The dream of cryptocurrency is a totally decentralized, trustless, be-your-own-bank model of economic interaction. While bitcoin was the start of this promise, the Ethereum network gave the framework and platform to build the tools for the next steps needed to realize this vision. Going into this next cycle, we have seen a Cambrian explosion of defi (decentralized finance) tools to help build the ecosystem. Right now, you can go be anonymous, get yield for putting up some of your crypto and hopefully be a little more financially independent for all those wise investments you made.
But defi is still hard. Gas fees suck. There's impairment risk for being a liquidity provider. There's so many projects, it's hard to know which ones are good, which ones are a fad and who will survive a shakeout. We don't know yet. Nobody does. And it's really hard to invest a couple hundred dollars when we're closing in on $100 in gas fees just to open a position. Then you have to go interact with these gas guzzling contracts to exit a position or reap some benefit.
All this is to say, defi has come incredibly far very quickly. It still has a little bit to go. New smart contract blockchains and blockchain interoperability will surely help. We'll get there.
What about now though? I think there's still a lot of people who just want to get some yield on a couple hundred bucks in crypto holdings without having to worry about vetting a defi platform, and paying all those HOLY F&* $80 in gas fees just to open my defi position?
Wouldn't it be great to just have a really basic crypto savings account?
Well there are options. I think they don't get a lot of attention because they're centralized, and the obvious retort for any true crypto believer is "not your keys, not your wallet."
Yes, correct. But do you actually worry about your bank running off with the balance of your checking account? Probably not. It's insured, and by all accounts your fiat deposits are probably safe (if you're in the US). So what if you could deposit your crypto, automatically get a 6-8% return on it (paid in crypto, or USD)? There's also the added benefits of being able to post your deposits as collateral and access fiat currency without having to sell your crypto.
It seems like an easy no-brainer to me. I probably wouldn't put all my holdings there (why have a single point of failure?), but keeping a portion dedicated as long term holdings is an easy way to get some yield, some cashflow, on what would otherwise be idle holdings.
Enter Blockfi. Yes they want to know who you are. They aren't in the business of laundering money. They want to be a regulated player and mainstream. This just lowers the counterparty risk. It turns out they have insurance, so you have some protection if they did go bust. They take your deposits and can use them to issue loans to institutional players, and then they give you a high rate of return for a savings account (6-8%). Easy peasy.
So maybe it's not a pure, decentralized, cypherpunk dream. However, as we wait for defi to realize its full potential, it's a pretty great option.
Shameless plug: sign up using this link, and we can both make $10. You can link your bank account, transfer fiat, buy into BTC, ETH, LTC and a handful of stablecoins, and even trade between them. And you'll be earning 6-8% along the way. Or if you already have crypto, just deposit some of that and don't link your bank account.
And you don't have to use my referral link, but as a believer in efficient allocation of capital, please go dive deeper in the crypto space and try to get some yield on your otherwise idle holdings. Why not make $10 with me?
*Side note: Nexo.io is another great service for this and offers more coins for deposit. The only reason why I default to Blockfi is because to get the full benefits of Nexo, you have to hold their tokens (10% of your total deposits in their NEXO token). There's really only one exchange where you can get those, and there's limited trading pairs. It's just way easier to get involved with Blockfi for what are otherwise two very similar services. Both are great. I use both, but in keeping with the idea that I want a super easy way to get yield on my crypto, Blockfi is way more straightforward.
