Understanding Celsius Network: a review

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Amplify, Holdex

TL;DR: You can get a summary of this article on its last section

The Celsius Network is a major decentralized finance application that offers Crypto savings and loans. The service is accessible via mobile applications for both iOS and Android . Support is available via ticket and email. Besides Crypto finance, the Celsius wallet offers a zero-fee payment product in CelPay.

I will divide this review into 5 sections covering the Celsius Network’s most salient features:

  1. origin and team
  2. potential
  3. CEL token
  4. Crypto savings & loan
  5. summary.

Origin and Team

The Celsius project was conceived by Alex Mashinsky, a veteran hi-tech entrepreneur and inventor of the voice over internet protocol (VOIP), and cofounders S. Daniel Leon, an early-stage growth expert, and Nuke Goldstein, a software architect and AI specialist — both from Israel, where Mashinsky grew up. Celsius, after raising $50M in its ICO, has been backed with venture capital by, among others, BnkToTheFuture and Tether . The founding team still runs the company as CEO, COO, and CTO respectively.

Celsius Network, after its launch in March 2018, has grown to a team of 50+, distributed in offices in London, New York, New Jersey, Tel Aviv, and throughout the world. Starting with the Celsius wallet, and providing interest payments since August 2018, the Celsius Network now has $700M+ in assets under management, has originated $8B+ in loans, and is supported by $124k+ active wallets. Needless to say, the Celsius Network is one of the most successful DeFi applications in existence.

Potential

“The Internet was an application running on the Voice network (back then it was all dial-up)… and I said you don’t understand, the Internet is going to become so huge that the Voice network is going to become an application on the Internet… and today we are going through the same thing… the Blockchain and cryptocurrencies are the future of everything, that network is going to be 1,000 times bigger and more powerful than the Internet.” — Alex Mashinsky

Mashinsky refers to the Celsius Network as like going “from VOIP to MOIP”. Meaning, in a similar vein to how almost nobody 25 years ago believed calls would be free as an Internet app, no one is ready for the eventual growth of the Blockchain to absorb both existing financial systems and the Internet itself.

So what does MOIP look like according to the Celsius team? According to Mashinsky, banks who pay 1% APY to depositors and charge 30% APR to cardholders take 90–95% of the value in the system for themselves. Celsius, on the other hand, using Blockchain and AI, is capable of providing 80% of the value to depositors, which translates to savings with up to 9% APY and credit lines as low as 1% APR. Mashinsky believes this has the potential to bring to Crypto the next 100M users.

Applications like Celsius Network are but the beginning of the transformation of Blockchain. Bitcoin and Ethereum are already amongst the largest computing networks in the world. Mashinsky swears by the adage that the largest network eventually wins and that we see most advances in computing today are being driven by the demands of serving increasingly more apps and users in the public blockchains.

CEL token

The CEL token is an in=app utility for the Celsius Network. The relative amount of CEL in your Celsius wallet will determine your membership level and thus rewards you will get as bonus interest for savings as well as rate discounts for loans. There are other benefits like VIP service to those with high CEL ratios, CEL balances, and “HODL ratios” (defined as CEL balance / CEL withdrawals) on CEL.

You can get the CEL token in-app or in the following exchanges apps: Liquid , IDEX , Switcheo , HitBTC , and Totle .

Crypto Savings Loan

Celsius supports an expanding number of choices for Crypto saving and lending. You can save in cryptocurrencies like ETH , BTC , DASH , BCH , BSV , LTC , XRP , XLM , OMG , 0x , EOS , ETC , and BAT ; as well as stablecoins like TUSD , GUSD , PAX , USDC , DAI , USDT , TGBP , TAUD , THKD , TCAD , SGA , XAUT , and BUSD ; and, of course, native CEL . Upcoming Crypto to be integrated with Celsius includes ALGO , TRX , PAXG , BNB , and IOTA . Each token has it’s own savings rate, which is paid out weekly. The interest rate hovers around 3-5% for classic cryptocurrencies, tokens and gold-backed coins, and 7-9% for stablecoins.

Signing up was simple. After downloading the Celsius mobile app for either iOS or Android , you can sign up with an email or using your Facebook, Google, or Twitter accounts. To deposit (or borrow), you need to pass KYC/AML, which you can do in-app by scanning a national ID or passport and filling-in your address. Verification can take up to 24 hours. There may be limitations in accessing the service, earning interest, and/or borrowing depending on your citizenship and residency. In general, the service is open to U.S. citizens. Once KYC/AML has been passed, you can send in your Crypto to the appropriate address inside your Celsius wallet.

To borrow, you simply select whether you would like to borrow in stablecoins or USD, select what Crypto you will use as collateral (at the moment, only BTC, ETH, XRP, EOS, DASH, BCH, LTC, and XAUT are available as collateral), your desired Loan-to-Value ratio (how much Crypto you will commit as collateral), and the term of the loan (from 6 months to up to 3 years). If you have selected a USD loan, you must have a receiving bank account in an eligible country. The loan funds will be released same-day or next-day in the U.S. and 3-5 days after approval for international accounts. The minimum installment payment will be interest-only, due monthly. The best rates require the most collateral. To give a present example, you can borrow $1,000 at 0.7% APY if you pay interest in CEL. With a term of 1 year, you will pay $0.58/month or close to $7 at the end of the year, plus the principal. You can pay interest in CEL, Crypto, or in USD (albeit this last one is a more complex process). In general, Celsius says loans are flexible, with a standard 6-month to a 1-year term that can be extended. To note is that the capital set aside as collateral will not earn you interest. You can also apply for a loan via the Celsius Network website but the process is more drawn out than doing so through the app.

Check the Celsius loan calculator if you are interested in Celsius’s real-time Crypto lending terms.

In Summary

Celsius Network is a groundbreaking DeFi app that has come a long way in realizing the promises it made in its Whitepaper. Celsius Network offers some of the best rates on loans and saving in Crypto. Moreover, it offers zero-fee Crypto payments with CelPay to other Celsius users and to your phone contacts if they download the app. While Celsius is still growing and releasing new features, many users will find extremely attractive the value proposition of receiving interest on your Crypto and being able to cashout at low-rates without selling your Crypto (great for market optimists and cheaper than margin fees for traders).

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