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What happened to Celsius (Cel)?
How many customers do Celsius Network have?
Celsius is a centralized cryptolending platform, the main services of which are cryptocurrency deposits and credits of crypto assets. Positions itself as replacing banks and provides financial services related to cryptoactives.
The founders of Celsius Network are Alex Mashinsky, Nyuk Goldstein and with. Daniel Leon. The platform was officially launched in 2017, a year later the project team released its own token – Cel.
According to the Crunchbase portal, during the work the company attracted more than $ 860 million investments.
As of December 2021, Celsius managed user assets for $ 24 billion, however, according to Financial Times, by the end of May 2022 this indicator decreased to $ 12 billion. In November 2021, the platform stated that it has 1.2 million users.
Who can use Celsius?
The platform does not disclose the exact list of supported countries and the list of services in each of them. Initially, the service started in the United States and was available to all residents of the country, but in April 2022, due to pressure of the regulator, he left access only by accredited investors. For users from the United States, special rates of both loans and deposits also operate. It is known that Celsius operates in several European countries.
How cryptocurrency deposits work in Celsius?
Celsius Network offers to open deposits in various cryptocurrencies with attractive profitability rates. For example, the maximum deposit rate in USDC stabilcoins according to the data as of June 14, 2022 is over 9% per annum, for DAI this figure is over 6%.
The rate of profitability depends on several factors. Firstly, the client can receive income in the cryptocurrency of the contribution. However, if he selects an option to receive a percentage in the CEL platform tokens, then the rate will be higher. The higher the CEL in the account, the higher the income of the deposit. The bonus can be from 10% to 30%. Interest on deposit is paid weekly.
Celsius also provides loans secured by crypto assets. The service user can block various cryptocurrencies as a collateral, having received a loan in the stabelcoin he needs.
The credit rate depends on the ratio of the loan to the pledge (Loan-to-Value, or LTV). The higher the LTV, the greater the key leaves the user, the less the rate. In fact, in Celsius there is excessive security for loans as a means of protection from changes in the value of the collateral asset.
What other services Celsius Network offers?
- Celpay – Cryptocurrency Payment Service. Allows you to translate assets to other users, as well as those who do not have a crypto. Does not charge a commission for transfers.
- Celsius Swap – a trading platform without trading commissions that supports more than 40 cryptocurrency pairs.
- Celsiusx is a Celsius unit that is engaged in the integration of Defi products into the main platform.
Something went wrong?
On June 13, 2022, Celsius suddenly announced the suspension of the withdrawal of funds “to protect the community” and “due to extreme market conditions”. CEL TOKEN reacted to this news with a strong fall.
According to experts, the real reason is that the platform can no longer earn enough funds for paying income to customers. Analyst Jack Niwold called this situation the “liquidity crisis”.
Meanwhile, according to journalist Colino Wu, shortly before the announcement of Celsius transferred about 104,000 ETH and 9500 WBTC to the FTX exchange.
According to APE Board, in mid-June 2022, various assets worth more than $ 1.5 billion are stored in Celsius cryptocurrencies. Of these, about 30% – steth token and about 27% – WBTC. The platform uses the funds in decentralized protocols: 60% in AAVE, and another 35.5% in Compound.
Celsius invested in Terra?
Just a month before the problems in Celsius, there was a collapse of another large blockchain project, TerRaForm, and its two main crypto acts-Luna coins and algorithmic stabilcoin Ust. Therefore, experts inevitably seek the relationship between two events.
At the end of May, the Nansen blockchain analytics service issued an investigation according to which Celsius was a major holder of the infamous algorithmic stabelcoin UST TerRaform project. Presumably, the company used these coins for high -profit pharmacy on AAVE. Celsius has become one of the “whales”, which hastily withdrawn its funds from the Terra ecosystem after reducing the rate of profitability for the UST stake in the Anchor protocol.
The founder of the platform Alex Mashinsky denied this information. However, on May https://gagarin.news/ua/news/the-blockchain-developer-path-how-to-become-one-and-what-is-need/ 13, Celsius publicly stated that they brought the air coins worth more than $ 500 million from that same Anchor.
Celsius uses LIDO?
The platform also actively uses customer funds in LIDO. It provides the possibility of liquid stakeing: allows you to send cryptocurrencies to stakeing and, without taking them from there, get an equal amount of synthetic tokens that can be used for operations in other Defi applications.
The most popular asset in LIDO is Ethereum. When sending ETH to the steaking through LIDO, the user receives in return steth, he is also paid from the steak income. On June 14, 2022, Celsius kept Steth in the amount of at least $ 475 million.
The nuance is that the “basic asset”, t.e. ETH, it will be possible to pick up from stakeing only after activating The Merge update on Ethereum 2.0. It will take place no earlier than a few months later. And Steth can only be used in Defi protocols. And although the price of a “derivative” token must correspond to ETH, against the background of problems in Celsius Steth, it has already been consumed by 5%.
What does MakerDao have to do with it?
Head of the department r&D in Coinmetrics, Lucas Nutzci drew attention to the fact that Celsius controls one of the largest WBTC storages in MakerDao (“wrapped” bitcoin). Due to this collateral, the platform is released by the DAI stablecoin. However, due to correction in the crypto, the cost of support is constantly reduced. To avoid liquidation, in June, Celsius has already increased the amount of WBTC in the storage from about 18,000 to 24000 tokens.
Celsius is to blame for the fall of the crypt?
Simultaneously with the news about the problems of the cryptolending platform, the cryptocurrency market continued to fall: for June 13, the price of bitcoin collapsed below $ 23,000, and Ethereum – up to about $ 1300.
Although many have connected this trend with a bad news background, experts agree that macroeconomics is a real reason, in particular the expectation of a new increase in the key rate in the United States and further increase inflation.
What will happen next?
Although the authority of Celsius was blown up, the project may be able to deploy the situation in the other direction. By June 15, the price of his CEL token returned to the “pre -crisis” value and even exceeded it.
Observers noted at least a few steps that the platform for stabilization took: