Investment Review: CEL Token & The Celsius Network App — Earning Interest on Crypto
I’ve been HODL’ing cryptocurrencies since 2016 and it has been a painful 4 years for me. I have seen the all-time highs and the major corrections that came afterwards, I’ve seen the recoveries and the dips and in the beginning, it would trouble me, watching the prices go up and down and as time went by it started to affect me a lot less, to where I am now where I hardly care what the price of the day is or where it could be tomorrow.
While HODL’ing is great you do rely on markets to set your gains and you have to actively watch it or set sell orders you would be comfortable with to try and make those gains. I do keep a small % of my cryptocurrency on exchanges to try and trade the ebbs and flows but it’s far from my day job.
Scraping gains from the market is one way to get your lunch money but for the vast majority of us, it’s not where we feel comfortable. We’re used to putting money away and receiving interested on the capital or buying shares and getting a dividend.
This is a behaviour we understand from the traditional financial market and it’s why I think cryptocurrency projects that tap into this methodology will do very well in the future.
CEL Tokens and the Celsius Network
After trying my hand at MCO and crypto.com (Previous review) a few kind Hive members mentioned that I should try out the Celsius network which offers a similar product.
Naturally, I headed off to research this project and started with their CoinGecko listing and noticed how cheap the coin was in dollar terms and thought okay I could get a fair bit of these should I invest. It’s currently far from its all-time high of $0.19 so quite a bit of upside potential there.
What did worry me was the lack of liquidity and availability on exchanges so If I wanted to get out with a reasonable stake I could be in for some slippage and lose out on gains.
Earn interest in a multitude of currencies
As I began to research I found that you could that you earn interest on several cryptocurrencies and only their native CEL token and on top of this, there was no minimum deposit fee to earn with the app. That is what really sold me on taking a risk and investing some BTC into the app.
I also found that users who are lenders and borrowers are insured for up to $100,000,000.00 by Lloyd’s — a London-based bank — in case of a hack or bankruptcy. This amount is for the total company, not per person, which gives me a little extra confidence, even though it's not something I count on, in crypto you can never be too careful.
How Celsius Network investing works
The celsius network allows you to send cryptocurrency to their custodial service but is not locked in and can be taken out at any time. The funds will receive a weekly payout based on that week's variable interest rate.
Depending on the currency you have invested with them, you will receive a fluctuating interest rate. You will need to look at the interest rate range you are comfortable with receiving and then store the cryptocurrency you feel would work best for you.
I am investing BTC simply because I want more Satoshis at the end of each week regardless of the price. The app also supports other cryptocurrencies like CEL its native token.
- ETH — Ethereum
- LTC — Litecoin
- OMG — OmiseGo
- ZRX — 0x
- BCH — Bitcoin Cash
- BTG — Bitcoin Gold
- ZEC — ZCash
- XLM — Stellar
- XRP — Ripple
Which all have variable interest rates.
However for someone doesn’t have the stomach for it, they could invest in a stable coin and earn interest in that digital version of a fiat currency.
The Celsius Network currency supports the following Stable Coins
- True Great British Pound
- True Canadian Dollar
- True Hong Kong Dollar
- True Australian Dollar
- Tether (USDT)
- USD Coin
- Multi Collateral Dia
- True USD
- Gemini Dollar
You can earn between 7.25% and 9.90% interest on any of these stable coins which are far more than any local bank in Australia, USA, Canada, UK or Hong Kong are going to offer you on the same amount.
The interest rate model
Depending on the coin you’ve invested and held in the app you will receive a variable interest rate that changes from week to week. You can also boost your interest earnings by opting to receive your payout in CEL tokens instead of the token you have invested in and receive a premium interest rate.
My experience with the app
The app is super clean and simple and not much to see or get confused over and the user experience is straight forward. You have two ways to fund the app, you can either deposit your coins directly into the app via one of the applicable hot wallet addresses should you already have the coins you want to earn interest on.
Alternatively, you can purchase any of the available cryptocurrencies using your credit card and pay in your local currency. The app supports 21 fiat currency purchases, but you will pay a fee of either 3.5% or $10 depending on your purchase.
They are also working on bank transfers which should be available in the near future.
Investing your funds
I chose to invest BTC and sent around $200 worth of BTC at the time and I’ve been earning between 3.45% and 4% range on my holdings with a payout each week. The payout is compounded onto your savings amount so you’re earning compound interest over time, which to me makes it more attractive to use this service when compared to the likes of crypto.com
How does the Celsius Network make money?
To pay you a variable interest the Celsius Network needs to do something with the funds you provide to earn a return right? Well, they do this by issuing out cash loans based on collateral in cryptocurrency.
Cel users are able to make loans based on 25, 33 and 50% of the collateral they post and can get a loan of 6 months, 1,2 or 3 years all with a variable interest rate.
This is a great option for those who have been holding cryptocurrency and don’t want to lose their holdings but require cash or those who are looking for more favourable loan terms than what they get from local financial institutions.
The Celsius Network app is a custodial service so you do not own your keys and do not have direct ownership over your cryptocurrency you only have access to your funds via the app, which doesn’t sit well with me, I am always in favour of custodial ownership, but I wanted to give it a try.
The app does have 2FA which you can enable using Google or Microsft Authenticator. I would recommend enabling the feature because any additional layer of security is always welcomed when dealing with cryptocurrency.
If you have been inactive for some time, like I am and check in periodically on your funds (even though you get a weekly update) you will be automatically logged out of your account. This security feature is annoying but hey better annoyed than sorry.
To invest or not to invest
The fact that there is no lock-up period and you earn as long as your balance sits with them gives me an impression that I have more control since I can pull my funds at any time, but this is not to say these applications are full proof.
You can also make a withdrawal at any time for any amount without worrying about fees or penalties.
Remember the dangers and invest only as much as you can afford to lose.
I clearly indicate the downside and If you’re not willing to accept the risk I suggest you stay away from this investment opportunity.
About the Author
Che Kohler is the co-founder of nichemarket, a South African Business Directory and digital marketing agency. He is an avid blogger who specialises in writing about marketing tech and cryptocurrency.