Celsius Network is a popular crypto-lending and investing platform. Users holding its native crypto, CEL, enjoy utilities such as better interest rates on deposits and discounted rates on loans. According to the platform, investors can expect to earn up to 22.4% APY on deposits while borrowers can enjoy low-interest rates starting from 0.7% APR. In this Celsius Network review, we dissect the good and the bad of Celsius Network and whether it is the best platform for your crypto.
Crypto-lending exploded during COVID-19 as people escaped worsening bank rates. According to a report by DeFi Pulse, there was a record 7X increase in invested funds in the industry between March and August 2020.
Since crypto-lending kicked in late 2017, platforms have launched an assault on traditional banking systems. One of the most talked-about crypto-lending platforms doing that today is Celsius Network.
Originating over $8.2 billion in institutional loans since their launch in 2018, and promising earnings of up to 22.4% APY, many are rightly skeptical. Is there a catch? Should you use Celsius Network for crypto investment and lending?
We’re going to help you find out in this Celsius Network review.
What is Celsius Network?
The company was founded in 2017 by its Alex Mashinsky (CEO) and Daniel Leon (Founding president). Alex Mashinsky is a serial entrepreneur known for founding several tech companies including Arbinet, a commodity exchange for tech companies in 1996.
Today, Celsius is available in more than 150 countries and supports over 30 cryptocurrencies. It reports an impressive $200 million in community assets, over $8b in loans processed, and over 180k active users.
As a borrower, you can access fiat or stablecoin loans using your choice of cryptocurrency as collateral.
Investors receive interest on crypto deposits, paid directly in-app. Celsius claims all funds are backed by loan collateral that can be sold to cover any defaults.
Celsius Network’s native cryptocurrency, CEL
Perhaps the most distinguishing factor for Celsius Network is its native currency, CEL.
Celsius Network offers utilities for those who use its CEL cryptocurrency to carry out transactions. These include:
- Up to 30% discounts on interest for borrowers who pay with CEL.
- Up to 30% more interest income for those who earn interest in CEL.
- Prioritizing dollar loans to users with the highest CEL balance in terms of fulfillment time.
- Celsius rewards 80% of its profits to CEL holders.
However, it is important to note that right now, American investors cannot choose to earn interest in CEL.
How Celsius network works and decides rates.
Borrowing and investing processes are fast and easy using the Celsius App.
How to take out a loan on Celsius
You can borrow in-app within minutes. Terms range between 6 and 36 months. Celsius states that there are no penalties for loan termination or early repayment.
Here are the steps to follow when taking a loan:
- Download and install the Celsius app.
- Fill in the required details and verify your profile.
- Enter your desired loan amount in coins or FIAT.
- Choose your payment period and LTV rate (25%, 33%, and 50%).
- Select the crypto or stablecoin you want to use as collateral.
- Choose your term — between 6 and 36 months.
- Choose whether you want to pay interest in CEL or cash (lower interest rates for CEL payments).
- Start your loan and begin repayment.
Celsius Network rates for borrowers
As a borrower, you can get a loan with as little as $1,000 of collateral. The rate of interest you will pay will depend on several factors including:
You can choose between 6, 12, 24, and 36 months. The longer the term, the higher the interest rate.
Loan to value (LTV)
Celsius offers LTVs of 25%, 33%, and 50%. The higher the LTV, the more interest you pay. Loans start at 0.7% APR for a loan of $1,000 paid in CEL. 1% APR if you pay in cash.
But…to enjoy these rates, you have to take out a loan for the lowest term (6 months). You’ll also need collateral equal to more than 3X the value of the loan (10.6443ETH = about $3970).
That’s not always realistic for everyone.
The highest LTV rate you can enjoy at Celsius is 50%. Or 200% of your loan value in collateral.
How to invest on Celsius
Celsius lets you start earning interest as soon as you deposit your funds in-app. You also can withdraw your earnings at any time.
Payouts are done in-app, every week on Mondays. For Friday, Saturday, and Sunday deposits, however, you will not receive interest on the immediately following Monday. Interest also compounds every week so the rewards can add up fast.
How to invest on Celsius:
- Download and install the Celsius App.
- Fill in the required details and verify your profile.
- Deposit your crypto into the Celsius App.
- Start earning interest immediately.
Celsius Network rates for investors
As an investor at Celsius who does not hold CEL, the highest rate you can currently earn is 22.4%. This is if you are earning interest on the Synthetic Network Token (SYNTH) or Matic Network (MATIC) paid in CEL.
The in-kind interest rates (rates paid in the cryptocurrency you deposited) for both of these tokens is 16.16% as shown below.
Popular cryptocurrencies such as Ethereum and Bitcoin go for rates lower than 10%. Rates fluctuate so you may earn more or less depending on the market.
Celsius promises to share 80% of its earnings with its depositors, but there is a catch — you must be a CEL “HODLer”.
The higher your CEL ratio, the more you earn. Here is a table showing how they distribute their bonus earnings.
(Note that with a CEL ratio of between 0% and 5%, you will not be getting any bonuses.)
Is Celsius Network safe?
According to our review of the Celsius Network, the answer is YES and NO.
- All loans are crypto-backed. In case of default, the company can sell crypto to recover funds.
- Celsius notifies you to top up their collateral if it loses value so you should have ample warning before being liquidated.
- They use BitGo to provide insurance up to $100 million.
- Celsius lends mostly to large institutions and sometimes to exchanges, which provide collateral. In case of default, Celsius can sell the collateral to settle loans.
- Centralized wallets — Celsius uses a centralized wallet to store your funds. That means they retain control of the private keys to your wallet, which puts your money at risk in case of hacking.
Summary of Celsius Network Pros and Cons
Here is a table summarizing the pros and cons for both Celsius Network investors and borrowers:
Should I use Celsius Network? The verdict
From our Celsius Network review, one notable factor to consider before you jump into the Celsius Network is security.
Celsius uses a centralized wallet which is risky in case of a hacking incident. Also, the company offers NO direct insurance on deposits.
On the bright side, Celsius Network provides an easy way for its users to transact through their app. The app contains a special feature, CelPay, which you can use to send or receive supported crypto at no fee. If you carry out CEL transactions on CelPay, you enjoy a 2% cashback on all transactions.
Celsius network provides some great features, but it’s far from the only crypto-lending platform out there. You may want to shop around a bit if you want to get the best rates and options out there for your crypto.
Where to borrow against 70+ cryptos and invest freely in USD or crypto
At MyConstant we let you earn against a much wider range of cryptos
- Earn high rates compounded every second
- Enjoy high security with a fund guarantee and still…
- Withdraw any time with no fees
Get up to 9% APY with crypto lend
Get high rates of 9% APY with popular crypto (BTC, ETH, BNB) using our crypto lend option.
This beats Celsius Network’s in-kind Ethereum rate of 7.06% and 4.51% for Bitcoin.
A whopping 4% APY for your fiat and stablecoins
If you are looking for a place to deposit your USD and earn a competitive rate away from the 1% offered by traditional banks, MyConstant has got you covered. With a Flex account, you can earn a competitive interest of 4% APY– compounded and paid every second.
Crypto-backed loans at only 6%-7% APR and 66% LTV
As a borrower, you only need to pay 6% and 7% APR on your crypto-backed loans with an LTV of only 66% for a 1–6 month term. And you can pay in cash or one of your cryptos. This is much lower compared to a rate of 7.95% for an in-cash interest rate at Celsius.
And you get to borrow against 70+ different cryptos.
Sign up for a free account today and see how you could be doing more with your money.