At a time when interest rates around the world are near an all-time low, and some even negative, how is it that some apps can offer double-figure APR? The Celsius Network app is challenging the traditional financial sector with its competitive interest rates and simple user experience. Moreover, holders of the CEL token can gain exclusive loyalty rewards including lower interest rates for borrowing, and higher interest rates for depositing. These are valid reasons for people to get excited about the app, and bullish signals for the future price action of the CEL token. Following a recent pump in the price for CEL and much community discussion, we wanted to bring you this deep dive into an up-and-coming crypto app with hundreds of thousands of users. 

In this article, we’ll look at the background of Celsius Network, and exactly why the Celsius Network app has become so popular. Also, we’ll explore the utility of the CEL token and discuss how Celsius Network can offer such competitive rates and the range of services on offer. 

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What Is The Celsius Network App?

Celsius Network is a wealth management platform that facilitates the borrowing and lending of crypto assets. The native CEL token is the center point of the Celsius ecosystem and can be used for borrowing, lending, staking, and peer-to-peer money transfers. Celsius Network makes it incredibly easy to earn compounding interest on your crypto. By simply depositing funds into the Celsius Network app wallet, users can start earning immediately. 

Furthermore, Celsius Network does not charge for deposit fees, withdrawal fees, default fees, or fees for terminating staking. Plus, interest is paid weekly and can be withdrawn at any time. Interest rates paid to platinum members are extremely competitive, which adds great value to the CEL token.

Celsius Network has stated:

“We believe in the power of disruption. A community-oriented system can act in the best interest of everyone, and that’s what we’re here to build. We learned that from our advisor and the original inventor of Blockchain, Dr. W. Scott Stornetta. With our diverse skillset and innovative spirit, we can change the equation and bring power back to the people! We hope you’ll join us.”

The Celsius Team

CEO, co-founder and chairman, Alex Mashinsky, is rather well-known in the tech space. As the inventor of VoIP (Voice over Internet Protocol), Mashinsky helped make it possible to make calls online without the use of traditional telephone networks. Furthermore, Mashinsky has established several successful businesses and holds over 35 different patents. One of Mashinsky’s most notable companies is Transit Wireless, which, at the time of Mashinsky’s departure, was valued at approximately $1.2 billion.

Alex Mashinsky

Also, every Friday evening, Mashinsky hosts his weekly AMA (Ask Mashinsky Anything) sessions. This provides a great opportunity for the Celsius Network community to engage with the team. Additionally, this provides insights into developments of the platform while assisting in the growth of the network.

COO, co-founder, and President, S. Daniel Leon, brings a huge amount of experience and expertise to the table. This includes a strong technology and business background. Furthermore, CTO and co-founder Nuke Goldstein has a firm background in artificial intelligence, blockchain, and the internet of things (IoT). Also, CFO Harumi Urata-Thompson sits on the board of directors of various companies and is involved in various fields including artificial intelligence and cybersecurity.

CEL Token 

Launched in June 2018, the CEL token is an ERC-20 token that runs on the Ethereum network. The CEL token initial coin offering (ICO) raised $50 million, with CEL tokens valued at $0.30 per token. After the launch, the price of the CEL token plummeted to $0.03. However, the recent adoption of the Celsius Network app and the increased utility of the platform has been a catalyst for a substantial increase in the price of the CEL token.

With a total supply of almost 700 million tokens, only half of all tokens were distributed during the ICO. The Celsius team received 25% of this amount, with the remaining tokens locked in a smart contract. This smart contract would only allow for new loans to be issued when the CEL token was valued above $1.50 for 10 consecutive days or longer. This was achieved in 2020. The CEL token saw an approximate 4,500% price increase after a sustained period of upward momentum throughout September. Providing that the CEL token remains above $3 for 30 days or more, the remaining tokens can be released and issued for loans.

The primary use for CEL tokens is for staking, maximizing interest, and loan payment discounts. Rewards and rates are determined by a tiered system.

Celsius Loyalty Tiers

The Celsius loyalty tiers are determined by the percentage of CEL tokens held by users on the platform. Celsius Network makes it easy for anyone to access top-tier rewards, with status based on the ratio of CEL tokens in your portfolio, not the amount.

To make the most out of the perks on offer from Celsius Network, users must hold and stake CEL tokens. Celsius uses a unique four-tiered system (bronze, silver, gold, and platinum). A user’s eligibility for each tier is dependent on how users choose to stake.  

• Bronze members must hold 5-10% of their portfolio in CEL tokens. Bronze members also receive a 5% bonus reward and loan interest discount.
• Silver members must hold 10-15% of their portfolio in CEL tokens. Also, silver members receive a 10% bonus reward and loan interest discount.
• Gold members must hold 15-20% of their portfolio in CEL tokens. Furthermore, gold members receive a 20% bonus reward and loan interest discount.
• Platinum members hold 20% or more of their portfolio in CEL tokens and receive a 30% bonus reward and loan interest discount.

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CelPay

CelPay is one of the main features of Celsius Network, offering peer-to-peer crypto payments. Also, you can use CelPay to send crypto to someone who doesn’t even have a crypto wallet!

Celsius Network operates in a similar way to Bondly Finance, by generating a link that can be copied and pasted, and sent to anyone. Simply choose your contact, select the type of crypto and amount to send, then type in any message you’d like. After that, just press send!

You can send the link via SMS or email. Then, the recipient will receive a wallet with the sent amount of tokens, generated from the link. There are no transfer or recipient fees. Users who send CEL tokens can receive 2% cash back for doing so. Plus, there are more than 30 other cryptocurrencies supported by the app. 

Crypto Loans

With the Celsius Network app, taking out a loan could not be easier. Loans are fully collateralized and flexible to adapt to different budgets and requirements. Celsius Network offers a minimum $500 crypto loan, with $1,000 collateral. This means the loan to value ratio (LTV) is 50%. Depending upon the amount one wishes to take out as a loan, the LTV can be as low as 25%. Moreover, users have the option to pay back the loan over different time frames between six months and three years. Also, loans are not subject to credit checks and are instantly approved.

Need quick access to some extra fiat currency or stablecoins and don’t want to sell your crypto? Now you don’t have to. At the time of writing, Celsius Network has processed over $8.2 billion in loans to 350,000+ users. Interest rates for borrowing are also incredibly competitive, charging from only 1% APR for a 25% loan to value ratio (LTV) backed loan, paid in fiat currency. Furthermore, if users pay the interest in CEL tokens, this is reduced to just 0.7% APR.

Celsius Network has designed a slick and cost-efficient business framework with the community in mind. The platform offers higher interest rates for depositors and lower interest rates for borrowers than many competitors.

How are Interest Rates So High?

Celsius Network makes use of one of the most secure business models on Wall Street, securities lending. In short, this means that Celsius Network lends out deposits to institutions, and the institutions pay an interest rate to Celsius for doing so. This is similar to the Robinhood model; however, Celsius Network has adapted this for cryptocurrency. Moreover, all transactions made are fully collateralized. This process can also be known as a rehypothecation model.

Institutions pay interest to Celsius Network for the loan, then 80% of the revenue is returned to Celsius users. This is unlike in the traditional financial system, where the majority of profits are split between share-holders of large banking corporations. Celsius Network is committed to giving its users the best interest rates possible by using only 20% of revenue for expenses and overheads. 

Insufficient collateral from institutions is a risk taken into consideration by Celsius Network. A sudden dump in asset prices has historically liquidated many traders and investors. For example, in March 2020, Bitcoin’s price fell by around 30% overnight. This created over $700 million in liquidations on BitMEX alone. Celsius Network, however, had zero institutional liquidations.

This is because Celsius Network makes use of margin calls. If the loan to value ratio (LTV) falls below 50%, an email is automatically triggered to the user. Then, the user can simply close the margin call by adding additional collateral on outstanding loans. During the March 2020 market crash, margin calls were in the hundreds of millions of dollars according to CEO, Alex Mashinsky. Celsius Network lends out funds to institutional borrowers as opposed to retail borrowers. These institutions have a big enough balance sheet and corporate resources to be able to swiftly rebalance the collateralized loan. This framework has proved sustainable even during economic turbulence. 

Celsius Network App & CEL Token Summary

The Celsius Network app and CEL token have recently become hot topics of discussion within the crypto community. Celsius Network offers some of the most competitive interest rates in a simple and easy-to-use, all-in-one borrowing and lending app.

This being said, the Celsius Network app is centralized. This may be of some concern to those who believe strongly in the decentralization of cryptocurrency. However, the app is founded by some of the most active and innovative entrepreneurs in cutting-edge technologies. Celsius Network has a solid foundation to make the app a popular crypto savings account for hodlers. Moreover, it allows anyone to access instant collateralized loans without the typical hurdles presented by financial intermediaries. 

The use of lending to institutions puts a new twist on crypto yield apps. It has certainly proved a profitable and secure way of reducing chances of liquidation during unforeseen market downturns. The recent fear, uncertainty, and doubt (FUD) about the UK Financial Conduct Authority (FCA) restricting the use of crypto-related businesses in the UK means that Celsius Network is at potential risk of ceasing trading in the country from July 2021. Crypto businesses that wished to continue trading applied to the FCA register last year. However, businesses that did not make the deadline seized trading from early January 2021. The FCA has temporarily registered Celsius Network whilst their application is under review. Thus far, Celsius Network has proved to be a transparent and community-centered business that shows no reason for the business to not meet the criteria.

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