A Guide to Gemini Trading and Staking Rewards
Yes you’ve read my articles on Medium for a while, you’ll know I’m a big fan of stablecoins – they’re not volatile like Bitcoin, and you can stake them for very decent returns compared to a traditional bank like Ally or Wells Fargo.
They are basically the “conservative” side of cryptocurrency.
For those new to stablecoins, they work like this:
A Gemini (GUSD), Dai, USDC, etc. basically equals $1.
I should note – there are minor price fluctuations on some of the stablecoins – the keyword is minor. I’m talking – a Dai could fall to $0.9986; a much more reasonable price variation than BTC.
Until February I was using both BlockFi and Nexo, until they disabled the ability to add additional funds to your account or create a new account until they finished signing up with the SEC.
Both are great companies, but since I would love to continue buying stablecoins, I knew I had to find an alternative.
Also, BlockFi and Nexo had state restrictions that weren’t much fun.
I started playing on the Gemini exchange, and I’m happy with my results so far. Not only are the returns decent (I get 8.05% on GUSD), but the user interface is the easiest to use of all the platforms I’ve tested.
Background on Gemini:
First and foremost, I would like to point out that Gemini is a New York-based trust company regulated by the New York State Department of Financial Services.
They are subject to capital reserve requirements, cybersecurity requirements, and banking compliance standards established by the NYSDFS and New York banking law. Gemini is also a qualified trustee and custodian.
Simply put, this means you can expect top-notch, no-frills security protocols.
From an insurance perspective, the majority of your cryptocurrency is kept in cold storage offline (to protect you from hackers).
A small portion is kept in an online hot wallet that is always insured against theft resulting from a security breach, hack, fraudulent transfer or employee theft.
If you’re wondering what’s the difference between a cold wallet and a hot wallet, a cold wallet is the safest option because it’s usually not connected to the internet. The downside is that it’s much less convenient. A hot wallet, on the other hand, is connected to the internet. Although considered “less secure”, it is faster/easier to trade or spend crypto (again, Gemini has insurance on crypto stored in a hot wallet).
I should also point out that they will insure up to $250,000 in balances.
This is a much better alternative to many Cefi/Defi projects that have no real plan in place to protect against cyberattacks or loss of funds – a very real concern in general, but an increased concern considering international affairs.
Finally, I would like to point out that EVERYONE residing in the United States – no matter what state you reside in – can use Gemini.
Gemini vs. Coinbase:
Both exchanges are very similar in terms of features, fees, and security.
You can buy, sell and stake cryptocurrency on both platforms.
Fee-wise, here’s what you can expect from both exchanges with standard Coinbase and Gemini accounts:
0.50% convenience fee; $0.99 to $2.99 transaction fee; 1.49% transaction fee for transactions over $200
Additionally, additional fees may apply depending on the payment method you choose.
ACH transfers from a bank account are free with both exchanges. Gemini also offers free wire transfers, while Coinbase charges $10 for wire deposits and $25 for wire withdrawals.
What’s quite different – and why Gemini is superior – are interest rates.
Coinbase has subordinate interest rates on many stablecoins (like USDC) – we are talking about an APY of 0.15%.
As I mentioned before, I am currently earning 8.05% on my Gemini USD.
So far, I’m happy with my results on Gemini as well as the simplicity of the platform. If you are looking for an assured platform to store crypto and earn interest, you can register here.
The link to Gemini is an affiliate link, but that doesn’t change my view of the company, and I wouldn’t recommend a product or service that I don’t personally use. I had plenty of other opportunities that I turned down because they stank 😄.