What Is the Celsius Network?

The Celsius Network utilizes blockchain technology to deliver various credit and payment options. Its mission diverges significantly from that of traditional financial institutions:

Secure financial services while prioritizing community welfare over intermediaries.

How Does It Operate?

The model hinges on the over-collateralization of cryptocurrencies and the practice of rehypothecation. This involves using crypto assets held as collateral on the Celsius platform to lend to larger investors seeking dependable cryptocurrency investments, facilitated through the Celsius App.

Investors like hedge funds can borrow cryptocurrencies directly from the Celsius Network, a reliable source, rather than uncertain external markets. Consequently, Celsius presents a compelling opportunity for institutional investors looking for a secure entry point into the crypto space, pooling assets effectively.

The interest income generated from these investors is reinvested back into the community, with 80% of profits returned to Celsius users and 20% allocated for platform development. An examination of the Celsius Network reveals a well-structured ecosystem that incentivizes user interactions.

Celsius comprises hosted accounts and various crypto exchanges, aiming to limit crypto-asset transfers outside its ecosystem.

Key players in the Celsius ecosystem include:

• Lenders: Individuals depositing assets to earn interest.
• Borrowers: Margin traders seeking leveraged positions.
• Celsius Platform: Facilitates trades and transactions.
• External exchange markets: Handle trade executions and liquidity provision.

> Earn up to 17% APY paid weekly. Start earning competitive rates on any crypto amount and receive payments every Monday while you hold. Additionally, increase your rewards by up to 25% by opting for CEL token payouts. — celsius.network

Earning through the Celsius Network

Users can leverage their cryptocurrencies within the Celsius Network to earn interest. The platform currently supports over 35 tokens, including BTC, LTC, ETH, and stablecoins like USDT, GUSD, and DAI. The annual percentage yield (APY) varies based on the market demand for each cryptocurrency, with some tokens offering returns of up to 15% annually, significantly exceeding traditional bank rates. For users choosing to receive interest in CEL, the network’s native token, returns can be boosted by an additional 30%.

Celsius imposes no minimum deposit to earn interest and lacks lock-in periods or penalties for withdrawals. With fewer restrictions and higher yields, Celsius presents a superior alternative to conventional banking.

Borrowing Cash Against Crypto

The Celsius Network also enables users to borrow US dollars using their crypto as collateral. This method has several advantages, primarily allowing individuals to manage their crypto assets while accessing cash liquidity. Selling crypto can trigger tax liabilities due to capital gains and potential missed market gains, which Celsius helps users avoid. However, all Celsius loans are over-collateralized to safeguard against market volatility, allowing loans equivalent to 25%, 33%, or 50% of the collateral's value, with the remaining collateral acting as a safety net.

In contrast to traditional loan processes that can take days, Celsius loans are executed within minutes or even seconds. Because all Celsius loans are collateralized, borrowers bypass credit checks and extensive verification procedures.

CEL Utility Token: Maximizing Rewards

Launched in June 2018, the CEL token underpins the Celsius network's reward and earning system. Initially, 50% of the tokens were issued, while 25% were allocated to the founding team. The remainder is locked under a smart contract. If CEL maintains a market price of $1.50 for over ten days and exceeds $3 for thirty days, the locked tokens will be released.

> CEL is the utility token of the Celsius Ecosystem. It unlocks loyalty tiers, offering interest bonus rewards as high as 35% and loan interest discounts of up to 30%. To access these benefits, users must hold a minimum of 15% of their Celsius balance in CEL. — celsius.network

The CEL token provides distinct advantages for various user categories:

• Holders: By opting for rewards in CEL Tokens, they can receive up to 30% more on all non-CEL Token deposits.
• Borrowers: Paying interest with CEL Tokens grants borrowers a discount of up to 30% on interest payments.
• Institutions: Institutions borrowing tokens from Celsius can also receive a 30% interest discount when paying in CEL Tokens.

Celsius has also implemented a rewards status system based on account holdings.

CelPay

While Celsius doesn’t provide a credit card, asset transfers are seamless via CelPay. This crypto payment application enables users to send cryptocurrency effortlessly, even to recipients without wallets. When sending crypto, CelPay generates a link that creates a wallet for the recipient upon clicking it. Unlike traditional remittance services that charge fees per transaction, Celsius transfers are free and support all cryptocurrencies within the app.

Recent Developments

Celsius Network recently increased its Series B funding from $400 million to $750 million, as announced by CEO Alex Mashinsky on Twitter. The previous funding round was oversubscribed. The initial $400 million raise was spearheaded by West Cap and Caisse de dépôt et placement du Québec (CDPQ), raising the company’s valuation to $3.25 billion in October 2021. This successful funding round is expected to enhance Celsius’s standing with regulatory bodies, especially after facing scrutiny from regulators in several states over potential securities law violations.

Celsius is Expanding into NFTs

Per Cointelegraph, the new funds will facilitate Celsius's expansion into new markets and products, including the upcoming “CelsiusX” bridge project that connects centralized finance (CeFi) with decentralized finance (DeFi). Additionally, Celsius plans to venture into the NFT space, although it does not intend to create its own marketplace, as CEO Mashinsky believes the market is already saturated.

Celsius Acknowledges Losses from BadgerDAO Hack

Celsius Network confirmed losses from the recent BadgerDAO DeFi hack. During a YouTube AMA, CEO Alex Mashinsky noted that while the organization “lost money” in the incident, it was not a hack of Celsius itself. He clarified that the hack occurred at BadgerDAO, although some Celsius funds were involved, and assured that no Celsius members lost funds.

Conclusion

With a market capitalization of approximately $0.7 billion, Celsius ranks 90th among cryptocurrencies. It has outperformed many lesser-known crypto projects, and the CEL token is on a positive trajectory, benefiting Celsius investors as the network gains traction.

While crypto loans are not a novel concept, Celsius remains a significant player in the space, alongside Aave, which is also a major force in decentralized finance.

> In summary, Aave is currently the largest lender and a prominent player in the DeFi ecosystem: a so-called DeFi blue chip. — DeFi Coin Aave: Invest in Decentralized Lending

Celsius offers attractive interest rates on cryptocurrency deposits and allows for the borrowing of fiat currencies at competitive rates. Users can send cryptocurrency through the Celsius app without incurring fees. However, one drawback is that Celsius manages its own wallet, meaning it retains control over users' private keys. This might not deter many investors today, but it is an important consideration.

In addition to the platform itself, the founder and CEO of Celsius Network, Alex Mashinsky, is recognized as the creator of VoIP (Voice over Internet Protocol). Given his impressive background, one can envision a bright future for Celsius!

How to Acquire $CEL

For newcomers, I recommend using Crypto.com* as a user-friendly trading platform with straightforward navigation and guidance. Crypto.com* offers a comprehensive ecosystem, including a credit card (with crypto cashback), staking, and other features. More information can be found here.

For EU residents, Bitpanda* offers a well-rounded service, including saving plans and support for stocks and precious metals at low fees.

For those seeking a more advanced platform with lower fees, BitForex* is a great option!

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With much appreciation, Maximilian

This article reflects the author's personal views and should not be construed as Financial or Legal Advice. All data was sourced on 20/01/2022. Changes may apply. *Affiliate links

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