In brief

  • Crypto lender BlockFi will support Chainlink deposits on its platform starting tomorrow.
  • Chainlink deposits will earn 5.5% APY with interest paid in LINK tokens.

The cryptocurrency space is still largely dominated by the original king of crypto in Bitcoin, but a few newer entrants have carved out strong followings of their own. Among them is Chainlink (LINK), which had a monster year in 2020, skyrocketing in price by over 500%.

Now, investors in Chainlink have a new way to earn interest on their holdings. 

Crypto lending firm BlockFi has paid out more than $20 million in interest on deposits of Bitcoin and Ethereum. Tomorrow, the firm will add Chainlink as a new deposit option to earn yield.

BlockFi announced the news via Twitter today, indicating that it plans to offer up to 5.5% APY on LINK deposits. Interest on those deposits will be paid in Chainlink tokens.

BlockFi, founded in 2017, offers interest of up to 8.6% APY on different cryptocurrencies including Bitcoin, Ethereum, and Litecoin, as well as deposits of dollar-pegged stablecoins such as Tether (USDT) and Centre’s USDC

To generate yields, BlockFi lends out deposited assets to business clients and other institutional-grade investors. BlockFi also manages an over-the-counter Bitcoin trading desk and recently filed documents with the SEC to launch a Bitcoin Trust similar to existing offerings from leading digital asset management firm Grayscale.

Chainlink provides a network of “oracles,” or external data providers supplying information on asset prices and other variables to smart contracts, automated blocks of code that run using blockchain networks like Ethereum. Smart contracts rely on oracles to provide data about off-chain events, making Chainlink (and competing oracle providers like API3) a critical part of operating decentralized finance protocols.

Decentralized finance, also known as DeFi, represents a collection of protocols designed to replace the products and services typically offered by banks and other financial institutions with blockchain-based equivalents. DeFi users can get loans, swap assets, and earn interest on crypto deposits, all without relying on a centralized third-party to facilitate the activity.

Both BlockFi and Chainlink experienced explosive growth in 2020, with BlockFi’s assets under management increasing 1,500% to more than $4 billion. On top of the 500% jump that LINK enjoyed last year, Chainlink prices have continued to go up in 2021: the asset is up 140% since January 1.

Disclaimer

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.