BlockFi vs Celsius Network
Today we’ll be comparing BlockFi and Celsius, the two most popular crypto lending platforms to see which one is the best lending platform for you. We’ll also be looking at the risks of lending crypto to others via a centralized crypto lending platform.
Watch our comparison between BlockFi and Celsius Network.
BlockFi vs Celsius - Comparison
Below you can see a breakdown, showing the main differences between BlockFi and Celsius.
|Operating since||2017, founded by Flori Marquez and Zac Prince||2017, founded by Alex Mashinsky and Daniel Leon|
|Minimum investment amount||$1||$1|
|Deposits||Crypto or USD (as stablecoin)||Crypto only, or buy directly from the app with a credit card (3.5% or min $10 fee - special rate for EEA and UK residents of 2.99%) + additional 0.6% fee, or bank transfer (0.1% - 0.5%) fee|
|Withdrawals||1 free withdrawal in crypto, 1 free withdrawal in stablecoin per month||Unlimited free withdrawals|
|Withdrawal fee||0.00075 BTC, 0.02 ETH, 10 USD for Stablecoins||None|
|Insurance||$200M Gemini insurance that covers hot wallets||$30M Fireblocks and PrimeTrust insurance that covers hot wallets|
|Safety||2FA, whitelisted addresses, biometrics (app only)||HODL mode, 2FA, whitelisted addresses, biometrics (app only)|
|Interest rates for lenders||Usually fixed: BTC from 3% to 6% (depending on your amount), ETH 5.25%, LTC 6.5%||Weekly change: BTC 4.06%, ETH 5.05%, LTC 4.08|
|Rates for crypto-backed loans||Only allows USD from 4.5% APR + 2% origination fee||USD or stablecoin from 0.7% APR|
|Loan terms||Only in USD for US based borrowers, min $5000 for 12 months||Cash or stablecoin from $500, no credit check, no origination fee, payback in CEL token or USD, min. 6 months|
|Coins||11 cryptocurrencies and stablecoins||30 cryptocurrencies and stablecoins|
|Token||none||CEL token (higher interest rates)|
This table should give you a good overview about the differences between BlockFi and Celsius Network. Continue reading our BlockFi vs Celsius comparison to find out even more about those two platforms.
How is my investment secured?
The security of your investments is equally good on both crypto lending platforms. Your deposits will be used to fund crypto-backed loans. This means that the borrower will need to deposit at least twice as much crypto-assets as the desired loan amount.
In the situation, where the value of the deposited collateral from the borrower drops, the platform will initiate a margin call, which means that the borrower will have 24h to either deposit more crypto or to match the contractual loan-to-value ratio or repay the loan.
If the borrower fails to react, the platform has the right to sell the collateral and repay the loan.
Are those platforms regulated?
Note that your deposits are not FDIC insured as none of the crypto lending platforms has a banking license. Both platforms are regulated by the SEC in the U.S. and Celsius is aiming to become regulated by the FCA in the UK.
Are there any hidden fees I should be aware of?
Both platforms are transparent when it comes to listing their fees. There are, however, additional transaction fees, which none of the platforms are mentioning.
When exchanging your cryptocurrencies or transferring it from your wallet to the platform, you will be charged a transaction fee.
The fees vary depending on the current demand on the blockchain as well as the network on which the coin is running.
So for instance, ETH or any stablecoin that runs on the ethereum network requires a so-called “gas fee” to be able to transact this digital currency.
In addition to the transaction fee, you will be charged a withdrawal fee if you're transferring your coins from an exchange.
Can I lose my cryptocurrency?
When transferring your coins to any exchange or any crypto lending platform, there’s always the chance that you might lose all of it. Your deposits are not secured by any government and most of the crypto lending platforms are centralized.
This means that as soon as you transfer your crypto to the crypto lending platform, the platform changes the coin into an obligation to return the same amount of that crypto plus any interest earned.
This means that technically you are not owning your private keys to the wallet which means that the platform becomes the owner of your coins. We called this status IOU (I owe you).
If you are no longer the owner of your crypto assets, the platform might decide to not process your withdrawal request in the future or freeze your account. In the worst case scenario you might lose your investment.
How big are the chances to lose my money?
Well, it comes down to how BlockFi or Celsius will use your deposits. As both platforms are to certain extent regulated and well established, the chances of a scam are rather low.
Apart from the counterparty risk you also need to keep in mind the currency-risk. The value of your crypto currency fluctuates. If at some point you decide to liquidate your position, it can take up to two days (sometimes even longer) to access your cryptos which can have a negative impact on your overall portfolio.
BlockFi has also been hacked in the past and hackers were able to retrieve personal information of half of BlockFi’s users at the time.
As you can see, there are several risk factors that you should consider when lending crypto to others.
You should certainly ask yourself the question why you want to lend your crypto to others in the first place. If you expect the value of your crypto to increase by 100% in the next 12 months, it’s not really worth it to risk all of it just to get an additional 6% in interest.
For this reason, we don’t use any of the crypto lending platforms but store our crypto on a safe hardware wallet where we are in control of the private keys.
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Which platform is better? BlockFi or Celsius?
It really depends on what you prefer. It’s worth noting that Celsius is currently available only as a mobile app while BlockFi offers both Desktop and mobile versions of the platform.
If you are from the U.S. and you plan to lend and borrow money at the same time, BlockFi will be the better fit for you as Celsius doesn’t offer loans to borrowers from the U.S.
If you are from the U.S. or from any other country and you only want to lend your cryptocurrency, Celsius is a slightly better choice. The platform supports many coins which aren’t available on BlockFi. The CEL token is also one of the most valuable utility tokens which you can also trade on the BitFinex exchange.
The yield as well as the rates for loans on Celsius are slightly better for most users.
If you end up lending on either platform, we have a referral code for both which will give you a small bonus.
Get $10 worth of BTC on BlockFi
Get $40 worth of BTC on Celsius
Or read our dedicated Celsius Network review.