest-bearing Bitcoin, and then lends these coins out to borrowers at higher rates.
But unlike heavily regulated traditional banks, lending and borrowing on the blockchain is mainly regulated only by the impersonal forces of the free market. This has both positives and negatives. Less administrative oversight means lower operating costs, and higher yields on your Bitcoin deposits. But this may also come with a somewhat higher risk of bank failure.
One thing that gives us confidence in Ledn is that despite being a relative newcomer to blockchain banking, it has already attracted several major institutional clients.
Among them are lending and trading giant Genesis Global Capital and Grayscale Investments, which sponsors the closed-end fund, Grayscale Bitcoin Trust (OTC trading symbol: GBTC).
Ledn Features Include:
• Earning up to 4.1% annual interest (compounded monthly) on Bitcoin deposits ... with no fee for withdrawing your previously deposited coins.
• A simple, easy-to-use interface.
• Crypto deposits are held by BitGo (the same custodian used by Nexo) and insured for up to $100 million.
Please keep in mind, that we do not recommend or make referrals to brokerage firms, crypto exchanges, or lending platforms. (Aside from trading accounts that we ourselves may have, Weiss Crypto Alert has no business relationships with any that we cover.)
The information here and in previous issues is intended pure for educational purposes. We hope you can use it to determine the best way for you to hold and trade crypto assets.
That said, here’s how you can get started with Ledn …
How to Sign Up
Step 1: Account Set Up
• Register for an account here.
• Set up 2 Factor Authentication (2FA) here. Use Google Authenticator only. Once 2FA has been set up with Google Authenticator, disable SMS Authentication promptly. (SMS authentication is vulnerable to SIM hacks. Plus, you may not always be able to receive SMS, if you travel internationally.)
• Submit KYC verification here. This needs to be done before deposits can be made.
Step 2: Deposit BTC and Earn Interest
• Head over to the main page (Figure 1, below):
• Click on Bitcoin Savings, which should bring you to Figure 2 (below).
• Click on Deposit
• Send the desired amount of BTC to the address shown
In order to estimate the yield you will make, scroll down the screen to Figure 3 (below).
• Change the Deposit Period to one year. Observe the interest earned on a 1 BTC deposit is roughly 4.1%.
Figure 4 (below) shows that 0.00000105 BTC interest was accrued after we deposited 0.0096 BTC for one day.
Borrowing Bitcoin
Ledn will also allow you to withdraw a fraction of your deposit in the form of a loan. We never recommend borrowing Bitcoin. There are two key reasons why.
First, the interest Ledn charges on such loans runs about 12%. That may be less than you’d pay to borrow U.S. dollars on your Visa or Mastercard, but it’s still exorbitant.
Second and most important, Bitcoin is famously volatile. That means you always face the risk of having to repay your loan with BTC that cost a lot more than the ones you originally borrowed were worth.
So, don’t do it.
Earning 4% Interest on
Ethereum with Nexo
We previously showed you how earn interest on USDC deposits with Nexo here. Since then, they’ve also begun accepting Ethereum deposits. Here’s how it works:
• Log in to your Nexo account and go to the Account page to see Figure 5 (below).
• Click Top Up on the crypto you choose to deposit. (I used BTC in this example, but ETH works exactly the same way.)
• You will see the deposit address for BTC. Copy this address
• Deposit the desired amount of BTC into the deposit address
You should automatically be earning 4% on the deposited BTC. Interest is compounded daily.
Figure 6 (below) shows that an interest of 0.000000103 BTC was earned on a deposit of 0.0096 BTC after one day. (Note that Nexos compounds interest daily.)
Best,
Juan and Bruce
