Having a savings or "emergency fund" has always been important for me. It's impossible to predict the curveballs life will throw at you and I make sure and set some extra money aside for them. I used to keep these funds in a high interest savings and money market account with my local bank. I believe I was earning around 1% APY which was much higher than the typical rates. When COVID started, rates began to crash and last I checked were down to .3%.
I came across this website, Celsius.network that was promising 10.51% APR on stablecoins. I'm a hesitant person so it instantly starting raising red flags and seemed too good to be true. So, I started doing some research to learn what the company was about. I want to share with you my personal opinions and what made me finally decide to give the company a try.
Whose the brains behind the operation?
Meet Alex Mashinsky, an entrepreneur and tech mogule who made his name with VoIP technology. He's founded several companies over his career and generated over $3 billion in exits. When he founded Celsius.network, the idea was to allow hard working people to keep more of their money. His catchphrase as I would call it and slogan of Celsius is "Unbank yourself".
Now I knew who he was, but why should I trust him with my money? Well what I found, were these weekly AMA (ask me anything) on YouTube where Alex would livestream himself and just give an update on Celsius and answer any questions that users had. As a potential customer, this is massive. How many companies do we use, yet don't even know the name of the CEO? How many CEO's of traditional banks give a weekly update and answer customer questions? Heck, if I try and call my bank It would require sitting on hold for an hour just to talk with a customer service representative. The more I listed to Alex speak, I could see the passion behind his idea.
Now let's learn more about the company!
Reward Rates
There are 36 different cryptocurrencies you can deposit such as BTC, ETH, USDT and USDC. The interest is paid out every Monday, for the previous week. Celsius has it's own token, called the CEL which currently trades as of 15 December at $2.27. Back in January 2020, the CEL was around $0.15 so it's make quite a jump. If you live outside the USA, you are eligible to receive the interest on your deposits in CEL. If you choose this route, the interest is greater as shown in pink below.
Residents of U.S.A are unable to receive interest in CEL and can only receive it "in kind" (which means the same as the token deposited). Below are the current rates for U.S.A only.
Lending Rates
So how is Celsius.network able to offer such high interest rates? The funds deposited are lent out to other investors and institutions. They are also used to invest in projects that generate a return. What makes these loans secure is that an individual has to put up collateral before receiving the loan. Below are the current lending rates, which shows the 3 LTV (Loan-to-value) options.
I'm gonna plug in a little scenario and show you what I mean. By going to their website, Celsius.network, you are able to quickly figure up your collateral required and what the interest payments would be depending on term length.
Let's say you wanted to borrow $500 (which is the minimum loan offered), at a 25% LTV for 6 months. As collateral, you would need 2000 USDC.
By choosing to pay interest in CEL, the rates right at 0.70% which means the total interest paid would only be $1.75. That low of an APR is almost unheard of in traditional banking. This is possible though because you are putting up some collateral, that makes the risk low for other customers.
Disadvantage
There is only one thing about the Celsius platform that I found inconvenient. There is no web interface for depositing and managing my funds. The only current options are to download the Celsius app on IOS or Google Store. While I have no issues with the app, it would just be more convenient at times to use a web interface.
I know this review was long and if you got this far, I hope that you will look more into Celsius.network. I attached my referral link, which will earn you $20 after making a deposit of $200. This is not a ploy for referrals though, I just attached the link to make it easier for you to find.
**This isn't financial advice and remember every platform in crypto comes with a risk. Be smart with your money and do your own research before investing in anything.