Finally made the leap of faith and made your first crypto investment? If your answer is yes, congratulations on becoming a fellow HODL-er and having diamond hands through the volatility ahead. While you HODL, wouldn’t it be great if you can earn compound interest on your idle assets? That is exactly what today’s topic is about.
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For those that have yet to own any crypto, you can check out my post here to learn more about Bitcoin and Ethereum (the 2 most popular crypto asset right now) or another post here to learn more about cryptocurrency and why you need to invest in them.
What exactly is Nexo and Celsius Network? In layman terms, they are simply a crypto based savings account (works similarly like your bank account) where interest is generated on idle assets on a daily/weekly compounding basis.
Let’s first talk about Nexo, where it has both a web and app interface. Nexo is where I park my Bitcoin and Ethereum in. Why? Because I am getting interest on a daily basis which sums up to 6% APY (Annual Percentage Yield), meaning I get 6% compound interest every year in Bitcoin and Ethereum even before any capital appreciation of the underlying asset.
That is way more than any other traditional bank interest rate/bond yield/endowments/fixed deposits right now. Heck, that is more than the returns of some individuals’ investment portfolio.
With inflation at 2% over the long run, we need higher yields to hedge inflation and the current traditional financial products don’t even have a guarantee for that. 0.05% is the norm for most bank accounts and just how are you supposed to retire when your cold hard cash is devaluing by the minute?
I am earning 6% APY as I am holding 10% in Nexo token which qualifies me as a platinum tier Nexo customer + additional 1% optional interest by locking my asset for 1 month.
Since I am parking my crypto for HODL (long term holding) anyways, I realised it would be a waste to simply rely on the value of the asset going up over time. The compound interest from Nexo will boost and accelerate my returns even faster compared to if I just let my assets sit idle.
Benefits of Nexo:
- Free crypto transfers every month (1 for basic users and up to 5 for higher tier)
- No minimum transfer or custodian cost
- No lock up period at all
- No fees at all
- BitGo as custodian (layman: huge crypto backer to ensure our assets are safe and insured)
- Crypto assets are stored in a separate cold storage and not as a hot wallet on Nexo public network
- SOC compliant and military grade bank vaults to store crypto asset (basically means your crypto is so safe just like money you deposit in a bank)
- Nexo Exchange (You can swap different crypto for 0 fees on Nexo!)
However, just like BlockFi or any other crypto savings account, these are not MAS licensed since crypto is really novel and the government literally has no control over it since it is decentralised and not owned by any single entity/group or organisation.
If you are someone who only trust MAS licensed products, I’m sorry to disappoint but there are no alternative options out there for such a great product at the moment and I doubt traditional finance will be able to offer something half as good.
I have been using Nexo for more than half a year now, and interest are credited on a daily basis the moment it is deposited into the Nexo account. (yes. sweet compounding interest in Bitcoin, Ethereum and more on a daily basis).
How to transfer your crypto into Nexo
Below, I will highlight the steps to take to safely deposit your precious crypto assets into Nexo.
- Create a crypto exchange account (To buy/Sell) + Nexo (savings account)
- Buy your crypto on an exchange (I use Gemini Active Trader as each buy/sell is 0.35% per transaction)
- Transfer the crypto through the blockchain (Copy&Paste the address for transfers between the exchange and Nexo)
- Wait for your crypto to be deposited and congrats on achieving daily compound interest!
Exchange wise, I highly recommend Gemini and its my personal exchange of choice since they have 10 free crypto-crypto transfers every month and also extremely low trading fees (0.35%) for Gemini Active Trader. You can read up on Gemini in greater details in a post I wrote here.
The next one would be Celsius, or what we call Celsius Wallet, which operates as a web interface and also an app interface just like Nexo.
It works just like Nexo but 1 thing which Celsius really stands out is their interest rates for stablecoins like USDT, USDC, DAI and more. It’s the best place to park Stablecoins which are basically spare cash and the interest ranges from 10.51% up to 13.3%!
Just like Nexo, they also don’t charge any withdrawal fees so your money won’t be locked up if you just want to try out 🙂
I personally park DOT (Polkadot) and DAI (Stablecoin) on Celsius as it offers the highest interest rates with ease and convenience.
Benefits of Celsius
- Similar as Nexo mentioned above
- Stablecoins interest absolutely crushes Nexo
Verdict: Park BTC/ETH in Nexo and stablecoins on Celsius
Question: How the heck do they pay such high interest? Is it a Ponzi scheme?
To the paranoid and skeptical ones: No, this is not a Ponzi.
In layman terms, they are doing whatever our traditional banks like DBS or OCBC are doing: Lending out deposits for higher interest to lenders and other organisations by charging interest on the loaned assets.
Instead of taking majority of the profits from the lending activities, they share more of the pie with the HODL-ers like us which translates to higher interest which is sustainable, but ultimately once demand catches up and more users pile on such saving accounts, interest will eventually start to fall (which is why I was reluctant to share this great product since you guys will start using and my interest might slowly drop… Kidding!)
You can check out articles here to see how interest is generated and more info on the platform:
Going forward, I will continue to buy my crypto through Gemini or Coinhako depending on which crypto I am buying, once done, I will transfer them via the blockchain and deposit them into either Nexo or Celsius depending on the asset bought, rinse and repeat and see my asset grow over time.
For BTC and ETH: Bank — Buy via Xfers (no fee)–> Gemini –> Nexo (interest 4%-6%)
For USD Stablecoins: Bank –Buy via Xfers (small fee)–> Coinhako –> Celsius Network (interest ~10.51%)
If you are interested to use the platform I am using to buy crypto, do sign up using my referral links for some sweet bonus!
Referral Links (Click and Sign Up)
Gemini Exchange: Deposits and buy US$100 or more crypto on Gemini and you will earn US$10 in BTC.
Coinhako Exchange: You can create an account by clicking the link and then enter promo code: COINGECKO when doing a buy/sell and enjoy 20% trading fees discount!
Celsius Network: Earn US$30 in DAI (USD Stablecoin) for free with your first transfer of US$200 or more in any crypto asset and wait for 1 month.
Nexo: No referral events at the moment 😦 Just sign up and enjoy this great product!
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The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment.
Do note that this is not financial advice. If you are in doubt as to the action you should take, please consult your stock broker or financial advisor. (Or contact me!)