January 2022 – Celsius review

January 2022 – Celsius review

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Jonathan
Jonathan

An editor at Coincrop


03 Jan 2022 | 10 min read
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C

elsius is an established centralised platform offering cryptocurrency savings and borrowing products.

In this guide:

Disclaimer: All of the information written on Coincrop is without influence and based on our analysis. No guarantee is offered concerning the accuracy of this information and therefore, any individual following up on it does as such completely at their own risk. Rates are correct at time of publication.

What is Celsius?

Celsius is a centralised blockchain-based savings and borrowing platform.  Individuals with cryptocurrencies can deposit the assets and earn rewards in return.  Users that wish to borrow can take out a loan (for currency or other cryptocurrencies) that is collateralised by other cryptocurrency assets.

The platform accepts more than 40 tokens including Bitcoin, Ethereum, Litecoin and stablecoins such as USDT, GUSD and PAX.

Who is behind Celsius?

The company was founded by Alex Mashinsky and S. Daniel Leon and Nuke Goldstein.  They key team are as follows:

    • Alex Mashinsky – Co-founder, Chairman and CEO

    • S. Daniel Leon – Co-founder, President and COO

    • Nuke Goldstein – Co-founder, CTO

    • Roni Cohen-Pavon – Chief revenue officer

    • Rodney Sunada-Wong – Chief risk officer

    • Oren Blonstein – Chief compliance officer

What is the history of Celsius?

    • The company was founded in the summer of 2017.

    • In March 2018, the Celsius token (CEL) was issued after an “initial coin offering”.

    • By June of 2018, the version version of the application was launched.

    • In August 2018, users began to receive the first rewards via the Celsius app.

    • By the end of 2018, Celsius held in excess of $50m in community assets and $100m in coin loan origination.

    • By May 2019, community assets grow to exceed $200m with $1.2B in coin loan origination.

    • By March 2021, community assets surpassed $10B.

    • In May 2021, a web based version of the service was launched.

What is the Celsius token?

In June 2018, Celsius launched a token referred to as CEL.  The token serves several purposes:

    • Earners can choose to receive rewards in CEL tokens rather than the same asset that was deposited.  On some occasions, individuals that choose to take rewards in CEL tokens receive higher rates of interest than the native asset.

    • Borrowers can receive a discount of up to 30% on interest payments if they pay the interest with CEL tokens.

It should be noted that due to U.S. security laws, the Celsius token is not available in the United States.

How much can I earn?

Deposit assetsReward assetsAPY Rate

How does borrowing work?

Celsius is not like a typical bank in the sense that loans are only provided in return for collateral from the borrower.  As part of borrowing, you choose an interest rate, loan-to-value ratio and a loan term.  The loan-to-value ratio (LTV) represents the amount of collateral required relative to the loan amount.   Below are some examples:

    • 1 year loan – 1% interest rate, 25% loan-to-value

    • 1 year loan – 6.95% interest rate, 33% loan-to-value

    • 1 year loan – 8.95% interest rate, 50% loan-to-value

As can be seen from the above, the lower the rate of interest, the more collateral you are required to provide in return for the loan.

In the example of a $10,000 USDC loan:

    • The interest rate would be 6.95%

    • The loan-to-value amount ratio is 33%

    • Collateral of 0.6577 Bitcoin ($30,254) would be required

Why borrow?

There are several reasons as to why you might borrow by using your cryptocurrency as collateral:

    • If you did need to raise funds and planned to sell cryptocurrency assets, most countries would levy a capital gains tax on the profits.  Alternatively, a loan against those assets would not incur such a tax.

    • No credit check is required to take out the loan.

    • In circumstances where the value of the collateral increases, this could potentially offset any interest charges incurred during the life of the loan.

What is a borrowing margin call?

As already mentioned, loans are provided at a specific loan-to-value that is agreed at the beginning of the loan.  Part of this agreement is that the borrowing maintains the LTV value throughout the term of the loan.  This potentially becomes a problem if the value of the collateral (for example, the Bitcoin) falls during the loan term.   In such circumstances, you will receive email notification of a “margin call” event.   At this time, you are required to provide additional collateral in order to safeguard your original collateral.   If you fail to do this (after a given amount of time), you risk losing your original collateral.

How much does it cost to borrow?

Asset to borrowLTVCollateralAPY Rate

Gemini Dollar (GUSD)

Collateral Celsius

Celsius (CEL)

1.00%

25%

Gemini Dollar (GUSD)

Collateral Binance Coin

Binance Coin (BNB)

1.00%

25%

Gemini Dollar (GUSD)

Collateral Binance Coin

Binance Coin (BNB)

6.95%

33%

Paxos Standard (PAX)

Collateral Celsius

Celsius (CEL)

1.00%

25%

Paxos Standard (PAX)

Collateral Binance Coin

Binance Coin (BNB)

1.00%

25%

Paxos Standard (PAX)

Collateral Binance Coin

Binance Coin (BNB)

6.95%

33%

TrueUSD (TUSD)

Collateral Celsius

Celsius (CEL)

1.00%

25%

TrueUSD (TUSD)

Collateral Binance Coin

Binance Coin (BNB)

1.00%

25%

TrueUSD (TUSD)

Collateral Binance Coin

Binance Coin (BNB)

6.95%

33%

Neutrino Dollar (USD)

Collateral Celsius

Celsius (CEL)

1.00%

25%

Are my assets safe with Celsius?

Cryptocurrency investments come with a variety of risks and it is always important to do your own research prior to selecting any such opportunities.  Unlike DeFi organisations are typically anonymous, Celsius is a centralised company with identifiable management.

Deposits made to Celsius are not FDIC or SIPC insured.

To its credit, the company is particular open with frequent social media engagement.

The company has the following accreditations:

    • California Lending LLC

    • ISO 27001 (April 2021)

    • Delaware C (June 2021)

    • FinCEN MSB (June 2021)

Does Celsius offer any other services?

The company has plans to offer a credit card.

How do I contact Celsius?

There are several means of contact Celsius:

    • By phone on 1–866–463–5669 from 8:00 AM — 11:00 PM (EST), Monday — Friday.

    • By submitting a support ticket – 24/7.

How do I get started?

Visit Celsius to open an account.


Jonathan

Jonathan

An editor at Coincrop
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Jonathan is a Crop Crop staff writer based in the UK, covering the best rates for cryptocurrency earning and borrowing products. When not at work, he's likely sailing.


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