Last Update september 2020
Celsius.network is arguably the leading platform when it comes to earning interest on cryptocurrencies. Similarly to BlockFi which we also reviewed, Celsius.Network is offering high-interest rates on the cryptocurrency you have deposited with them. Celsius Network is rapidly expanding its user base and at the time of writing has recorded over 165.000 Celsius app downloads.
Today we’re going to review their services, compare them to other crypto interest platforms in the market, explain how earning interest on cryptocurrencies works, discuss the Celsius.Network philosophy, track-record of founder Alex Mashinsky, and much more.
So whether you’re just starting to learn about how to earn interest on your crypto or you just want an honest review about Celsius interest account, we hope you’ll find what you’re looking for in today’s review of the Celsius Network.
Now, before we get started, do understand that Celsius.Network is a custodial service, which essentially means that you are entrusting them (third-party) with your digital assets. So, as there is third party risk involved, you should do your due diligence as to whether you’d like to be involved and use their services to earn interest on your cryptocurrencies.
What is the Celsius Network Business Model?
Celsius.Network is essentially a lending platform that focuses on providing collateralized loans to individuals and institutions. They are leveraging the existing high demand for cryptocurrency loans. With the profits from their lending services they pay their depositors -you- high yield interest! Celsius.Network proudly states it returns approximately 80% of the profits to its depositors.
Why do individuals and institutions borrow digital assets from the Celsius Network?
- From the standpoint of an individual borrower: Imagine you are in a position where you have a substantial amount in digital assets and you wish to hold them for the long term, then how can you get liquidity today without selling? Because you know that if you sell, you are creating a taxable event and you might want to avoid that for the time being. Simple, initiate a loan with Celsius Network, and deposit your cryptocurrency as collateral. The higher your collateral, the lower the interest rate they charge you!
- From the standpoint of institutions and other industry players: There is a growing demand from institutions and other professional players in the market to take out short term loans in certain cryptocurrencies. This might be to hedge their trading positions, short the market, or express any other belief they have financially in the current cryptocurrency market.
Business model: Celsius Network returns 80% of their lending profits to pay out interest to their depositors, resulting in yearly interest rates close to 9% on some digital assets.
Why do people consider depositing digital assets with Celsius Network?
- Traditional banks no longer share profits with their clients by offering compelling interest yield, instead they often charge you with annual holding costs.
- For many long term holders – “hodlers” – of cryptocurrency assets, it’s an easy way to capture significant yield on their digital assets, especially if they were already comfortable using custodial services.
In other words, to earn interest on idle digital assets simply by joining the Celsius Network and depositing your cryptocurrencies with them. Celsius Network will lend out your deposits and share the profits with you.
Do you need cryptocurrency to earn interest or can you also deposit dollars?
Yes, you’ll need to deposit a cryptocurrency, however, nowadays you can actually easily convert your currency into a stable coin which represents your USD, CAD, GBP, and so on, 1 for 1. In other words, you can avoid the price volatility of cryptocurrencies. So, these stable coins represent the equivalent of an underlying traditional national currency.
Celsius Network supports the following stable coins:
- USDC – (USD Coin)
- TGBT – (True Great Britain Pound)
- TCAD – (True Canadian Dollar)
- GUSD – (Gemini Dollar)
- USDT – (Tether)
- TAUD – (True Australian Dollar)
- PAX – (Paxos)
- THKD – (True Hong Kong Dollar)
- SAGA – (Represents a basket of currencies)
- XAUT – (Tether Gold ) (for those considering Gold as a ‘currency’)
- BUSD – Binance USD
Celsius Network - Founders, Backers & Our take
Founders - From VOIP to MOIP
Celsius Network was founded by Alex Mashinsky, S. Daniel Leon, and Nuke Goldstein in 2017. The main goal of Celsius Network revolves around creating a financial platform that intends to bring in a new mass wave of adoption in cryptocurrencies.
Founder Alex Mashinsky, in particular, has a strong proven track record when it comes to executing on big visions. The fact that today we are all communicating through “Voice Over IP”, has a lot to do with his perseverance and ability to see the future. Now, Alex is foreseeing the transformation of money and working to be part of the ‘Money Over IP’ revolution.
He has many times compared the current adoption trajectory of cryptocurrency adoption to a 4-way relay race where institutional investors dropped the baton and didn’t come in to pick up digital assets from the early speculators. Celsius intends to usher in simplicity and a clear value proposition for the layman and open the door for one hundred million users to enter the crypto arena. A simple proposition: No costs & high-yield.
Who’s backing Celsius Network besides the founders?
- Community: In May 2018, Celsius Network launched an ICO (CEL token) and collected roughly 50 million USD. So far, Celsius has been able to keep the crypto community close and they are closely monitored by that same community. (ex. celsians.com)
- Venture Capital: As we speak, Celsius Network is in the middle of a capital raise, with a pre-money valuation of 120 million USD. According to data found on Crunchbase, they’ll be raising around 25 million USD when all is said and done. Sadly, you need to be an accredited investor to join in. All-in-all, we can understand the strategic move and think it actually helps to ease some of the risk factors involved. Simply said, with more strategic backers and ways to obtain growth capital, Celsius Network is better equipped to address unexpected financial issues, which, in turn, lessens the risk to ever have to socialize losses or ‘share losses’ with its user base.
With a hardcore blockchain and cryptocurrency community fractioned over a large number of different projects, visions, ideas,…, there’s a strong need to start offering high-value propositions to the part of the world who’s not interested in ideology, but in utility.
We believe that helping to “disintermediate” the financial sector is a big step in that direction. The Celsius philosophy to redistribute 80% of their profits and avoid becoming just another toll collector for financial transactions is inspiring.
Earning high-yield interest on digital assets? We like it, but is it safe? How much risk are we taking when we consider leaving our assets with Celsius? Let’s explore some more.’
Breaking down the Celsius interest account - Crypto interest rates and safety
Comparing Crypto interest rates - Earning interest on crypto!
Celsius allows you to earn interest on an ever-increasing number of cryptocurrencies and stable coins.
Currently, Celsius Network is supporting:
CEL token (CEL), Ethereum (ETH), Bitcoin (BTC), Chainlink (LINK), Ripple (XRP), Bitcoin Cash (BCH), Bitcoin SV, (BSV), Litecoin (LTC), OmiseGO (OMG), Ox (ZRX), Stellar (XLM), Dash (DASH), EOS (EOS), Ethereum Classic (ETC), Basic Attention Token (BAT), Kyber Network (KNC), Livepeer (LPT), Matic Network (Matic), Synthetix Network Token (SNX).
Supported stable coins:
TrueUSD (TUSD), Gemini Dollar (GUSD), DAI (DAI), Paxos Standard(PAX), USD Coin (USDC), Tether (USDT ERC20), True Great Britain Pound (TGBP), True Australian Dollar (TAUD), True Canadian Dollar (TCAD), True Hong Kong Dollar (THKD), Saga (SGA), Binance USD (BUSD).
Comparing Celsius Vs BlockFi interest rates
In the table below, you can observe that both Celsius and BlockFi, are offering very competitive rates for your crypto deposits. Do note that Celsius does have an offer that will crush BlockFi’s interest rates. That is if you are willing to accept CEL token as interest payment. For stable coins, for example, you can earn up to 15.89% in interest if you accept a payout in CEL token.
So, with respect to your choice between Celsius Network or BlockFi, it probably comes down to:
- which platform you prefer from a user perspective.
- which company do you trust more with your digital assets
If you want to exclusively compare Bitcoin interest rates between different platforms, you can check them in the following article “Best Bitcoin Interest Account“.
Another thing to consider is that BlockFi will only pay 6% on BTC on deposits lower than 5 BTC. For deposits higher than 5 BTC their interest rate on BTC drops to 3.2%.
So for deposits higher than 5 BTC, you might want to consider the 3.82% yield Celsius Network is offering.
Update: Celsius is now offering 6.20% APY for the first BTC.
All-in-all Celsius is offering exceptional interest rates and is supporting a large number of digital assets which is a big plus.
Obviously there are more things to consider before we decide if these offers make sense to us. We need to explore the functionality of a platform & understand the risks involved. If you want to learn more about the BlockFi platform we can recommend our BlockFi review.
Let’s discuss the risks involved with the business model & then continue with a closer look at the Celsius App.
Are your cryptocurrency assets safe with Celsius?
Are 'Celsius' compounded interest rates legit?
As we’ve discussed before the Celsius business model revolves around issuing crypto asset-backed loans to private individuals and lending out digital assets to institutional players. To date, the Celsius business model has proven to be successful. As far as we know it has flawlessly navigated through some periods of extreme volatility in the crypto market, which is a very positive sign. Celsius returns around 80% of the profits to its depositors. So, yes the offered Celsius interest rates are legit.
What are the risks with the Celsius business model?
As with any starting business, there are risks involved. We won’t get into all of the different risks here, but you’ll definitely have to do your due diligence on its management, follow its profitability, funding capability, and so on.
From a business model perspective, one of the things to watch out for is a scenario of extreme volatility where they cannot sell the assets that are backing a loan quickly enough. So far they have had a successful track record and only time will tell…
Are my funds safe with Celsius Network?
If you are depositing your assets with any third party you’ll want to know that your funds are held safely, and learn about how best practices are applied to secure that. Especially in the digital asset space where we keep hearing about security breaches and hacks. Celsius is holding the majority of the funds in cold storage with BitGO.
Now, to be fair, don’t be fooled into thinking that this is only a problem for the crypto space. Traditional banks get hacked all the time, we just don’t get to hear about it all the time. Having said that, an important factor that makes people generally feel comfortable with traditional banks is the FDIC insurance, or the equivalent of it, depending on where you live. Does Celsius have any insurance?
Is the Celsius Network insured?
Celsius Network does have insurance in place up to 100 million USD through its digital asset custodian BitGo. So, when you deposit funds, BitGo will act as a custodian for the deposited assets.
Is Celsius FDIC insured?
No, there is no FDIC or equivalent insurance for Celsius Network or any other cryptocurrency interest provider. In other worlds, you should take this into account when comparing interest rates at traditional banks with crypto interest accounts.
Over time, we do expect that the deposit insurance situation will improve, on the flip side, rates might start trending down when that happens.
How does Celsius manage security for the app?
- Celsius network offers Two-factor identification (2FA): Celsius offers two-factor identification, which is solid protection to your mobile app access. Also, the Celsius App will quickly log out of your session. (So quickly, that it is almost an annoying feature of the app.) Do note that you’ll have to activate this yourself!
- Celsius offers crypto address whitelisting: Another recommended method to ensure that no one tries to steal your crypto assets is to add predetermined specific withdrawal addresses. This ensures that any withdrawal of funds goes to a crypto address you control.
So, is Celsius Network safe? Can I trust Celsius? Is Celsius legit?
Celsius Network is definitely legit if you consider the following:
- Strong management team with a proven track record
- The backing of the community, a large number of industry-leading partners
- A commitment to transparency towards the community
- Paying interest to their depositors based on real income form business activities.
Given all of that, it’s probably also safe to assume that Celsius has your best interests at heart and in that sense, they are trustworthy.
Does that mean that your funds are safe? That is really a question you should answer for yourself. The reason we can not offer a clear answer has to do with the fact that safety and risk vs reward is really an idea that can only be measured through the eyes of the beholder. In other words, through your eyes. Nothing is ever 100% safe in finance… ask the 2008 crisis or ask Cyprus bank holders when their bank accounts got a forced haircut (read: assets seizure) in the period 2012-2013.
Only time will be the judge of this. If they are still around 10 years from now we would have to conclude that they were safe today.
Full disclosure: At this time, we are using the Celsius services ourselves and intend to have a small part of our portfolio allocated to earn interest.
Celsius App Features
Is Celsius offering compounded interest?
Yes, interest payments are deposited on a weekly basis.
Does Celsius have withdrawal fees?
No, Celsius does not apply any withdrawal fees.
However if you fund your account with a credit card, you’ll find that it is really expensive. Celsius offers in app purchases/funding of your account through Simplex.
Is there a minimum deposit amount in a Celsius interest account?
No, you can deposit any amount.
Does Celsius require a lockup period for your funds?
No, you can withdraw your funds at any time.
How to get started with a Celsius interest account?
1. Download the Celsius App & Create an Account
Download the Celsius app:
Getting started with Celsius is pretty straight forward. Simply download the Celsius app available for Android & IOS.
How to create a Celsius account?
When you open up the app you’ll simply have to choose one of the options to sign up and create your account. Celsius gives you 4 different options to create an account:
- Sign up with Facebook
- Sign up with Google
- Sign up with Twitter
- Sign up with Email
In order to do that, you’ll need your driver’s license or identity card closeby & be ready to take a selfie!
2. Deposit cryptocurrency
Once your account is created and verified, you can simply deposit your cryptocurrency. Simply select the currency you want to deposit. As discussed earlier, Celsius is offering a wide array of cryptocurrencies and stable coins to earn interest on.
Tip for beginners:
- It is recommended that you enable the two-factor identification and add an address to the whitelist right away, you don’t need it to do that in order to proceed.
- Remember to double-check the copied address before sending cryptocurrency and to make sure that you are sending the correct cryptocurrency. You cannot send Bitcoin a Litecoin address for example. You can use the copy to clipboard function to copy the address, but a good practice is to always double-check the first and last letters of a cryptocurrency address before you hit send from your wallet.
3.Start Earning interest on your cryptocurrency
Once you have deposited your cryptocurrency, you will start earning interest on the deposited coins immediately. The interest payments are scheduled weekly and Celsius will send out a notification with every interest payment.
The Celsius Dashboard
You can always add deposits, withdraw, start the process to get a crypto backed loan.
At this time Celsius is not offering an easy way to trade between cryptocurrencies.
Celsius Review - Conclusion
What we like & what we are looking forward to?
What we like:
- Competitive interest rates!
- Mobile app
- Compounded interest!
- No fees for withdrawals
- Deposit Euro, USD, …. , from your traditional bank account. Do note this is an embedded 3rd party service (GEM)
- Competitive interest rates!
- No-lockup period
- Team & Institutional backing & last but not least, community backing!
What we would like to see:
- Trading within the app at reasonable rates
- Some kind of deposit insurance – we suppose that the market will figure out how to do that in the future.
- Crypto Debit card or Credit Card (Without prohibitive fees of course!)
Celsius Review - Final thoughts
Earning interest on your crypto assets is magic and Celsius is growing rapidly because of it. While we are still in the early days, and it remains to be seen if they can keep it up, the heart of the matter is that you can actually explain the benefit of holding crypto to someone who’s brand new to crypto currencies.
The step to convert USD to buy USD stable coins in order to earn an 8.69% yield is an easy step to explain and an even smaller one to take for new users hungry to protect their purchasing power over the long term.
Over time people can learn about Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and so on. Even better, they can use their interest profits to invest in cryptos and have their downside protected.
Celsius is offering very attractive interest rates, through an easy to use mobile app, and we think it will be rewarded with an ever faster growing user base. Who doesn’t want to earn attractive interest rates?
So, we have a positive view on the project and are eager to see how the company can build up its reputation. We will definitely allocate some capital into the project with the intent of earning interest on idle cryptocurrencies or stable coins.
We do however think that trading within the app & a crypto debit card are winning features, which are missing. In our view, while we really like Celsius when we think about the longevity of the business, but we think BlockFi, for example is making it a bit easier for users as they are actively thinking of providing a debit card in the future, allow trading within the platform and allow you to earn interest in any cryptocurrency you want. We also prefer to send money from our bank account through BlockFi as Celsius requires you to go through the KYC verification process a second time with GEM. Now, in the spirit of diversification we will be users of both platforms.
We hope you have found this Celsius review to your liking and invite you to share this review to support if you’d like to support our work here at OnchainGuru.com.