The word Stacking has a peculiar significance for me and never fails to whisk me back to 2014 and my days doing regional work, employed as a Stacker in an orange packing shed in rural Australia. In those days Stacking meant 10-12 hour shifts 6 days a week throwing 20kg boxes of oranges onto a pallet to be shipped away for delivery. I even christened myself Chief Stacker amidst the chaos of it all. Gladly, in 2021 Stacking has taken on a vastly different meaning for me although I do admit some nostalgia for my days spent in Mildura Fruit Company.
Stacking for me now means a guaranteed way to earn Bitcoin rewards and it is by no means the only option out there. Perhaps you are perfectly happy to hodl but perhaps you are weary of simply hodling. At this stage you’ve hodled and hodled, been through bull runs and bearish dips, scoffed at Schiff, pumped Pompliano. Now you’re finally there. You believe in this thing. 10% corrections don’t phase you, 20% pumps are par for the course. You’re starting to wonder, is the wisdom of “make your money work for you” applicable to crypto? This article will assess three of the available options for earning Bitcoin rewards so you can start making your crypto work for you. The three options we will look at are the BlockFi Interest Account, Binance Savings and Stacking STX. We will look at the pros and cons of each while focusing on the three key areas: rewards, the set-up, and privacy and security.
BlockFi Interest Account (BIA): All-in-One Crypto Bank With Up to 5% APY
BlockFi: The future of finance or the bank in disguise? Whether you love it or hate it you can’t deny that BlockFi offers some of the best interest rates around of any crypto platform. Founded in 2017 by Flori Marquez and Zak Prince, BlockFi lends U.S. dollars against Bitcoin and other cryptocurrency collateral, as well as accepting deposits of cryptocurrencies which pay interest to the depositor. BlockFi has garnered a reputation as one of the leaders in the crypto lending and borrowing space and is backed by industry-leading investors such as Coinbase Ventures, Valar and Winklevoss Capital. However, for these very same reasons the platform is much maligned by the “not your keys, not your coins” crypto-anarchist type and has been slightly shaken by two interest rate reductions in the space of two months. Ultimately, it will be up to you to decide where you land on the crypto spectrum and whether or not a BlockFi interest account is the right option for you.
Rewards
BlockFi provides lenders with moderate but consistent returns on their Bitcoin. The APY (Annual Percentage Yield) for Bitcoin rewards is split into 3 rates based on how much BTC you are able to lend with no minimum deposit required and higher yields for smaller deposits. For deposits less than 0.5 BTC the rate is 5% APY, for deposits between 0.5 BTC and 20 BTC the rate is 2% APY and for deposits over 20 BTC the rate is 0.5% APY. The more you can afford to lend, the lower your rate of returns will be. BlockFi pays rewards into your BlockFi account at the end of every month and auto compounds to increase yield as time goes on for long term savers. The BlockFi homepage has a handy calculator to calculate estimated earnings for up to 30 years in the future for those considering not just a fling but a long term relationship with BlockFi. You can withdraw your funds at any time and BlockFi currently offers one free crypto withdrawal and one free stablecoin withdrawal per calendar month. There have been reports that the withdrawal process can be a little lengthy compared to other services. Returns are somewhat dependent on the market and auto compounding interest but a 5% APY should yield roughly $5 for every $100 deposited.
The Set-Up
BlockFi account set up is straightforward. You must provide your name and a valid email address. To deposit to the BlockFi Interest Account you will have to provide an up to date photo ID for KYC (Know Your Customer) Verification which is usually approved in minutes. Once set up you can deposit BTC into your BlockFi account or buy BTC through BlockFi and start earning rewards. If your application has been pending for more than 48 hours you should email onboarding@blockfi.com and let them know. To sign up for BlockFi using a referral code for an added bonus follow this link: https://www.blockfi.com/?ref=9c6e71d8
Privacy and Security
BlockFi is a good fit for those just dipping their toes into cryptocurrency who still want the security and regulation of institutional finance. By contrast, BlockFi is probably not the best option for the crypto-purist. It is a custodial service and as a result, it fails on the mantra of "not your keys, not your coins". The Gemini Trust Company (Tyler and Cameron Winklevoss) secures all crypto held by BlockFi under the regulation of the New York Department of Financial Services. However, BlockFi is not insured by the FDIC or SIPC. BlockFi does take measures to protect customers' funds. These measures include keeping the majority of funds in cold storage (i.e., offline). BlockFi also says that its client funds are placed ahead of any equity or employee funds in the event of a loss. While some may argue money deposited with BlockFi is not as safe as being on deposit at a bank, others may argue a traditional bank is the least safe place to deposit your money.
Binance Savings: Flexible Options From World’s Leading Crypto Exchange
Tokenized Stocks? Classic Trading vs. Advanced Trading? Vanilla Options? BATTLE?!! Is this a crypto exchange or a video game? First-time users may feel intimidated and even overwhelmed by the plethora of trading options made available on Binance. Despite this, the site is easily navigable and offers a pathway to more advanced trading options should you wish to pursue them. The cryptocurrency exchange was founded by Changpeng Zhao (commonly known as CZ) in 2017 and is the largest cryptocurrency exchange in the world in terms of trading volume as of April 2021. For the same reasons as BlockFi, Binance has faced criticism for being a centralized exchange with many of the familiar drawbacks of traditional finance. CZ addressed these concerns in this blog post: Centralization Vs. Decentralization where he outlined his views on the matter. The Binance Savings feature offers a huge range of options for earning interest on cryptocurrencies including Flexible Savings on Bitcoin which we’ll now explore in more detail.
Rewards
With Binance Flexible Savings, you can commit as little as .001 BTC and earn interest. The glaringly obvious drawback compared to our other contenders in this article is the 1.2% APY. Binance offers better than a traditional savings bank but nowhere near as much as BlockFi or Stacking. No interest is accumulated on products purchased on the day of subscription, interest is calculated the next day. You can redeem funds at any time and you can choose between fast redemption or standard redemption to redeem your assets. For standard redemptions, the full amount will be returned on the second day after redeeming at 00:00 AM (UTC). For fast redemptions, you will receive the full amount of your digital assets back on the day of redemption without interest. The low APY means $100 deposited will earn roughly $1.20 over a 12 month period.
The Set-Up
Binance offers arguably the widest range of services in terms of trading, staking and earning on a cryptocurrency exchange. This may in fact scare some users off at first but its popularity seems to suggest enough are willing to take on the challenge. The user interface is slightly intimidating and Binance looks and feels like a place for advanced traders and crypto aficionados. In reality, the core features of Binance are easy to use and are accessible to all. You can set up an account through email or phone. Similar to BlockFi, identity verification is necessary to start earning, so keep this in mind if privacy and anonymity are important for you. Identity verification usually takes less than 1 hour. You can buy BTC directly from Binance or transfer your BTC to your Binance wallet. Once you are set up, navigate to the 'EARN' section of the website, find 'FLEXIBLE SAVINGS' and choose the option to transfer your BTC to start earning rewards albeit meagre(ish) ones. To sign up for Binance using a referral code for an added bonus follow this link: https://www.binance.com/en/register?ref=15683838
Privacy and Security
Due to it being a centralised exchange, Binance, like its brother BlockFi, fails the "not your keys, not your coins'' test. Users should also be aware the platform was hacked in 2019 but the company was more than forthcoming about this and vowed to review all its security processes in the aftermath. As far as exchanges go, Binance is a well respected one and takes security seriously, encouraging all customers to use two-factor authentication on their account. The APY is disappointing but Binance can offer an introduction for those wanting to learn more about trading and earning with crypto as it has arguably the most comprehensive options available.
Stacking With STX: Hold STX Tokens, Earn Up To 15% BTC APY
Founded as Blockstack in 2013 by Muneeb Ali and Ryan Shea, Stacks is an open-source network of decentralised apps and smart contracts built on Bitcoin. Stacks aims to harness Bitcoin’s full potential as a programmable base layer. STX is the native cryptocurrency of the Stacks network. It is used as fuel for blockchain transactions and enables holders to earn Bitcoin through Stacking (STX tokens that is, no heavy lifting of boxes of fruit will be involved). Stacks is a fully decentralised protocol but Stacking is available as a service on two cryptocurrency exchanges and so hopefully can satisfy the needs of the full spectrum of crypto enthusiasts.
Rewards
Stacking is locking your STX temporarily to support the network’s security and consensus. As a reward, you’ll earn the Bitcoin that miners transfer to compete for STX mining rewards as part of the Proof of Transfer/Stacking consensus protocol. Rewards from Stacking are accumulated in cycles. Each cycle lasts for 2100 blocks (14-16 days). APY varies from cycle to cycle but Stackers should expect to earn around 10% per cycle on the STX they lock up. Stackers earned an average of 9.7% APY last cycle. Rewards are the highest but the least stable of the three options with no fixed rate on offer. This means $100 should earn roughly $9-10 over 12 months with APY varying between cycles. Rewards are paid daily and someone Stacking 50,000 STX should expect to earn roughly .0165 BTC/$900 per month. To Stack by yourself, there is a dynamic minimum of roughly 100,000 STX, but fortunately, there is a wide variety of options to join Stacking Pools for as little as 40 STX. Most delegated Stacking Pools pay rewards in BTC to a designated address but there are some which pay STX rewards (Friedger Pool).
The Set-Up
This is a little different from the previous two examples and gives you the greatest responsibility while simultaneously offering the widest range of options. One possible disadvantage is that you must buy and hold STX tokens rather than simply earning interest on BTC you are hodling. It should be noted, however that STX has performed incredibly well over the past 12 months and continues to announce further exciting developments. There is a wide range of Stacking options for all levels of interest and knowledge:
Non-custodial: Stack by yourself through the Hiro Stacks Desktop Wallet (must hold > minimum STX threshold of approx. 100k STX)
Non-custodial: Connect to a Stacking Pool through Hiro Stacks Desktop Wallet. (Staked,Xverse, Plan Better, Friedger Pool)
Custodial: Connect to a Stacking Pool through Okcoin or Okex
The most similar to BlockFi and Binance is custodial Stacking through an exchange. Once your account is set-up and verified through phone or email, you can buy or deposit STX to your exchange wallet address. Once you have your STX tokens, you must navigate to the 'Earn' section of the site and deposit your STX to start earning daily rewards in BTC. To sign up for Okcoin or Okex using a referral code for an added bonus follow one of the links: https://www.okex.com/join/7350105
https://www.okcoin.com/join?channelId=600009922
Privacy and Security
A major advantage of Stacking with STX is that you can delegate your STX to a Stacking Pool to earn BTC rewards without the STX ever leaving your Stacks Wallet. Of the three options discussed to earn BTC it is the only one where you can earn BTC while keeping custody of your own cryptocurrency. This means security is up to you: "your keys, your coins". You can take responsibility for the security of your cryptocurrency. There are also options available through custodial Stacking Pools on exchanges for those who feel more secure in traditional banking methods. With Stacking, you can have your cake and eat it too or Stack your sats and Stack STX too?
All three options discussed in this article have their own advantages and disadvantages. For those used to traditional finance, BlockFi is an excellent way to explore earning interest on Bitcoin. Binance offers lower reward payouts but has the advantage of arguably the largest range of crypto services on offer. Stacks offers an opportunity for those who are looking to get their hands dirty in the crypto space and take more responsibility for the custody of their cryptocurrency while earning Bitcoin at the same time. Stacking provides the highest APY and also the most flexible range of options. Those used to traditional finance can delegate Stacking through an exchange such as Okcoin while more experienced crypto users can Stack by themselves through the Stacks Wallet and keep custody of their cryptocurrency.
I hope you have found this article useful - now this is your Chief Stacker telling you to get Stacking………... those oranges!!
Detailed report of Stacking options here: https://marklar.substack.com/p/stacking-report
