Major Points:
- Celsius (CEL) is a comprehensive platform for all-in-one banking and financial services.
- Users can deposit cryptocurrencies and get rewards as well as access services such as wallet-style payments and loans.
- The native token, CEL, is used for various functions including boosting user payouts.
Also read : Differences Between Cold and Hot Crypto Wallets
Explained: Celsius (CEL)
Celsius (CEL) is an SEC-compliant lending platform that enables users to access crypto-collateralised loans or receive interest on deposited cryptocurrencies. The project aims to provide high yields on their deposits to attract users. It also maintains the advantages associated with traditional loan outlets such as faster, fee-less transactions. For existing investors who want a loan, the platform provides them with the opportunity to receive dollars without requiring them to cash out their crypto holdings.
How Does Celsius (CEL) Work?
The Celsius Network is made up of several hosted accounts and several crypto exchanges for decreasing crypto-asset transfers outside its system. There are four components that make up the Celsius ecosystem – Lenders, Borrowers, the Celsius Platform and External exchange markets.
- Lenders are depositors who receive interest on their crypto holdings.
- Borrowers are margin traders who want to take advantage of leveraged long or short positions.
- The Celsius Platform allows trades, risk management and determines trading fees.
- The external exchange markets are responsible for executing trades and providing liquidity.
Earning and Borrowing on the Celsius Platform
Users can deposit crypto on the Celsius Network and earn rewards in USDC, Ethereum and Bitcoin. Celsius uses a lending stake pool to manage deposited funds. It is then lent to external exchanges, with the interest received being distributed among the Celsius users.
Celsius uses a Proof-of-Stake (PoS) formula for determining the distribution paid to lenders. Here, the interest paid to lenders is a function of the number of days participated and the funds deposited in the Celsius consensus mechanism.
When it comes to borrowing, there are several participants who can avail of borrowing facilities on the platform.
- General users are those who deposit cryptocurrencies and use the funds as collateral to get the loan.
- Traders are accredited investors who borrow capital from lending pools for trading purposes. Their accounts require a $10k minimum balance to cover any fees or losses arising from certain trading activities.
- Exchanges are entities that borrow from lending pools at the Celsius network if they need the added liquidity for settling trades.
About the Celsius Network Token – CEL
The native token of the Celsius Network is CEL, which is an ERC-20-compliant token. The token has several use cases within the network.
CEL can be used to earn higher interest rates when depositing cryptocurrencies. The platform provides higher interest rates to CEL holders as opposed to other cryptocurrencies. The exact rate of interest is determined by the amount of CEL held and the duration of the deposit.
The CEL token can also be used to pay loan interest and origination fees. Using CEL will result in a discount on the interest rate charged. CEL token holders also have access to exclusive perks and rewards within the network. For instance, holders of a certain amount of CEL are eligible for VIP status, which will allow them to access benefits such as access to special promos and priority support.
Celsius also has partnerships with several payment processors such as Wyre and Simplex. CEL plays an important role in incentivising participation and engagement within the Celsius Network, while also offering users access to additional benefits and discounts.
What Makes Celsius Network Unique?
Celsius wants to offer financial services with the kind of terms that traditional financial institutions like banks no longer provide. These include features such as easier loan requirements, higher rates of returns on deposits and savings, waiving off bank-style fees and penalties and algorithmically computed rewards.
The Celsius platform uses its CelPay feature to act as a wallet. It also hosts its own CEL token which users can leverage and increase payout values. Celsius returns 80% to its users after taking a cut of the profit margins on interest payments. It also lends to hedge funds and other institutional entities. Every payment is ensured thanks to the loans being asset-backed.
Conclusion
Celsius has some nice features that can appeal to a lot of different types of investors. By providing robust DeFi services and perks with the CEL token, the platform has become a favourite among crypto traders who are looking for reliable crypto-collateralised loans.
Frequently Asked Questions
What Is the Maximum Supply of CEL Tokens?
The maximum supply of CEL tokens is 695,658,161 tokens.
Where Can You Get Celsius (CEL) Tokens?
CEL can be found on most major exchanges, both centralised and decentralised.
When Did the Initial Coin Offering for Celsius Network Take Place?
The Initial Coin Offering (ICO) for Celsius Network took place in May 2018, where it raised $50 million.