I’ve been extremely intrigued by the Cryptocurrency and Blockchain tech space over the past few months. It feels like the next evolution of money, finance, and even the internet itself along with many other industries running on modern or future technologies.

So I’ve created yet another outline with the intent to organize my thoughts and comparisons which I figured I might as well turn into another guide to help other people. Sometimes my craziness pays off I guess.. Ha ha.

Of course I have to give the full disclaimer that I am not a financial advisor and this is not financial advice. The information provided here are simply my thoughts and opinions.

This outline is all about high interest savings accounts that operate with Stablecoins.

Let’s start with some basic definitions

What is a Stablecoin?

A stable coin is a Cryptocurrency asset that is tied to a real world asset or commodity. The Stablecoins I refer to in this outline are pegged to the US Dollar resulting in a 1:1 ratio. For example; $1 = 1 stablecoin. By nature, Stablecoins are not subject to the volatility that you see with Bitcoin and Ethereum. However, inflation of the US Dollar results in the same inflation with these types of Stablecoins.

What is USDT?

USDT is the Stablecoin created by Tether. USDT (the name of Tether’s coin) is the 3rd most used Cryptocurrency following BItcoin and Ethereum. To be clear Tether by nature cannot be decentralized since it’s pegged to the dollar.

What is DEFI?

DeFi is short for “decentralized finance,” an umbrella term for a variety of financial applications in cryptocurrency or blockchain geared toward disrupting financial intermediaries such as banks. DeFi is distinct because it expands the use of blockchain from simple value transfer to more complex financial use cases. Fun fact, Ethereum is the overarching platform driving the DeFi space which is part of the reason why it has so much potential for growth in 2021.

Why am I excited about this?

Most investments involve some level of risk. Typically the higher the return on your investment, the higher the risk. Instead of being stuck with volatile and unpredictable markets, these savings accounts are tied to the US dollar. They’re VERY easily accessible once you’re comfortable using them.

Decentralized Finance is UNDENIABLY the future. These are the new banks, loans, etc. Normal stocks, commodities, margin, derivatives, real estate… all of these financial markets will be powered by DeFi protocols in the coming years. Transitioning from the old banking system to DeFi is like going from a landline to a smartphone.

A typical high yield savings account from your average bank will only provide approximately 0.70% APY. This is absolutely pathetic in my opinion…. It’s insulting.

Inflation rates are 1-2% per year on average, so if you just save your money long term without earning interest to offset inflation, you’re simply losing money. Real world inflation from 2020 onward will be much higher than what the FED is reporting. The FED straight up lies to us… They can’t print 25%+ of the money supply in one year and claim we’re only going to experience  1% inflation.

Historically the S&P 500 has averaged 10% per year, but it’s just that, an average. The only way you can truly expect a 10% average is if you hold for 20 years or longer.

Retirement accounts like IRA’s penalize you with fees if you withdraw the interest before retirement age, and they don’t allow you to pull out anything that you deposit before retirement. You’re simply not in control of your money.

In contrast to everything I just said…

These DeFI savings accounts give you the benefits of

• An incredibly simple way to self manage your money, just like you would with a bank or CashApp
• Quick and easy access to your money whenever you need it, instead of dealing with banks only open during normal business hours
• Withdraw whatever you want and whenever you need to without penalty like you would with retirement accounts
• Can take out loans without any approval from banks by using your savings as collateral
• Earn VERY healthy return on your investment of around 10% APY without the risk of the markets or stocks crashing

Of course there are downsides as well…

• My biggest concern is a big inflow of users or transfers blocking up the system, this is a known problem for Crypto apps especially during very turbulent swings in the Crypto markets
• Possible app glitches
• Hacks to the system
• Poor customer service

Here a good video to consider – https://youtu.be/zXO7m4g3LBc

And another one – https://youtu.be/K7Fn7BEhsR4

My intentions / ideas / plans

I’m planning on opening accounts on 2-4 of the platforms listed below (or potentially different platforms I may find in the future). I intend to cash out my Crypto investments later this year and re-diversify the majority of that money into these accounts and use the interest as another stream of passive income.

Just an idea / example:

$300,000 at a return of 10% per year will give you a $30K annual salary. You can practically retire with that amount. You’d need at least $1M to retire with a $30k annual salary based on a typical 3% dividend from ETF’s in the stock market. By the way $30k per year is $2,500 per month.

And if you simply reinvest the interest it will compound over the years. $300,000 with all interest reinvested at 8.6% compounds into $4 Million after 30 years!

High interest DEFI Savings Accounts I’m considering

YOUHODLER

https://www.youhodler.com/earn-crypto

• 12% APR on US Stable Coins
• $100k max for earning interest ($1,000 per month with $100k invested)
• Withdraw anytime

CELSIUS NETWORK

https://celsius.network/earn-rewards-on-your-crypto/

• 10-13% APR on USDT (compounded)
• Maximum amount.. unsure ??? ($1,000 per month with $100k invested)
• Weekly interest payout every Monday
• Seems to be a very simple interface
• Mobile app looks great!
• No desktop version, which is concerning (should always have desktop access as a backup to mobile access)
• All reviews state horrible customer service with weeks of response time, worth looking into further, but many other great reviews from loyal users for several years
• The CEO filed the CEL token as a security greatly reducing issues with the SEC!
• Launched May 2018
• 350 Institutional clients (some with Billions)

PHEMEX

https://phemex.com/earn-crypto

• 10% APR on USDT
• $50k max for earning interest ($416 per month with $50k invested)
• 7 day lock up cycles
• Interest and funds can be withdrawn after 7 day lock up cycle
• Auto renewal reinvests interest
• I really love using their platform! They have THE BEST advanced charting and technical data and trading options on desktop I have used. In contrast, the mobile interface is very clean and simple for the purpose of a savings account. Just open the app, click the “Finance” tab, and there’s your savings and interest. Very secure. You can tell they’ve HEAVILY invested in their software. Very happy with this company so far!

BLOCKFI

https://blockfi.com/crypto-interest-account

• 9.3% APR on USDT
• Monthly payout

NEXO

https://nexo.io/earn-fiat

• 8-10% APR on USDT
• Must have 10% of your holdings in their NEXO token to qualify for 10% on USDT
• Up to 30% dividends paid out from holding NEXO
• Overcollatoralized and stable interest rates
• Zero Fees
• Accrue Interest Daily
• The video on their page is completely worth watching

OTHER PLATFORMS AND CONCLUSION

The list above are the top 4 I found with the highest interest rates that still seemed reliable enough to seriously consider. There are many other reputable companies out there, they just have lower interest rates. Binance is probably the oldest and biggest name in the Crypto trading space and they’re very solidified, but the interest rate is 6%.