Centralized exchanges control your cryptocurrency with their private keys.
- When you transfer your cryptocurrency from your wallet, or an exchange to a Centralized Exchange like Celsius, Coinbase, Binance, Gemini or Poloniex, your giving control of your cryptocurrency to the exchange.
- It as simple as moving your crypto from your wallet, controlled by your keys, to their wallet, controlled by their keys.
- This is why the depositors on Celcius are in a panic.
- They want their crypto back, and Celsius has suspended withdrawals.
Oh My Goodness!
- Celsius is a popular, well known cryptocurrency finance project where people take their money to earn high yields.
- How did this happen?
Cryptocurrency is suppose to be the most secure form of encryption in existence!
It is...when you use it. - But when you deposit your cryptocurrency on a centralized exchange, you have stopped using the cryptographic protection of your keys, securing your cryptocurrency in your wallet.
- You have turned over your cryptocurrency to the exchange, and there is an unspoken promise that they will return it.
- But if you read the Terms of Service, they tell you under what circumstances they will withhold your cryptocurrency and deny you access to it.
- Whats happening at Celsius is one of those times.
- Remarkably, if you read the Terms of Service, they even state that in case of bankrupcy your assets couls be sold to settle their debts.
- Yep, literaly they will sell your cryptocurrency, to settle their debts.
- It Doesn't get any clearer then that, that they own your cryptocurrency until you get it back.
A Decentralized Exchange is different.
- You deposit your funds, they ask your permission, you sign a transaction, but your cryptocurrency assets are under the control of your keys.
- Why is this an important distinction?
- Because You so can remove your assets anytime, as long as the project website is up and working.
- This is completely different from Celsius right now.
Let's look at Polycub on Polgon
- Your Hive, HBD or SPS can be deposited there as a Liquidity Pair, earning high interest. But have you thought about it's liquidity? How long does it take to get your money back? Well you probably don't think about liquidity much, but you can bet the people trying to get their money off Celsius are thinking about it all the time now. And wondering why no one told them that liquidity was important.
Liquidity of Hive, Splinterlands and Hive Savings Account
- Hive-Polycub, HBD-USDC and SPS-Polycub are all liquidity pairs there, and you can connect your Metamask wallet and withdrawal your funds instantly, anytime you want.
- So those assets are still under the control of your Keys.
- In fact they have some advantages over staking in your Hive Wallet or Splinterlands Wallet.
- If you stake Hive in your wallet, it takes 7 weeks to get it all withdrawn. Seven weeks is a longtime to wait in a market down turn or up turn.
- If you stake your SPS on Splinterlands, it takes 4 weeks to get all your money out. Four weeks is a longtime to wait in a sudden market downturn.
- If you transfer your HBD to the Savings Account in your Hive wallet, it takes 3 days to get your money out. Three days is shorter then 4 weeks or seven weeks, but it's still a lot longer then instant withdrawals
Earnings APRs
- Hive APR on HivePower is dependent on your level of activity and proficiency at solving the rewards algorhythm for curation. It seems to be anywhere from 5-18% with rare individuals who have mastered the art of curation around 30%. Compare this to Hive-Polycub at 89%.
- HBD Savings Account pays a cool 20%. Compare that to HBD-USDC currently at 29.46%.
- SPS APR in the Splinterlands wallet pays an atractive 58%. Compare that to SPS-Polycub currently paying 103.97%.
Safety
- Your cryptocurrency tokens are safe in your Hive wallet, your HBD savings account and your SPS wallet on Splinterlands.
- Just remember safety has many parts, and control by your keys is a very important, if not central or core component.
- But liquidity is also very important, because if the value of your cryptocurrency drops to zero, and you couldn't get it out due to long lockup times...
- What have you saved? Worthless assets?
- This isn't a criticism, just a big picture view during volatile times and it's important to know as much as possible during times like these to protect your assets.
- Do your own research, educate yourself about all the risks, and remember it's important to adjust your risks to the current or prevalent threats.
Picture Credit:
Title Picture: https://www.pgurus.com/crypto-firm-celsius-freezes-all-transfers-withdrawals-between-accounts/
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