Cryptocurrency and blockchain technology have seen a massive explosion over the course of the past year. What was once considered an emerging technology is now seeing uses around the world and has garnered international attention.
The lack of official banks and currency management platforms for cryptocurrency has also created a need for decentralized financial services that investors can use to manage their assets.
Four of the most popular decentralized finance (DeFi, for short) services are BlockFi, Nexo, Celsius, and Gemini. All of these platforms allow their account holders to save/hold their assets, trade or exchange their cryptocurrency for other crypto coins, and also provide lending opportunities in the form of crypto-backed loans.
The goal of a DeFi platform is to take the place of the traditional banks that most people use to manage their fiat currency.
So, Which One Is The Best For Crypto Investors?
Each De-Fi platform has unique benefits that set it apart from the others. BlockFi is better for first-time investors who are just now getting into the crypto scene, while Gemini is more attuned to cryptocurrency day traders.
So, that being the case, I’ll break down my top choice into two categories:
- Platform for new crypto investors.
- Platform for experienced investors.
The Best Platform For New Crypto Investors
In my opinion, BlockFi is, by far, the best platform for people who are just getting into the cryptocurrency scene. It provides a wide number of De-Fi solutions from great Bitcoin interest accounts to a simple investing platform that anybody can understand.
The Best Platform For Experienced Investors
However, for those who are more experienced crypto investors, I would definitely suggest Gemini. Although it doesn’t offer some of the money management and lending services that BlockFi, Nexo, and Celsius offer, Gemini is widely regarded as having one of the world’s top cryptocurrency exchanges.
They’ve been around for far longer than any of their competitors and have an impeccable reputation for security and usability.
Whether you’re new to cryptocurrency or you’re an experienced investor, you’re almost certainly going to need to use one of these DeFi services at some point in the next few years.
Personally, I believe that these DeFi platforms are the future and that in the next decade, everybody will have one, the same as everybody has a bank account.
Today, I’m going to compare and contrast some of the major features and services offered by BlockFi, Nexo, Celsius, and Gemini in order to help give you a better idea of which one is best for your needs.
Understanding The Prime Tenants of DeFi Platforms
Before I jump into my comparison of these four major DeFi platforms. I’d like to take a minute to break down some of the primary features and areas of concern that you should examine when comparing any DeFi platform.
We will be looking at these tenants later in the article as we take an in-depth look at how each of the four competitors stacks up to each other in these key areas.
One of the most basic services offered by any cryptocurrency services is a crypto wallet. Although they function more like a virtual safe, the term wallet denotes the level of portability and accessibility offered by cryptocurrency wallets.
In essence, a “wallet” is just a piece of software that contains the necessary tools needed to access the address on the blockchain where your funds are stored. Most DeFi services provide their users with a hot wallet– a web-based crypto wallet where you can store your currencies online.
Depending on the amount of money that you have invested into your DeFi account, some of your funds may be stored in your “hot wallet,” while the other funds may be placed into cold storage– hardware-based wallets that are not connected to the internet and are therefore more secured against hacking attempts and data breaches.
No matter whether or not the platform you’re using makes use of cold or hot storage, though, each user should have the ability to access 100% of their funds at all times for the purpose of investing, sending/receiving funds, or using their crypto to stake loans.
Crypto Trading and Exchange
The other common feature offered by most DeFi platforms is an exchange. This is a service that allows users to exchange one cryptocurrency for another or exchange their fiat currency to purchase crypto tokens. It’s similar to the way that several fiat management services allow users to invest their money into the stock market.
Some exchanges only allow users to trade a few of the major crypto tokens, while others give their users the ability to trade a number of different pairs. Ultimately, it’s all up to the organization that’s in charge of the exchange and how volatile they want their exchange to be.
One of the biggest reasons why so many crypto investors are flocking to these DeFi platforms is to take advantage of their crypto-backed lending programs. These programs allow users to stake percentages of their crypto holdings in order to receive cash loans. These loans can either be used as personal loans or business loans, depending on what your needs are.
The advantage of crypto-backed loans is that you don’t have to go through quite as many hoops and hurdles as you would have to go through with a traditional bank loan. The only disadvantage of these loans is that they typically require you to have a larger amount of assets than a traditional fiat-backed lender would require.
KYC stands for Know Your Customer. It’s a verification process that is used by many banks, financial institutions, cryptocurrency exchanges, and DeFi platforms. Essentially, it requires all users to submit multiple forms of identification to verify that they really are who they say they are.
It’s a way for banks and financial organizations to ensure that they aren’t interacting with terrorists, money launderers, known criminals, or other unsavory businesses. KYC also attempts to verify how and where the user makes their money to ensure that the financial institution doesn’t have to worry about getting mixed up in illegal activities unbeknownst to them.
Some DeFi platforms require KYC, while others only request minimal information. Generally speaking, though, the platforms that offer KYC tend to be more secure than those that do not.
Most DeFi platforms have top-notch blockchain security set in place to prevent hackers and criminals from accessing user data or stealing funds from their clients’ wallets. Some platforms have managed to remain untouched by hacking attempts, while others (such as Gemini, for example) have had known penetrations into their systems resulting in a data breach or loss of funds.
Comparing The Giants: BlockFi vs Nexo vs Celsius vs Gemini
So, now that you have a better idea for how we’ll be comparing these major DeFi platforms, it’s time to take a look at how each of the major four platforms compares to the others in these key areas of performance and features.
Founded in 2017, [BlockFi ]is one of the newest DeFi services on the market. But they’re already making waves and drawing a considerable user base. They’re even in the process of launching their own Bitcoin credit card that provides users with Bitcoin-back rewards for using the card.
BlockFi’s crypto wallet is a “hot wallet” that allows users to access their funds while online. BlockFi’s wallet has two interesting features that make it stand apart from competitors:
- They offer interest up to 8.6% APY on any funds that are held in the wallet. This allows you to earn passive income on your holdings.
- BlockFi’s wallet is custodial managed by Gemini.
Crypto Trading and Exchange
BlockFi has a fully functional exchange that allows users to invest in various coins. However, the platform currently only supports the trading of the following major coins:
- Bitcoin (BTC)
- Ethereum (ETH)
- Litecoin (LTC)
They also support the following stablecoins:
- Tether (USDT)
- US Dollar Coin (USDC)
- Paxos Standard Token (PAX)
- Gemini US Dollar Token (GUSD)
BlockFi really stands out in regards to its crypto-backed lending platform. It allows users to stake 50% of their desired loan amount in cryptocurrency funds and can provide them with cash loans as soon as the next business day. For instance, if you wanted a $10,000 loan, you would only need to offer $5,000 in cryptocurrency as leverage to receive the loan.
Before transferring any money or crypto funds into your BlockFi interest account or wallet, you’ll be required to complete a KYC form to verify your identity and the validity of your funds.
BlockFi has only been hacked once during a “sim swap” hacking attempt where corrupted sim cards were placed into the phones of a handful of employees and executives. However, no money was lost and very limited customer name lists were compromised.
Nexo is a global DeFi service that focuses on providing users with a large crypto exchange and specializes in providing crypto-backed lending services to its users. It was founded in 2017 (the same year as BlockFi) and is powered by Credissimo- a European financial tech platform designed to vet borrowers and aid in the transfer of funds.
Like BlockFi, Nexo utilizes a cryptocurrency hot wallet that allows users to access their funds online at any time, as long as they have an internet connection. However, unlike BlockFi, Nexo supports a far greater number of cryptocurrencies, meaning that you can store a wider range of assets.
Crypto Trading and Exchange
Nexo really wins when it comes to its exchange. They currently offer support for trading over 100 different crypto and fiat pairs, which is far more than BlockFi allows. The platform has also launched its own NEXO token in order to facilitate transactions on its exchange.
Nexo is the first DeFi platform to ever offer crypto-backed mortgages. In fact, they recently did so for the famous Mighty Ducks actor, Brook Pierce, when he recently purchased a new million-dollar home.
Like most DeFi platforms, Nexo requires all of its users to verify who they are using KYC protocol. This helps ensure that any loans given out are not being staked towards criminal organizations.
Since the company was created in 2017, there have been no successful hacks on Nexo or its custodial service, BitGo.
Celsius is a lot like BlockFi and Nexo. However, their key selling point is that they offer incredibly high APY returns on crypto holdings. They offer particularly high APY on any stablecoins that you’re holding in your wallet. They also provide a DApp known as CelPay, which allows users to easily send and receive crypto and works similarly to PayPal.
Celsius has a relatively simple wallet. Its primary functionality is to store cryptocurrency tokens for investors who are looking for long-term returns from storing their tokens. Celsius offers some of the highest APY returns on the market, allowing users to earn over 6% APY on Bitcoin and Ethereum and up to 12.35% on US Dollar Coin (USDC).
Crypto Trading and Exchange
Unfortunately, this is one area where Celsius has failed. They currently do not provide users with the ability to trade or exchange on the DeFi platform. Instead, Celsius is more concerned with providing lending opportunities, money transfer services, and internist accounts for its users.
Celsius offers crypto-backed lending that’s very similar to that offered by BlockFi. You can take out USD loans as little as $500 and decide whether you want 6, 12, 24, or 36-month terms. As far as your collateral goes, it all really depends on how much you’re borrowing. They offer the option to maintain the following loan-to-value (LTV) ratios:
The higher your LTV ratio is, the lower your APR on the loan will be.
Like both BlockFi and Nexo, Celsius also requires users to perform KYC identity verification before they’re given access to all of their account features.
Unfortunately, Celsius was recently the victim of an unauthorized hack that attempted to take user funds through the use of a Phishing attack. The hackers were able to access Celsius’ user database and send fraudulent emails to a number of customers, requesting them to respond with their crypto hash address and seed key. Thankfully, the breach was detected early and no funds were lost, but it could have easily resulted in several unsuspecting customers losing money.
Gemini is one of the oldest and most trusted DeFi platforms in the world and they’ve been around since 2014. They offer a number of DeFi services and they are also the custodial manager for BlockFi’s cryptocurrency funds.
Gemini offers one of the most secure hot wallets on the internet and is available for both desktop and mobile. Additionally, if you have larger funds that you would like to place in cold storage, they provide ultra-secure offline storage. Lastly, Gemini also offers decent APY interest rates on crypto stored in your wallet (up to 7.4%).
Crypto Trading and Exchange
Gemini has one of the most respected and efficient trading platforms in the world and many account holders use Gemini solely for trading. Their trademarked ActiveTrader platform allows you to place multiple order types, create custom charts, and other advanced investment opportunities.
At this time, Gemini does not provide crypto-backed lending options.
In accordance with US and global anti-money laundering laws, Gemini uses KYC verification for all new users.
Gemini provides state-of-the-art security and even offers highly secured off-grid cold storage options for those who don’t want to risk keeping their funds in online “hot wallets.” In its 7 years of being in business, Gemini has never been hacked, making them one of the most secure DeFi platforms in the world.
BlockFi is, by far, the best platform for people who are just getting into the cryptocurrency scene. It provides a wide number of De-Fi solutions from great Bitcoin interest accounts to a simple investing platform that anybody can understand.
However, for those who are more experienced crypto investors, I would definitely suggest Gemini.
Although it doesn’t offer some of the money management and lending services that BlockFi, Nexo, and Celsius offer, Gemini is widely regarded as having one of the world’s top cryptocurrency exchanges.