Celsius (CEL)
What Is Celsius (CEL)?
Celsius (CEL) is an all-in-one banking and financial services platform for cryptocurrency users.
Launched in June 2018, it offers rewards for depositing cryptocurrency, along with services such as loans and wallet-style payments.
Users of the platform receive regular payouts and interest on their holdings. Celsius’ native token, CEL, performs a variety of internal functions, including boosting user payouts if used as the payment currency.
Who Are the Founders of Celsius?
Celsius originally came into being as the product of creators Alex Mashinsky and Daniel Leon in 2017.
Mashinsky has a long-running history in the internet development sphere, having worked on the Voice Over Internet Protocol (VOIP) in the 1990s and other technologies since. Celsius is far from Mashinsky’s first corporate venture, with seven startups and 35 patents to his name, the project’s official website states.
Co-founder and COO Daniel Leon meanwhile has experience focusing on growing early-stage startups. His previous roles include being CEO of Atlis Labs, a social recommendation and discovery app which used real-time user referrals.
Celsius now has a large team of core employees, technical developers and advisors with experience in various spheres.
What Makes Celsius Unique?
Celsius aims to outperform banks at their own game by offering financial services on the kind of terms which traditional financial institutions no longer offer.
These include much higher rates of returns on savings and deposits, much easier and fairer loan requirements and automated rewards computed for each user algorithmically. Penalties and bank-style fees are also waived.
The platform also functions as a wallet via its CelPay feature, and hosts its own CEL token which users can leverage to increase payout value among other things.
As a for-profit company, Celsius takes a cut of profit margins on interest payments, still returning 80% to users themselves. The company also lends to institutional entities such as hedge funds.
Payments are ensured because loans are asset-backed, and any borrower must supply more than 100% of what they borrow in the destination currency.
How Does Celsius Work?
The Celsius Network is composed of hosted accounts on Celsius and a variety of crypto exchanges intending to minimize the transfer of crypto-assets outside its system.
Ultimately, there are four key players within Celsius system:
- Lenders : Depositors who earn interest on their accounts holdings
- Borrowers : Margin traders who wish to take leveraged short or long positions
- Celsius Platform : Facilitates trades, manages risk, and determines trading fees
- External exchange markets : Executes trades and borrows/provides liquidity
Earning
To earn extra income using the Celsius network, participants deposit crypto assets on the platform and earn rewards on a number of cryptocurrencies, such as Bitcoin, Ethereum or USDC.
Celsius manages deposited funds in a ‘Lending Stake Pool,’ subsequently lent to external exchanges, and the interest received is distributed among the users.
To determine the distribution paid to lenders, Celsius uses a modified Proof-of-Stake (PoS) formula where the interest paid to lenders is a function of the funds deposited and the amount of days participating in Celsius’ consensus mechanism.
Borrowing
There are a few types of users who may wish to borrow through the Celsius platform.
- General Users : Users who deposit crypto on the Celsius Network and using the funds as collateral to receive a loan.
- Traders : Accredited investors (or SEC registered funds) who borrow capital from Celsius lending pools to trade. These accounts require a minimum balance of $10k to cover potential losses and fees that occur in certain trading activities.
- Exchanges : Institutions who borrow from Celsius lending pools should they need the added liquidity to settle trades.
Why Does CEL Have Value?
Celsius Network’s cryptocurrency, CEL, allows users to take loans, make payments, and receive added loyalty benefits.
However, CEL is mostly used as a reward mechanism for users accessing the Celsius Network and as a collateral currency to receive loans.
CEL holders gain added benefits of using the cryptocurrency to make cheaper loan payments or receive higher yields instead of opting for other cryptocurrencies.
As a token built on the Ethereum blockchain, CEL are also transferable for other such tokens like ETH and DAI. Furthermore, CEL can be transferred to other users within the Celsius network without transaction fees through its payment service CelPay.
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Cryptocurrency