About

Celsius Network was a financial services company that offered cryptocurrency lending and borrowing services. It provided a platform for users to earn interest on their cryptocurrency holdings and take out loans using their crypto assets as collateral.

History

Celsius Network was founded in 2017 by Alex Mashinksky and Daniel Leon. Celsius aims to provide a fully community-oriented alternative to traditional financial institutions.

After succeeding at raising $50M from its ICO in march 2018, and after a year of building and developing its product, the team launched the Celsius Wallet in early 2019. It allows users to deposit coins as collateral to get loans in dollars, and lend their crypto to earn interest.

Since inception, the platform has experienced significant growth : the number of active users grew by around 800% in the first year, and is showing an average weekly growth of 3.06% since launch. As of February 2021, Celsius has acquired more than 400,000 users, and holds more than $9Bn in community deposits.

Attractive features for retail deposits and CeFi borrowing With about 90% of the deposits coming from retail clients, and close to 100% of the borrowers being institutions, the business model of Celsius revolves around lending retail money to institutional hands.

For retail users, the Celsius Network offers high interest-bearing savings accounts, low interest borrowing credit lines and a payment system. On top of subsidising the service with a fee-less experience on financial services, Celsius gives attractive rewards to its community, 80% of loan interest flowing back to pay depositors.

To generate revenue,Celsius Network lends deposits and coins to CeFi Financial Institutions: large investors, institutional traders, hedge funds or exchanges.

Community-centric tokenomics Retail and Institutional users are all incentivised to take part in the community by using the CEL token since the network is designed for the Celsius community to share a portion (80%) of the profit generated. In addition, the CEL token allows access to community membership and increased rewards.

Concerns and regulatory risks surrounding institutional loans, and funding of margin trading program But there is rising concern surrounding the use of user funds. Celsius states that it lends to hedge funds, institutional traders, and exchanges to earn interest, however, the firm does not make clear that it also lends to margin traders through margin trading programs run by some exchanges. This implies that Celsius lends directly to customers on some exchange through their peer to peer margin trading program; if anything happens to the exchanges themselves, lenders, including Celsius, may face default risks as well.