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1/16 Did you know you can make money from your XRP without even selling it? You can! But there are some things to watch out for and be aware of if you decide to do so.
(Video version @ )
A thread.
(Video version @ )
A thread.
2/16 Interest rates for bank accounts are dismal, near zero (below zero in some countries). With global money printing accelerating, leaving money in a savings account is a great way to LOSE 10-15% of purchasing power every year. That's one reason many of us are in crypto.
3/16 Did you know you can also earn interest on your crypto, and that the interest rates you get are far higher than what a bank will give you for your US dollars? Even with the SEC lawsuit, there are still a few places that will pay US XRP holders interest on their crypto.
4/16 The way it works is very similar to a bank. You transfer your XRP into an account and you're paid interest on it. The similarities end there, though. The interest rates are much higher and are paid more frequently (daily or weekly).
5/16 There are 2 sites that I am aware of which will pay interest on XRP to US holders despite the SEC lawsuit: http://Celsius.network and http://Nexo.io . How do they compare to each other, and what should you be aware of? Let's look at each one.
6/16 http://Celsius.network offers 2.5% APY on XRP (3.26% if you buy CEL tokens, a risk b/c they're tradable and can lose value). Interest is paid weekly. Celsius is in London, is heavily regulated and has been audited by an indep. 3rd party, Chainalysis. https://celsius.network/why-trust-celsius/
7/16 Celsius uses FireBlocks and PrimeTrust for custody, which both provide insurance against theft/loss, but not for assets that are lent out (which is how Celsius pays you interest). Celsius says loans are collateralized "up to" 150% of their value. https://support.celsius.network/hc/en-us/articles/360002174718-Do-you-have-an-insurance-policy-
8/16 At 6% APY, http://Nexo.io is the clear winner for XRP yield. You earn 8% if you're willing to be paid in NEXO tokens. While that may sound good, it adds another risk layer (NEXO is tradable and can lose value). Being paid in XRP guarantees 6%. Interest is paid daily
9/16 Nexo was started by TechCrunch founder Michael Arrington, which lends credibility, but doesn't say where it's actually headquartered. A bit of research turned up that its headquarters are in Bulgaria, but that could not be verified.
https://www.reddit.com/r/Nexo/comments/dggdt6/what_country_is_nexo_based_in/
https://www.reddit.com/r/Nexo/comments/dggdt6/what_country_is_nexo_based_in/
10/16 Location information being absent seems shady. Not knowing clearly how/where an institution is regulated doesn't inspire trust. It's regs page gives a non-answer, saying only that it has "legal entities" in 200+ countries, but that doesn't mean much. https://support.nexo.io/hc/en-us/articles/360008236853-Where-is-Nexo-registered-and-is-it-regulated-
11/16 Nexo uses BitGo for custody, which has a $100 million insurance policy, but Nexo holdings appear to be much more than that. It's unclear whether that insurance policy covers your crypto when it's being lent out (which is how they pay you interest).
https://www.reddit.com/r/Nexo/comments/ehleqf/quick_stats_on_nexo_deposits_early_version/
https://www.reddit.com/r/Nexo/comments/ehleqf/quick_stats_on_nexo_deposits_early_version/
12/16 If you're comfortable with the additional risk of murky regulatory status, Nexo will pay more than double the interest of Celcius. However, while Celcius appears to be more clearly regulated, neither institution is a bank and your deposits being fully insured appears iffy.
13/16 Keep in mind that US taxpayers have to pay tax on the interest earned, including for crypto. Interest is taxed at ordinary income rates, so you'll want to keep track of that and consult with a tax professional when it comes time to pay Uncle Sam.
14/16 A word of warning: As the saying goes, "not your keys, not your crypto", so you're taking a risk when you let another company custody your crypto, especially a non-bank located overseas where it could be difficult/expensive to seek legal relief if something goes wrong.
15/16 I personally do not trust any institution to custody my crypto. As the industry matures, custody laws catch up, and deposits become Federally insured in the same way banks are, I'm certainly open to changing my position. Right now, though, it's a bit too Wild West for me.
16/16 SUMMARY: US residents have at least 2 options for earning interest on XRP while awaiting moon-time. Nexo pays 2x more interest but w/murky regulation. Celcius network is more clearly regulated, but isn't a bank. Not your keys, not your crypto, so proceed with caution.
More explainer threads. https://twitter.com/xrpartisan/status/1347653134504652801
Watch my threads as videos on my YouTube channel. https://www.youtube.com/channel/UCakPUIZ8-ncZSdt5Efrgjng
