What Was Celsius Network (CEL) How It Worked & Where To Buy It?

Please Note: On July 13, 2022, Celsius Network LLC and certain of its affiliates filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York.  The cases are pending before the Honorable Martin Glenn in the U.S. Bankruptcy Court for the Southern District of New York and are being jointly administered under Case No. 22-10964.

The information below is being kept for archival purposes but is now no longer relevant. 

Celsius Network is one of the largest decentralized borrowing and lending protocols in the world. The platform offers a suite of financial services including borrowing, lending, and DeFi savings accounts.

Smart contracts facilitate various actions that are initiated, and the entirety of the process is handled securely and efficiently – without the need for any institution to act as an intermediary.

Celsius Network (CEL) has grown to become the 5th largest lending protocol with a market cap of $178 million (151st largest overall market cap).

How Celsius Network (CEL) Works

The Celsius Network is an innovative internet protocol that provides similar services to traditional financial institutions like banks – except it utilizes the power of blockchain.

The Celsius platform has its own native token, the CEL token, which is both a utility token and a governance token. CEL tokens play an integral role in the rewards qualification and distribution process on the Celsius app.

What makes the protocol more innovative is that it flips the conventional top-down model on its head – traditional corporations are typically giving users minimal profits but lining their own pockets. Celsius network changes this; 80% of all revenue generated is used to reward users on the platform through higher yields, interest payments, and token distribution rewards.

The Celsius community is prioritized at the core of the project, and users participating in this innovative crypto market get to earn generous yields.

You’re probably wondering how the Celsius network could afford to sustain this model in the first place? Essentially, the entire model is reliant on over-collateralization – crypto assets are used as collateral when taking out a crypto loan on the platform. This collateral is then redistributed to large market investors who seek a reliable entry into the cryptocurrency market.

The process for redistribution, which banks use, is called rehypothecation. Traditionally, users who agreed to rehypothecation on their collateral, often receive lower borrowing fees or generous rebates.

Market investors like hedge funds now have the opportunity to invest directly through a credible source, the Celsius Network. Institutional investors are given access to a trustworthy crypto market and to a large pool of aggregated cryptocurrencies. Interest earned from these investors then gets redistributed to Celsius in the following ratio: 80% of profits are distributed to the users, and 20% of profits are utilized to develop the platform.

Users that lend their crypto assets to the platform receive attractive interest rates, while users that borrow crypto assets are also subject to a relatively low loan interest rate.

Essentially, the platform works in tiers and users earn higher yields from the Celsius network based on the amount of CEL tokens they hold. Interest payments on the Celsius network are paid either in CEL tokens or the crypto asset being lent to the platform: hold DOT earn DOT, hold AVAX earn AVAX.

The higher the amount of CEL tokens being held by a user, the higher interest rates are paid out, and the lower the fees are for any loan taken out.

What Is Celsius Network (CEL) Used For?

The Celsius platform can be thought of as a lucrative way for people to become independent financiers of others, through an internet protocol that facilitates the process. People who hold their assets on the Celsius platform earn interest on the holdings (like a savings account) and their collateral is then redistributed to users who wish to take out a crypto loan.

The tiers which power the platform can be best understood as follows:

None – This is the lowest tier – users who have 5% or less of their crypto portfolio in CEL tokens don’t receive rewards. However, they do still earn a base APY yield and they receive a 5% discount on loan interest.

Bronze Tier – Users hold 1 CEL of between 5-10% of their total crypto portfolio in CEL tokens. Users are rewarded 10% in bonus rewards and also receive a 5% discount on loan interest.

Silver Tier – Users hold at least 1,000 CEL or 10-15% of their total crypto portfolio in CEL tokens. Users are rewarded 15% in bonus rewards and receive a 10% discount on loan interest.

Gold Tier – Users hold at least 15-25% of their entire portfolio in CEL tokens or at least 10,000 CEL. Users are rewarded 20% in bonus rewards and receive an additional 15% discount on loan interest.

Platinum Tier – Users hold anywhere between 25-100% of their portfolio in CEL tokens or at least 25,000 CEL tokens. Users receive 30% bonus rewards as well as a 25% discount on loan interest.

Additionally, CEL tokens are also frequently traded on cryptocurrency exchanges because they experience daily price fluctuations. Swing and arbitrage traders try to capitalize on price volatility in the market.

Where To Buy CEL Tokens

CEL tokens are available to purchase on most of the popular cryptocurrency exchanges. The CEL token experienced its most significant trading volumes in June 2021, when the price of the CEL token surged to more than $8.

Five of the most popular crypto exchanges to buy and trade on are:

1. FTX
2. Gate.io
3. OKX
4. ByBit
5. Bitfinex

Many people opt to move their tokens off of exchanges and into digital wallets or cold wallets. This is considered to be the most secure option because exchanges can be hacked or exploited.

Trust Wallet is one of the most frequently used wallets and it’s used by hundreds of thousands of people globally.

About Celsius Network (CEL)

How long has Celsius Network (CEL) existed?

The Celsius Network team initially launched Celsius Network in 2017. Sequentially, the CEL token was launched in 2018.

The CEL Initial Coin Offering (ICO) took place between 16-22 March 2018. A total of $50 million was raised during the sale. The ICO token price was 1 CEL = 0.3 USD. 

The CEL cryptocurrency is still trading at more than 2x its ICO price.

What’s controversial about Celsius Network (CEL)?

Practice caution before investing in any project and do diligent research. Do a substantial amount of research on any project before you invest, research the project’s history, its founders, the tokenomics, partnerships, and any other important factors associated with the project.

Let’s take a look at the two biggest controversies surrounding CEL below:

• Competition – CEL has gained popularity in recent months but the project is still not one of the top 3 lending protocols on the market. Many people are concerned that the project won’t be able to claim a spot at the top because the competitors are already dominating the market.
• CEL is overvalued – Only 34% of CEL tokens are in circulation. This percentage is especially concerning because it typically indicates that there will be a massive price dump once locked-up tokens hit the market. CEL is already more than 10x below its all-time high price, and when more CEL tokens are released into circulation, further negative price action will likely occur.

How many CEL tokens are there?

At the time of writing, CEL has a circulating supply of 238,863,519.83 CEL (34% of the total supply).

The total supply of CEL is 695,658,160.

Can CEL be mined?

CEL is not a mineable cryptocurrency. CEL differs from cryptocurrencies like Bitcoin which is mineable because they use a proof-of-work consensus mechanism.

The most popular way to earn CEL tokens is by participating on the Celsius platform and holding more than 25% of your portfolio in CEL.

Additionally, users can participate in various DeFi products such as liquidity provision, farming, and staking on decentralized exchanges like Uniswap.

Certain centralized exchanges also offer staking rewards for users who invest their CEL tokens.

What is the market cap of Celsius Network (CEL)?

To calculate the market cap of any cryptocurrency, you can use the formula below:

the total amount of coins in circulation x the current market price of the coin.

Celsius Network (CEL) Market Cap = 238,863,519.83 CEL x $0,74 = $178 million (151st largest cryptocurrency by market cap).

Biggest Competitors Of Celsius Network (CEL)

CEL has become a well-known and trusted platform in recent years. Celsius aims to generate revenue for users – the platform offers crypto collateralized loans and accommodates both lenders and borrowers.

Although the Celsius protocol has onboarded thousands of users, it’s not the only project in the space that is providing users with an innovative easy-to-use, and high-yield-bearing platform.

Celsius’s biggest competitors are:

• AAVE
• Maker
• Compound

What Are The Future Plans Of Celsius Network (CEL)

The Celsius team has announced its intention to continue onboarding retail and corporate clients to the platform. It will continue to actively add various cryptocurrencies and keep building the platform in a way that rewards its community.

Celsius Network will also strive toward growing its market dominance and becoming one of the top protocols by market cap.

 

Pros And Cons Of Celsius Network (CEL)

Pros:

• High-interest payments – Compared to other protocols, Celsius Network has very generous yield returns on assets.
• Hold an asset earn rewards in that asset – Celsius allows users to hold an asset and earn rewards in that asset. For example, users can hold DOT and earn either DOT or CEL tokens.
• Fair tier system – Celsius rewards are divided into tiers but aren’t only centered around how many thousands of CEL tokens a user holds. Rather, users are rewarded according to the percentage of CEL tokens they hold in their crypto portfolio.

Cons:

• Competition – Celsius is currently the 5th largest lending protocol and has a very small market cap compared to its competitors.