What is Celsius? (CEL)
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Celsius network is a regulated, SEC compliant, lending platform that enables users to receive interest on deposited cryptocurrencies or take out crypto collateralized loans.
Celsius hopes to attract users by returning high yields on their deposits while maintaining the benefits apparent in traditional outlets such as quick, fee-less transactions. For existing crypto investors wishing to take out a loan, Celsius provides an opportunity to receive dollars without cashing out of cryptocurrency holdings.
The system is based around their native token CEL, which is used to take loans, provide rewards, and make payments.
Further, Celsius implements a loyalty program where status is reflective of CELs value in the user’s portfolio. As a member progresses to each subsequent tier, they are given bonus rewards and discounts on loan interest.
For more regular updates from the Celsius Network team, you can bookmark the Celsius Network Blog, which includes weekly updates, new offerings, and explanatory articles.
Who Created Celsius?
Incorporated in London in 2017, Celsius Network was founded by Alex Mashinsky, S. Daniel Leon, and Nuke Goldstein. Notably, Mashinsky is an accomplished entrepreneur and engineer formerly contributing to the foundations of VOIP (Voice Over Internet Protocol) and founding two of NYC's top 10 venture-backed exits since 2000.
In 2018, Celsius launched an Initial Coin Offering (ICO), raising about $50 million by selling 325 million CEL (about half of their total supply)
While the Celsius Foundation guides the project allocating their funds, the addresses of prominent CEL holders are publicly available on their website.
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
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.
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.
Kraken's Crypto Guides
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- What is EOSIO? (EOS)
- What is Stellar? (XLM)
- What is Cardano? (ADA)
- What is Monero? (XMR)
- What is Tron? (TRX)
- What is Dash? (DASH)
- What is Ethereum Classic? (ETC)
- What is Zcash? (ZEC)
- What is Basic Attention Token? (BAT)
- What is Algorand? (ALGO)
- What is Icon? (ICX)
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- What is OmiseGo? (OMG)
- What is Gnosis? (GNO)
- What is Melon? (MLN)
- What is Nano? (NANO)
- What is Dogecoin? (DOGE)
- What is Tether? (USDT)
- What is Dai? (DAI)
- What is Siacoin? (SC)
- What is Lisk? (LSK)
- What is Tezos? (XTZ)
- What is Cosmos? (ATOM)
- What is Augur? (REP)
Why use CEL?
Users may find Celsius Network appealing if they wish to earn yield in the form of cryptocurrencies or if they wish to take trading positions with more than their account balance.
Investors may also seek to add CEL to their portfolios should they believe in the future of cryptocurrency lending platforms.