In this article, we are going to take a look at Celsius Network, a blockchain-based peer-to-peer lending platform that allows users to earn, borrow, and pay in cryptocurrency.
What Is Celsius Network?
The interest in cryptocurrencies has witnessed significant growth in the last few years. As a result, various crypto projects have emerged in an attempt to solve the issues of traditional finance through innovative approaches.
But there’s more to crypto than just buying and selling. Crypto users and projects alike want to benefit from various financial services and products but do so without the downsides found in traditional finance. Lending and borrowing are thus an essential part of the crypto sector. Several platforms already enable crypto lending and borrowing, each with its pros and cons (if any).
However, Celsius Network aims to take these services to a whole new level, as we will see in this video. The financial technology platform was designed and built to allow users to borrow, lend, and pay in crypto. It is centralized and doesn’t serve as an exchange platform.
Nothing new so far, as other platforms already offer such services. So what makes Celsius truly stand out from the crowd? Users can earn up to 17% APY paid every week, up to 25% more rewards when they choose to earn in CEL token, and borrow funds with Celsius at interest rates as low as 1% APR. What’s more, there are no fees for the purchase of crypto coins, and no origination fees on loans, termination fees, or withdrawal fees. However, as we take a closer look at it, we will see that there are some exceptions.
The New York-based startup company was founded by Alex Mashinsky, S. Daniel Leon, and Nuke Goldstein in 2017. Their goal was to combine banking services with cryptocurrency and thus make financial services such as interest income and credits available in crypto.
Celsius supports more than 30 cryptocurrencies including BTC, ETH, DOT, and AAVE, and a selection of stablecoins for various fiat currencies including USD, GBP, AUD, and CAD. It does not offer interest-bearing accounts for fiat, though.
It is currently available in over 100 countries. Still, it is not available in countries against which the United States, European Union, and the United Kingdom impose financial sanctions or embargoes. Plus, according to the most recent update of the project’s FAQ page, New York and Washington state are blocked from using Celsius services, and Rhode Island and Texas do not allow USDC deposits.
The network has already reached $8.20 billion in processed loans and $24 billion in community assets, so, as they say, it’s all in the numbers.
How Does Celsius Make Money?
Now, such claims cannot be ignored, and one question arises, how is it possible for Celsius to provide these high interest rates?
To put it simply, Celsius basically takes the coins that are deposited by the platform users and lends them to borrowers in the institutional and retail spheres. These borrowers pay interest, and Celsius takes 80% of that interest and gives it back to the community. That’s what makes these high interest rates possible. So, users who deposit their cryptos on Celsius get to benefit from 80% of the value being created.
The rates that the community earns are adjusted regularly because the rate of returns achieved by the network changes almost daily.
Celsius Network Products
As we’ve said earlier, the Celsius Network is designed to provide some of the most important financial services and products: lending and borrowing, so whether you need a loan or you want to put your crypto to work and earn interest, there is a Celsius product to help you with that.
It’s no news that a traditional savings account doesn’t come with the highest interest rates. Well, here is where Celsius wants to make a difference. Through its Rewards service, investors can deposit their cryptocurrencies and earn interest rates ranging from 2.02% to as much as 17.78%. The interest rates depend on the type of cryptocurrency users stake and the country they reside in. Deposits on the platform can be made via the Celsius app, and the interests are higher if the staked tokens are CEL tokens.
The interest is paid weekly, and users can withdraw the amount they’ve deposited along with the earned interest anytime they wish to without paying a fee for doing so. Also, there is no minimum balance required for a crypto deposit.
As of September 2021, users who don’t reside in the U.S. can qualify for one of Celsius’ loyalty tiers which pay rewards based on how much of a user’s crypto portfolio is in CEL tokens. There are four tiers, including the Bronze, Silver, Gold, and Platinum tiers. Those who have 25% – 100% of their holdings in CEL tokens fall in the Platinum category and have the highest bonus rewards, that is 25%.
One of the key features and advantages of Celsius Network is that users can borrow USD against crypto as collateral. What’s more, thanks to the loan-to-value (LTV) options available, they can select how much crypto they want to put up as collateral, so they can go for 25%, 33%, or 50% LTV.
It is also worth mentioning that there are no credit checks, and aside from KYC, no document is required. Loans are instant and can be fulfilled in either cash or coin. Plus, there are no origination fees to get started.
To help users do more with their cryptos than just collect them, Celsius also offers the CelPay app, which, as its name suggests, allows users to also pay and get paid in crypto and do so fee-free.
What About Fees?
One of the things that drew our attention is the “no fee” claim, which is also one of the pros that set Celsius apart from other similar platforms. Celsius Network users pay no fee for the purchase of crypto coins. Plus, there are no origination fees on loans, termination fees, or withdrawal fees.
Still, some of the network’s partners do charge fees for crypto purchases, and they should be included in the listed price. For example, Simplex (Credit Card) charges a 3.5% or $10 minimum fee, or 2.99% for EEA and UK residents.
How Is Celsius Network Safe?
Whenever one’s assets are involved, whether we’re talking about cryptocurrencies or fiat money, there is another major aspect that calls for attention, namely, security. According to the information available on the project’s official website, Celsius does take compliance and security seriously.
It has a robust AML program with a knowledgeable team of Certified Anti-Money Laundering Specialists (ACAMS), it has acquired licenses from FinCEN, and it is ISO 27001 certified. Also, Celsius stores funds with third-party custodians including Fireblocks and PrimeTrust, which both provide insurance on digital assets.
It uses biometric signatures and two-factor authentication as security measures and has a dedicated in-house security team that includes ex-military cybersecurity professionals. Even so, keep in mind that Celsius is a centralized platform and uses a custodial wallet, so it is not free of cons and risks.
The native token of Celsius is CEL, which is an ERC-20 token that serves various functions. It is used to generate interest, make person-to-person payments, and take loans. Additionally, CEL users and holders benefit from extra perks, such as higher interest on staked CEL tokens. CEL can be transferred to other users within the Celsius network without transaction fees via CelPay.
The token was launched in June 2018 during an ICO, raising $50 million. It has a maximum supply of approximately 696 million tokens, a circulating supply of 238 million, and a market cap of $1,2 billion.
At the time of our video, the CEL price was $5.09. The token reached its ATH in June of this year when it peaked at $8.05. CEL is listed on several exchanges, including FTX, BitMart, Uniswap v2, Bitfinex, and OKEx.
Team & Community
As we’ve said earlier, Celsius Network has three founders, all of them bringing a remarkable professional experience to the table. Alex Mashinsky is best known as the inventor of VOIP (Voice Over Internet Protocol), now also working on MOIP (Money Over Internet Protocol). He has been given 35 different patents and conducts an AMA (Ask Mashinsky Anything) on YouTube every Friday.
Daniel Loan is the co-founder and COO of the Celsius network, having extended experience as a business and social entrepreneur. Nuke Goldstein is also a co-founder of Celsius Network and its CTO, having designed the technological and financial infrastructure of the network. He is also a member of the Forbes Finance Council.
The project already benefits from a strong community, having 180k followers on Twitter and 30k followers on Facebook. It is also worth mentioning that, according to the project’s official website, over 1 million people use the network. The team is active on Medium where updates are frequently posted. We’re still waiting for the roadmap to be updated, though.
Celsius was thought out and designed in such a way as to bring crypto borrowing and lending into everyday life and simplify these services in order to cater to users of all levels.
With the growing interest in cryptocurrencies, crypto users can now use several platforms for borrowing and lending, so to make a difference, Celsius offers high rewards for lending, low interest rates for those who take a loan, and easy and instant crypto payments.
Except for a few cases, there are no fees for the above-mentioned services, and there is no minimum deposit required. Even if it remains to be seen how Celsius will manage to keep a leading position in the crypto lending sphere, for now, it seems like a promising project.