As the second largest and most popular cryptocurrency on the market, there are no doubt many people who are eager to earn interest with Ethereum. However, like most aspects of the blockchain space, there is a lot of variety when it comes to this. With such a huge range of companies and services offering methods of earning interest with ETH, it can be hard to make sense of the landscape and pick the right option for you.
With this in mind, we have decided to collate some of the best Ethereum interest rates on the market, and see how they compare against each other. This should help to add some much-needed clarity for anybody currently searching.
What is Ethereum?
Ethereum is the second-largest cryptocurrency in the industry. It is a crypto ecosystem, which means that people can do much more than simply send digital assets between one another– they can also create programmable contracts with it (known as smart contracts), and even build applications on top of it.
It is a proof-of-stake blockchain, which means that it uses a system where people who hold more of the blockchain's coins can help validate transactions and create new blocks.
How Do I Earn Interest On My Ethereum?
There are three methods that can be used to build interest on your Ethereum. This can happen via a savings or Growth account, yield farming, or by staking your ETH.
Ethereum savings accounts, such as Ledn’s Growth Accounts, are a popular option for many individuals or entities. In these accounts, you deposit your ETH and allow it to earn interest over time. The total interest you gain depends on how much ETH you put into the account and how long you keep it there. It is fair to say that savings or Growth accounts are the most tried and trusted method out there, as they have a longer legacy and history.
Yield farming, on the other hand, is a newer and more experimental method of earning interest on Ethereum. It is essentially the process of lending your digital assets to a liquidity pool on a decentralized network, and receiving rewards for your contributions. By lending your assets, you add liquidity to the service, helping it to keep afloat. As Ethereum is the top blockchain ecosystem in the industry, there is a lot of demand for people to do this.
Related Content: How to Use Ledn to Grow Your Digital Wealth
An even more experimental and cutting-edge way of earning interest is via staking. This is where you lock away a certain amount of ETH on the blockchain itself for a set period of time, with the wallet it is locked in being used to validate blocks and ensure transactions occur on the chain. Doing this makes you an instrumental part of the Ethereum network, although be aware that it is a very novel approach to earning rewards, as Ethereum only recently switched to proof-of-stake, meaning that mistakes at the foundational or developer level could still get triggered at some point.
Related Content: How to get a loan on Ethereum
The Best Ethereum Interest Rates
Let’s take a look at some top ETH interest rates the market has to offer, and give an overview of the projects that are providing them. These will all allow you to gain interest via savings or Growth accounts, yield farming, staking or even perhaps a mixture of the three.
Ledn
Renowned for its transparent practices and currently offering competitive interest rates of 2.00% APY on ETH, Ledn has become a favorite among crypto enthusiasts. The platform is known for its reliability, made clear by its semi-annual proof-of-reserve attestations, detailed monthly open book reports, and stringent risk management such as its ring-fenced Growth Accounts that prevent the digital assets held in such accounts from being affected by any counterparty or activity that is not directly involved in the generation of interest for them. Opting for a Ledn ETH Growth Account means you are engaging with a highly esteemed and reliable company when it comes to crypto savings and loans.
ETH interest rate: 3.00% APY
Aave
Aave stands at the forefront of decentralized lending, pioneering in this sector. While it has established a strong reputation in DeFi, it is important to remember that its decentralized framework naturally means there is limited customer support. Additionally, the foundational protocols and techniques it employs are quite innovative and experimental. However, this can be a double-edged sword, as it makes them cutting-edge, whilst also potentially exposing them to unforeseen complications in the future.
ETH interest rate: 0.0001–0.042% APY
Binance
Binance is widely recognized for its crypto trading services, although this is just one of its functions, as it also provides opportunities for users to earn interest on their ETH holdings. It is important to state, however, that the most favorable interest rates are reserved for VIP users– a status attained through having significant monthly trading volumes. Therefore, this feature tends to be designed more so for users who perform regular higher-value transactions, than the average consumer.
ETH Interest rate: 0.78% APY
Bake.io
Bake.io, or CakeDeFi, as it used to be called, is a decentralized crypto toolkit with some architectural similarities to Aave. However, the project has a few different features, and is less well-known than its counterpart.
ETH interest rate: 5.00% APY
YouHodler
YouHodler is a centralized crypto toolkit that has several features aimed at building interest. In many ways, it takes a relatively novel approach to earning interest by trying to combine it with actual trading. Unique services, such as its Multihodl dashboard has enticed people in the past, although it is by no means a simple tool to get your head around.
ETH interest rate: 4.08% APY
Blockchain.com
Blockchain.com is an established block explorer and wallet service. However, what many people might not know is that the company offers lending and saving services as well. This is for many cryptocurrencies, including Ethereum.
ETH interest rate: 3.00% APY
Nexo
Nexo, previously celebrated as a prominent figure in the crypto savings and lending industry. Despite some regulatory challenges, Nexo continues to retain a dedicated group of users.
ETH interest rate: 8.00% APY
Bit.com
Bit.com is mainly known for its trading services, but it also provides savings accounts for ETH, BTC, and other cryptocurrencies. The low minimum deposit requirement of just 0.01 ETH makes it an attractive option for newcomers eager to delve into the world of cryptocurrency for the first time.
ETH interest rate: 2.25% APY
Related Content: Compare Ethereum Loan Rates
Direct Staking With Ethereum
If you are interested into staking, then you could either look for a service that will help you do that, such as Binance (at 1.00% APY), Coinbase (at 6.00% APY), or Kraken (at 3.00-6.00 APY), or you could stake directly and cut out these intermediaries.
Rather than doing this via another company, it might be worth taking a look at how to perform the action on your own. Staking is a decentralized activity that does not require a company or third party of any sort, meaning that it can be done independently. Of course, this full independence, coupled with the novel nature of staking, means there could be some errors or problems that may occur in the future. But this is simply the nature of using such experimental and cutting-edge tools.
ETH interest rate: 3.80% APR
Is Ethereum safe?
All cryptocurrencies come with some inherent risks that need to be taken into consideration. For starters, this is because this industry is relatively new, compared to other asset classes. Therefore, we cannot know with any level of certainty what the future will hold for them, or whether they will simply be a passing fad. Not only this, but cryptocurrencies are cutting-edge and innovative. This is both a positive and a negative, because the best innovations also come with experimentation, and often tread on unchartered territory.
This is especially the case with Ethereum, which is the leading crypto ecosystem on the market, and is regularly pushing boundaries and setting standards in this space. However, it does not mean that you should avoid Ethereum. Rather, it means you should keep this in mind and act with caution (as you should always do, no matter what financial activity you are engaging in).
Is Earning Interest on Ethereum Worth It?
Deciding whether it is worth earning interest on Ethereum will come down to a range of factors. You first need to ask yourself if you’re comfortable having your digital assets locked away somewhere else, out of your hands, for a set period of time. Some accounts and services let you access these digital assets sooner if needed, but generally, the expectation is that the assets are left to accrue undisturbed and untouched by the original owner.
Alongside this, it is also crucial to weigh the associated risks. It is definitely possible that ETH could dramatically lose its value, as it is a highly volatile asset, just like BTC, and practically every cryptocurrency (other than stablecoins like USDT and USDC). This does not mean you should avoid trying to earn interest on Ethereum. But it is definitely something you need to keep in mind and be aware of, so that you do not get blindsided, should it drop.
Of course, this also means that it can reach tremendous highs as well. Just note that, if you are using a savings or Growth Account, or have your funds locked away somewhere, then you might not get the chance to withdraw or access those assets, should volatility occur. A general rule is that the higher the APY, the riskier the investment. For example, while Ledn may not have the highest APY, it comes with certain safeguards (e.g. ring-fenced growth account and best-in-class transparency) that other platforms may not have.
Weigh these notions up against the fact that you can earn sizable rewards with minimal effort. If you have some ETH that you are willing to place somewhere for a period of time, then you can make a decent return, which could exponentially grow as time goes on.
How Do You Maximize Your Returns With Ethereum?
The most effective way to enhance your earnings is to choose a service offering favorable ETH interest rates and then send your assets to it for an extended duration. Interest accrues more significantly over a substantial timeframe, meaning the longer your ETH is invested in an account like this, the greater your returns will be.
A prime example of such a service is Ledn’s ETH Growth Accounts. With an attractive current interest rate of 2.00% APY, these accounts provide solid returns while ensuring peace of mind through Ledn's renowned commitment to transparency and risk management.
It is worth keeping in mind that the most substantial gains are usually seen by those who can afford to be patient, or have the resources to let their investment grow over time. While a year-long commitment isn’t necessary to see benefits, holding your ETH for several months or longer generally yields better results.
Conclusion
As you may have gathered, the crypto market offers a wide array of Ethereum interest rates, each controlled and provided by different companies and services with their unique practices, methods, and risk management strategies. While high interest rates are fantastic, they should only be one factor in your overall decision-making process. It is equally (or potentially even more) important that you choose a service that is trustworthy and respects its community.
In this context, Ledn’s Growth Accounts stand out for building ETH interest. Ledn not only offers impressive interest rates but also shows a genuine commitment to its users. They safeguard the funds held in their ring-fenced accounts and maintain transparency through regular open-book reports and proof-of-reserve attestations. If Ledn's approach appeals to you, it's worth exploring their services in more detail and considering their accounts for your ETH holdings.
Sponsored by 21 Technologies Inc. and its affiliates (“Ledn”). All reviews and opinions expressed are based on my personal views.
