The Celsius Network is a blockchain-enabled fintech platform that anyone with a smartphone can access. The network, through its suite of lending, yield creation, and payments solutions, provides access to financial services and conditions not available through traditional institutions. The Celsius mandate is simple at its core: provide financial services while doing what is best for the community, not the intermediaries.
What is Celsius?
Celsius (CEL) offers peer-to-peer lending services to DeFi users all over the world. The network combines a new cryptocurrency with DeFi lending pools to allow users to access funding while also earning money by lending out their cryptocurrency. Notably, the DeFi lending sector is currently one of the fastest-growing blockchain industries.
It is one of the market’s best-performing peer-to-peer protocols. The network has over one million registered users and has lent $25.2 billion in assets. Furthermore, since its inception, the network has distributed over $929 million in yield rewards.
It officially entered the market in June 2018. Investors jumped on board right away. This success aided the protocol’s expansion of operations. Notably, the platform recently closed another $400 million funding round.
How it Works
The Celsius Network is made up of hosted accounts on Celsius and a variety of crypto exchanges with the goal of minimizing crypto-asset transfers outside of its system.
Finally, there are four major players in the system:
- Depositors who earn interest on their account holdings are referred to as lenders.
- Borrowers are margin traders who want to trade leveraged short or long positions.
- Celsius Platform – Allows trades to take place, manages risk, and determines trading fees.
- Markets for foreign exchange – Conducts trades and lends/provides liquidity
Participants who use the Celsius network to earn extra income deposit crypto assets on the platform and earn rewards in a variety of cryptocurrencies such as Bitcoin, Ethereum, or USDC.
Celsius manages deposited funds in a ‘Lending Stake Pool,’ which are then lent to external exchanges, with the interest earned distributed among the users.
Celsius uses a modified Proof-of-Stake (PoS) formula to determine the distribution paid to lenders, where the interest paid to lenders is a function of the funds deposited and the number of days participating in Celsius’ consensus mechanism.
There are several types of users who might want to borrow from the Celsius platform.
- Users who deposit crypto on the Celsius Network and use the funds as collateral to receive a loan are referred to as general users.
- Traders – Accredited investors (or SEC-registered funds) who borrow capital to trade from Celsius lending pools. To cover potential losses and fees associated with certain trading activities, these accounts require a minimum balance of $10,000.
- Exchanges – Institutions that borrow from Celsius lending pools in the event that they require additional liquidity to settle trades.
What Makes it Unique
Celsius brings some significant advantages to the DeFi lending market. For one thing, the network’s collateral options are extremely flexible. To secure a loan, users can select from +40 options. Instead of selling your cryptocurrency, you can use it to secure funding with the altcoin. Your collateral is returned once you have paid off your loan.
Lenders have a lot to gain by joining Celsius. The platform offers rewards up to a 17 percent yield. The system calculates and distributes these rewards based on your loan terms every Monday. The lack of human interaction in the process ensures that these rewards are always delivered on time.
Another significant advantage of Celsius is its high transparency. The developers are forthcoming about the network’s current state. They provide social media channels as well as direct contact information. They also regularly publish information on the blockchain. In addition, Chainalysis is used for third-party verifications on the platform.
Celsius borrowers can repay their loans in a variety of ways. You can pay off your loans with either fiat currency or stablecoins. When it comes time to fulfill their loan commitment, this added flexibility can save borrowers time and effort.
Celsius offers the market a valuable service. A global audience of disenfranchised borrowers can now gain access to liquidity thanks to the platform. It also allows lenders to earn passive income without having to sell their digital assets. These features will keep it a popular choice for users now and in the future.