But, I have serious concerns about learning my crypto to 3rd parties. What happens if the institution that I loan to, for example BlockFi, goes brankrupt? I assume I will lose my crypto. Would it be safer to loan to an exchange and I don't run that risk?
If the 3rd party company is a regulated and well-established company, the chance of being insured is possible. I don't know about BlockFi but seems they are a strong and reputable company.
But everything can change overnight, as to my own decision, I won't try their service but instead, I will choose crypto-exchange with interest features. Same risk but the exchange can stand strong more.
in these times, even if the company is strong and established, few months from now and the possibility that they may not be up and running is always there. we cant tell their survival here in crypto. though BlockFi has been here since 2017 and they are pretty much doing great. but if you remember their security was breached last year -
https://blockfi.com/wp-content/uploads/2020/05/Incident-Report-05-14-20.pdfnow, if you are ready to take risk for all possible situations, you can do so. but will trust my funds more in an insured platform like binance, they have
lending also on their platform.