This article will examine and review Celsius Network, a wealth management platform that allows borrowing funds and earning interest on crypto deposits. The app is available for both iOS and Android.
The project was born from an ICO back in May 2018, raising $50 million. The name of the token is CEL and recently it has been performing extraordinarily on the crypto market. Its yearly performance reaches an outstanding +3767.7% according to data from Coinpaprika.
CEL is a utility token allowing users to earn more interest on their deposits as well as get discounts on the interest to repay when taking out a loan.
There are 4 Celsius Loyalty Tiers that depend on the percentage of CEL tokens in relation to the rest of the funds held by the user:
5% – 10% CEL
5% Bonus Rewards
5% Loan interest discount
10% – 15% CEL
10% Bonus rewards
10% Loan interest discount
15% – 20% CEL
20% Bonus rewards
20% Loan interest discount
20% – 100% CEL
30% Bonus rewards
30% Loan interest discount
Long story short, the more CEL tokens are held on the platform, the greater the benefits.
Celsius Network supports over 30 cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), Uniswap (UNI) and Chainlink (LINK), as well as some stablecoins like Tether (USDT), USD Coin (USDC) and Tether Gold (XAUT).
Who’s behind Celsius Network
The founder and CEO of Celsius Network is Alex Mashinsky. Perhaps some of the computer geeks might know him as one of the inventors of VoIP (Voice over Internet Protocol), thanks to which we can all talk with our friends and family through the internet without having to rely on telephone networks.
Alex has over 35 patents in his name and founded many successful companies including Arbinet, which had an IPO in 2004 with a market capitalization of over $750 million, and Transit Wireless, which was valued at $1.2 billion at the time of exit.
He’s very active on YouTube where every Friday he engages with the community during his AMAs (Ask Mashinsky Anything), and occasionally interviews big names of the crypto space for his MOIP (Money Over Internet Protocol) series. Here is a recent interview with presidential candidate Brock Pierce and also one with Jonathan Levin from Chainalysis.
Needless to say, Alex has quite a lot of experience in the technology sector and is now dedicating his time and efforts to help people achieve financial freedom.
Let’s talk about money
How does Celsius compare to the several lending platforms out there like BlockFi and Nexo?
Interest rates vary weekly. At the time of writing of this article, the yearly interest rate (APY) for BTC is 4.51% when choosing to earn interest in BTC and 6.20% when choosing to earn in CEL. Stablecoins offer greater interest: USDT and USDC have a reward rate of 10.51% in-kind and 13.86% in CEL. There are also some altcoins that reach unbelievable rates: SNX, for example, has a reward rate of 16.16% when choosing to earn in SNX and as much as 21.49% when choosing to earn in CEL.
When making a comparison with other platforms, Celsius seems to have very competitive rates.
Something worth mentioning is that this is Compound Interest, which was described as “the eighth wonder of the world” by Albert Einstein, who once said:
“He who understands it, earns it; he who doesn’t, pays it”.
As far as loans are concerned, the rate when repaying a loan is 1% APR, which is ridiculous when comparing it with the rates of banks. Using the calculator on the official website, we can see that in order to take out a loan of $500 to be repaid in 12 months for example, we require a collateral of 0.13 BTC (around $2000 at current prices) and the total interest to repay in cash is $5, or $0.42 per month. As mentioned above, CEL’s utility plays a role here, reducing the APR to 0.7%, which means that the total interest to repay on the same loan goes down to $3.50 when using their proprietary token.
Can they be trusted?
“Not your keys, not your crypto”. This is the mantra often repeated in the crypto space, and for good reasons. Not a week goes by without news about an exchange being hacked and users losing their funds. The safest way to store funds is to hold the private keys in a safe place, possibly in more than one. There are also many devices that help in this feat, one of them being the hardware wallet Ledger Nano.
In the case of Celsius, users have to trust the platform with their funds and as much as this goes against the above-mentioned mantra, it does have some pros.
Let me explain. The crypto space will not grow without mass adoption, and mass adoption will not take place unless the majority of people start using cryptocurrencies. It’s quite obvious that most people aren’t computer geeks and as soon as they hear stuff like public and private keys, hot and cold wallets, 12- 24-word seed phrases, they will never stop using their bank accounts and VISAs and MasterCards.
As such, platforms like Celsius Network are the perfect gateway for new users who, as soon as they learn they can earn greater interest and take out cheaper loans compared to their banks, won’t think twice and will deposit their hard-earned money on these platforms.
But what guarantees do they have that the platform won’t run away with their funds or get hacked? Well in the case of Celsius, they have licences with the American SEC and FinCEN, whereas as far as security is concerned they have many measures in place, including biometric signature. Moreover, funds are stored with the 3rd party custodians Fireblocks and PrimeTrust, both providing insurance on assets.
Another useful feature worth mentioning is CelPay, as the name implies, it’s an in-app payment solution. It is possible to add other Celsius users and easily send/receive cryptocurrencies, without having to deal with the cumbersome cryptographic addresses and network fees: when you send 1 BTC, your friend receives 1 BTC.
While we are on the topic of fees, Celsius is renowned in the community for not charging any fees for their services. No withdrawal fees, no deposit fees, no transaction fees, no early termination fees and no origination fees. The only fees charged in the app come from third-party services for the purchase of cryptocurrencies, namely Simplex, Wyre and Coinify.
To top it all off, Celsius will soon be adding CelSwap, an AMM (Automated Market Maker) DEX (Decentralized Exchange) within the app, which will allow users to swap between currencies, for example to take advantage of higher interest rates on some tokens.
Celsius Network review, in conclusion
As the author of this article, I feel the need to state that I do own CEL tokens and have used the Celsius app for over 1 year, nonetheless, I’ve tried to stay very objective when writing this piece. I’ve witnessed the evolution of this project and the results achieved by a very competent team led by a visionary CEO, which is why I wanted to share my thoughts about this platform.
As with many platforms in the crypto space, there’s also a referral link which will reward both of us with $20 in BTC when depositing $200 worth of any supported cryptocurrency.