Celsius Network Weekly AMA– August 7, 2020

With Alex Mashinsky and the Celsius Tech Team

This week’s AMA begins here with updates from Alex, followed by a quick introduction to the tech team, and ends with community questions. As always, the timestamp from YouTube is hyperlinked to each question below.

Summary: Alex starts with some updates, including the exciting news that six(!) new staking coins will be added to the app next week. Furthermore, Celsius has negotiated the rates on ACH deposits to only 0.1%, down from 0.75%. Borrowing against all assets in the wallet, including CEL, is live everywhere (even the US!), and Alex is excited about the US OCC’s new licenses available to crypto companies that will grant them many functions previously reserved for banks.

We hear more about the desktop version of the Celsius app– both an institutional and a retail version are available for beta testing, and a new retail portal will be launching on a completely redesigned Celsius website in the coming weeks. AUSD fiat deposits are in the works, and Celsius is actively looking for ways to offer swaps in-app– but needs to find a partner who can do it in a way that will be beneficial to the community (meaning low/no fees). Additionally, the team confirmed that development of biometric login methods for the app should begin in the next week with potential updates including this feature in the near future.

Finally, the tech team discussed one of the upcoming features I’m most excited for– Celsius Explorer. This system had been hinted at in the past, and will permit Celsius users to peer into the inner workings of Celsius’ financial system. Essentially, this will allow users to verify that they are earning the correct amount of interest on their deposits– based on what Celsius has earned through lending and on how many other deposits there are– and all of this will be done in a trustless, transparent way.

And if you’d like to earn interest on your crypto, gold, and stablecoins with Celsius, scroll to the end for instructions on how to get $20 in BTC when you sign up.

Celsius Updates

  1. AUM reaches $1 billion. AUM has crossed $1 billion a few times recently, and is now solidly above $1 billion. Celsius is fully deployed, and has never had more dollars and coins loaned out to customers. However, Celsius still needs more coins– specifically, BCH, LTC, and BTC– and has demand for at least another $200 million of these coins.
  2. Record new users and depositors. New user acquisition is growing nicely, and you can track all of these numbers from the Community dashboard within the Celsius app.
  3. US OCC backs crypto. The OCC is creating a new license/charter that will allow crypto companies to have very similar rights as traditional banks– and this is exactly the type of thing Celsius has been waiting for. This is big news!
  4. More reasons for non-correlated assets. Detailed in this article, it appears that China and Russia are making a conscious decision to move away from using US dollars in their transactions. This is another great argument for holding non-correlated assets such as Bitcoin, gold (XAUT), or other cryptocurrencies or stablecoins from fiat currencies other than USD– all of which you can earn interest on in the Celsius wallet.
  5. Buy, earn, and borrow in the app. Withdrawals are always free for all coins (Celsius subsidizes them)– and Celsius supports 18 different blockchains. Celsius is also lowering the ACH fee down to 0.1% (by subsidizing Gem’s fees), and they hope to do the same thing for SEPA soon as well. Celsius will never charge you fees, and will work to subsidize as many fees as they can. Borrowing against all coins, including CEL, is live in the app and is available in the US as well!
  6. Staking coins live next week. Six coins are being added– helping reinforce the idea that for Celsians, Mondays truly are the best day of the week.

Intros with the Tech Team

Q: Can those of you from the tech team introduce yourselves and tell us about what you do at Celsius?

Lazar: I’m a senior backend engineer and team lead, based in Belgrade, Serbia. We love working towards making Celsius a leader in the crypto space.

Alex: What’s your favorite hobby?! What’s your favorite thing after Celsius?!

Lazar: I’m infamous for having like a thousand hobbies– but probably scuba diving and skiing are two of the ones I’m most known for.

Vlad M: Yeah, we would need a separate AMA to go through all of his hobbies. Also, I’m speaking first, but that does not mean that I am Vlad #1. I’m a software engineer at Celsius, and now I’m working as Head of Engineering for the Celsius office in Belgrade. I don’t want to reveal how old I am, but I have been coding HTML since CSS didn’t exist. I started out on my own trying to work on payment systems using SMS, but then when blockchain came along I became addicted to that– because I thought it was great to be able to do something without a middle man. And Alex discussing inflation earlier– I’ve got personal experience with that, so I really do think it’s important to hold non-correlated assets because you never know what can happen with fiat.

Vlad B: I’m definitely the younger Vlad– not #2, just younger. I’m really glad you shared that story about inflation, Vlad, because I remember growing up in the midst of that– and I think it’s a big reason why we have so many blockchain developers here in Serbia. I got into crypto about four years ago and have been with Celsius for 1.5 years, and I’m really proud of what we’re doing to help a lot of everyday people who just want access to the same services that are normally reserved for the wealthy.

Community Questions

Q: How many developers does Celsius have?

Vlad M: We have 30+ developers based in 3 locations– but we are one big family working together to bring the best stuff to our community.

Alex: And we’ve hired a few new people but still have six or seven openings– you can always email hr@celsius.network if you’d like to apply for any of them.

Vlad M: Most importantly, we need team members who are passionate about this work. But some of the specific things we are looking for– including QA skills, backend developers, and background in any kind of crypto and blockchain technology.

Alex: And don’t forget, we’ve got one leg in the traditional finance world– and use classic services like Amazon and Azure– so we’re looking for people with skills in both worlds, not just blockchain.

Q: Will Celsius be launching AUSD deposits soon?

Alex: Yes, we’ve applied for a license in Australia. With that license, we’ll be able to do things faster/cheaper/better than anyone else. Once we are granted that license we will announce it– we’re just in a waiting period right now.

Q: Will we be able to swap between stablecoins and other crypto in the app?

Alex: The short answer is yes, but the main issue is that all of the swap providers we would be working with all charge fees, especially with current high gas fees on ETH. So we’re looking for a way that would minimize the transaction fees, minimize friction and spreads– but this is something that will be inside the app at some point.

Vlad B: Just to add to that, we have already conducted a few rounds of internal experiments for swaps using different solutions. Both the front end and the back end– this is something we’ve been working on over just the past few weeks– so hopefully this is something that we’ll be able to provide soon.

Q: Is Celsius planning to add the ability to generate our own deposit addresses?

Lazar: This is an interesting question– because this is something we had early on in the app, but is something that we moved away from because we saw users not really understanding what this meant. It’s something we may move back to in the future as it allows users to anonymize their transactions further, and shouldn’t be a problem logistically.

Alex: Just to add to that– I think there’s a lot of value to reusing addresses and whitelisting these addresses– and you can’t really do this if you’re generating a new address every time. Our job is not just to make this app usable for the professionals, but to make it safer and simpler for the next billion people who don’t have a concept of what these addresses really mean.

(Editor’s note: I’ve seen dozens of people freak out, thinking they’ve sent their coins to the wrong address– not realizing that certain custodians like Coinbase automatically change deposit addresses after each use. So I think this makes sense as an available feature, but not a default setting.)

Q: What was your reaction to Crypto.com merging their tokens at a ratio unfavorable to MCO holders?

Alex: First of all, it’s something we will never do since we only have one token– but they realized that they didn’t really need two tokens. I think they’re a great company, but it seems they chose to make a decision that was best for themselves, and not for their community. People who were with them from the beginning, who supported them by buying a lot of MCO, were obviously not happy. We are always trying to be as transparent as possible with what we are doing with CEL token– we list our top 100 holders on our website– and if there’s something we’re doing that you don’t like, let us know! If you have a better way of doing things that will help our community more, we’re all ears.

Q: Any ETA on a Canadian bank transfer with zero fees?

Alex: I can see the idea for zero fees is really catching on! Unfortunately, the payment rails for each country are different– for example, in the EU it’s fairly easy with SEPA. We normally wait until our infrastructure providers/partners enable these services for us to add it. Occasionally, like in Australia, we’ll go out and try to build these systems ourselves– but in most cases we’ll be partnering with someone who already has all of the connections and infrastructure. So realistically, we just need to wait until one of our partners offers this in Canada before adding it.

Q: Where is the development team based?

Vlad M: We have a team in Belgrade, a team in Tel Aviv, and a team in New Jersey. It’s great having people in all of these different places, because we bring in different perspectives and can really challenge each other to produce the best product possible.

Q: What is the REX Framework, and is there anything to share with users about it?

Vlad M: So this stands for Rapid Experimentation Framework– something we came up with in Celsius that is one of the ways that we have modified the traditional hackathons. When you’re working with a lot of smart people, there are a lot of ideas on how to improve our product– and this is basically a focused, two-day period where we bring up all of the ideas that we’ve collected in the previous month or two.

Lazar: We try to cover a lot of things, since they don’t occur every week– any ideas that might help improve our users’ experience with Celsius. One of the things that came out of one of these sessions is the Celsius Explorer– we want to be able to completely showcase the ins and outs of the Celsius financial system. We don’t want for our users to feel like they are getting a random amount of crypto every Monday– we want for our users to fully understand how that crypto is calculated and distributed. There are three things that we are aiming for with our users– complete transparency, the ability to verify that there is no tampering with the data or the interest, and we want to be able to give open APIs to our community to offer a complete picture of everything that is going on with Celsius.

Alex: It’s not easy– because even though we have all of this data and we want to make it transparent, we need to be able to protect our borrowers and our users. So the hardest part was coming up with the design that combines zero proof, trustless techniques with all of these traditional types of financial data. But we think this is the future of what finance needs to look like– if you can see all of the deposits, loans, and interest we earn– then you can believe us when we say that we truly are acting in the best interests of our community and delivering on what we are saying. And we also know that by making these data public, it will help improve the quality of what we offer, as our community will catch us anytime we are not doing things perfectly.

Vlad M: We can’t say exactly when this will be out yet– since we are working with such important internal data, it’s very important that this is secure, works correctly, and that it functions on its own as data-driven proof that Celsius is doing what we say we are doing.

Alex: And I think this is very important that we are designing this in a way that can be completely verifiable– even when companies are audited, you have to trust the auditors– and we’ve found a way to make this process trustless.

Q: What does your tech stack look like on the server side?

Lazar: Really, this question is asking which cloud service we are using. I think that we are slowly redefining what a hybrid infrastructure means– we have a whole ecosystem of decentralized apps, and the cloud is becoming a relic of the past right before our eyes. We are running a hybrid system, using AWS for our cloud-based systems mainly because of their security, stability, and having supreme network connectivity, which is really important for establishing consensus between our nodes.

Alex: And the reason we need to be in both Centralized and Decentralized Finance is because of the issues that inevitably occur (with the exception of Bitcoin) on these new blockchains– whether it be critical bugs or hard forks or anything else. So bridging these two worlds is difficult, but is crucial for being successful in this space.

Q: How do you ensure the Celsius app is secure since it’s open-source on Github?

Vlad M: When you have open-source code, it brings transparency to the project, and it also brings a little bit of healthy tension because you know that everyone will see your code and could potentially exploit any bugs or gaps you may leave in the code. And I think it’s important to realize that before any new code gets pushed– it’s not like one person writes some new code and it’s instantly live in the app– it goes through several levels of review before it ever makes it out into the open.

Alex: We’ve had hackathons with other groups like Horizen and Chainlink, and still pay bug bounties. And we also have several APIs with open data feeds, so people in our community can look into our data and create cool things with it– and we’re just at the beginning of what we can do with those APIs. Celsius has also never been hacked– we have a whole security team working around the clock with our tech team, performing at a world-class level, to keep our users’ funds safe. And I think we’re maybe the only company in the world employing two types of MPC technologies together.

Q: What are the biggest challenges for the tech team?

Lazar: When we started over two years ago designing the Celsius ecosystem, we had the mission to bring crypto to the masses– and needed to figure out how to make our app as usable as possible to someone who’s not familiar with concepts like segwits or gas on Ethereum. There are a lot of things that we need to simplify so that it doesn’t compromise security but at the same time doesn’t confuse the hell out of the user.

Vlad M: I totally agree with you– it is always hard to find the balance between security and user experience. People always want to do things quickly, but we don’t want to sacrifice any security. At the same time, I think we are leaders in the field, and are always trying to create a better version of ourselves.

Q: What makes Celsius different?

Alex: So much of what we are doing, no one has done before. Celsius was the first company to offer interest on crypto by simply depositing it, now we’re doing it on gold, and tomorrow it’s going to be more digital assets. We are doing the hard work and innovation that is required to solve these problems. And so it’s not just about acting in the best interest of our user– but it’s figuring out how to do that on a blockchain– where no one has ever done it before.

So many of our competitors in this space– they’re merely taking what has always been done on Wall Street, and bring it to the crypto space. And one of the reasons why none of the new FinTech companies have done anything to any of the banks– they’re not doing anything new! They’re just putting fancy layers on top of traditional finance. If you want to transform the financial experience and really bring the power to the people, then you have to rethink things from square one and innovate.

Vlad M: For me, it’s great to have that feeling, waking up in the morning and knowing that you are competing with yourself– because you are the leader in your field, you are the one moving everything forward.

Alex: Like Vlad said, it starts with passion! And every employee in Celsius brings a critical piece to the equation that makes us successful.

And from the beginning– it’s always been about building trust with our community by acting in their best interest. Whether it was paying out interest to our users three months after we launched our ICO, or bringing in almost 1,000 investors from our community for our recent equity raise– we have been innovating in every area to align the interest of our users with that of our company.

Vlad M: And maybe the most important thing is that we’re keeping promises. I’m really glad Alex hasn’t made too many promises during this call– otherwise the tech team was going to have a very hard weekend!

Alex: And we know what we’re gonna develop, we have a very clear road map. For competitive reasons, we don’t want to talk about everything we’re planning to do– but in terms of transparency, I have no problem talking about this because I know that none of our competitors are trying to be as transparent with their users in the same way as we are!

Vlad M: In terms of transparency, as a CEL token holder myself– I don’t want to just hear from Celsius that the token is secure, and that they are generating X amount of dollars– I want to be able to see it for myself. One thing I can say– at our next REX, we are going to be working with several partners– there are a lot of them, and we have lots of ideas– and it’s going to be a lot of fun.

Q: How can Celsius afford to lend at 1% and borrow at 10%?

Alex: The math is quite simple– we can lend to you at 1% because we are making money somewhere else.

1% APR is only offered on loans that are 25% LTV. This means that if you want to borrow $1,000, you have to give us $4,000 of Bitcoin or another crypto that you will no longer be earning interest on. We can then go and lend out that $4,000 of Bitcoin. Say the going rate is 6% to borrow BTC, then we are profiting anywhere from 10–14% from that loan we gave you. And when we loan out crypto to institutions, we are taking collateral from the borrowers– and we probably have the highest ratio of collateral from our institutional borrowers compared to our competitors. We say no every day to institutions who want to borrow without collateral– and so they go to our competitors instead who will give these riskier loans.

And we don’t deploy 100% of our coins– we usually keep around 20% to cover margin calls or mass withdrawals or anything else. So realistically, we’re making about 80% of the maximum amount that we could if we weren’t holding any in reserve (so 8–11% on a 25% LTV loan). And this is also why we charge a higher rate for loans with a higher LTV– because we don’t have as much capital to lend back out and earn interest on. Importantly, Celsius only has seven institutional loans that are collateralized below our normal high standard– and these are to institutions with billion-dollar balance sheets.

Q: When will biometric login be added to the app?

Vlad B: This is something that is coming in the very near future– we are starting to work on the development of this in the next week or so. We’re always wanting to ensure that our security features are both secure but also very usable– and are just working on a few design issues with this.

But very soon we are going to have ways to access to the app that are much more user-friendly. We always treat security as the first priority, and sometimes that does not result in the easiest user experience, but we are working to make this as frictionless as possible.

Q: How can I sign up for the desktop beta program?

Alex: We actually have two versions of this– one is a desktop version that is very similar to the mobile app, and then the other one is an institutional version that offers certain benefits not normally included in the retail app. If you’re interested in trying out either one, just email us and you can be a beta tester.

The retail web version is just a few weeks away– we’re launching a complete redesign for our website, and I know we’re going to be adding this function to the website shortly afterward. We’re just working on a few things from a security and compliance standpoint.

Q: What is something you love about working at Celsius?

Vlad M: The best way to describe this is the drive that I feel every morning when I wake up to try and keep Celsius as the best service in this space.

Lazar: For me, the answer would be that no matter how long you’ve been here– every opinion matters, and there will always be someone who will listen to you and give you valuable feedback.

Vlad B: I think it’s really hard to pinpoint one thing, but when I go to work, I don’t feel like it’s a burden– I just feel happy. When you’re so connected to what you’re working on, that’s a really special thing, especially with so many different people bringing their own views and passion to the project.

Alex: Like Lazar and Vlad said, we hire people who are passionate. And we also think it’s important that we have about 50% women working here at Celsius– they’re 50% of the world, but they’re incredibly underrepresented in the crypto world. And all of the hard work is done by all of the team– everyone contributes.

Q: I would love to take a loan to buy a property. Do you think one day you will have 10, 15, or 20 year loans?

Alex: So, mortgages are definitely still one area where traditional banks excel– but we would love to be in that business one day. One of my MOIP shows was with Figure, a company that is specializing in the concept of mortgages on the blockchain. So we are definitely interested in partnering with companies like Figure. To be able to do this kind of thing, we don’t need to solve the problem– we just need to find the best companies delivering this service, and utilize their expertise to integrate it into our Celsius wallet.

Q: What types of apps would you like to see developed by community dev partners?

Vlad M: For me, I love statistics, and I would love to see the community use the API data that we provide to prove that what we are saying about Celsius is legit. It’s very different when someone from Celsius says something versus when someone from the community is able to take the raw data and show you what Celsius is doing.

Lazar: There are a lot of budgeting apps out there, and I would love to see the data coming from Celsius being used with a community plugin in one of these budgeting apps– so all of the households that are using these apps to make their budgets could see the impact that their Celsius wallet is having on their budget.

Q: Would you please go over the benefits of a 1:1 loans for stablecoins to fiat?

Alex: So I don’t think there really are any benefits of doing this in the United States, but if you live in France for example– all of the conversions you do on the blockchain between BTC and ETH and USDC– none of these are taxable events. It’s only once you convert that stablecoin into fiat that you are taxed. So you can keep your crypto earnings in stablecoins, and take a dollar loan against it, and still aren’t paying taxes. But I am not a financial advisor! This is just my understanding of the laws in France.

Q: Could you speak more about the financial benefits of Celsius?

Alex: Most rich people defer their taxes, and borrow against their assets. Part of financial planning is minimizing your taxes– but when you’re not making much money, you don’t have time for that! It’s sad that the poorest people are the ones paying all the bank fees, who don’t take advantage of these great opportunities. The laws apply to all people the same– it’s just that the poor people cannot take advantage of it because they need to spend most of their income every week just to stay above water.

Most of all, you just need time– because time is what makes compounding interest so effective. And for so many our users– when they realize that they can be financially independent thanks to compounding interest in the Celsius wallet– your ego gets a huge boost. And I want for everyone to have that moment! The reason I’m fighting so hard for this, and why everyone else at Celsius is fighting for this, is because there is a solution– and all we need to do is put our mind into it to deliver this to the next 100 million users.

Q: I would like to see the FIO protocol technology installed on the Celsius Network. Would it be possible?

Vlad M: So that’s not on our roadmap– what I do know about it is that they have a few interesting ideas in terms of addresses and requests. We already have something similar with CelPay– so to be honest, I’m not sure.

Q: How does Celsius choose what coins to offer?

Alex: The ones that we are adding are ones that we know we can generate yield with, like the six staking coins we are adding next week that automatically generate yield. There are also coins like BTC and ETH that we have borrowing demand from institutions, and the last class is stablecoins and we always have borrowers that we can transact with to create yield. If we can’t generate yield, there’s no point in adding it– that’s not going to help you with your retirement plan!

Q: What does it take for Bitcoin to become a success, and when will we see it start behaving as a true non-correlated asset?

Alex: When Celsius hits 100 million users! But no, obviously Bitcoin has its own life. A few years ago, I jumped in from the sidelines, because I could tell that mass adoption of Bitcoin was not going to happen unless we provided more utility. For Bitcoin to move from just being a store of value to being a form of payment, we need hundreds of millions of users. Nothing starts as a reserve currency of the planet– you have to earn that. For Bitcoin to be successful, it has to deliver much more than any other fiat currency or any other commodity today. And earning interest income is a major utility, since banks have not paid real interest rates on fiat in 30 years. But we are really just in the beginning of the beginning.

Want to unbank yourself with Celsius (and get a free $20)?

You will earn $20 in BTC once you hold your deposit for 30 days

…And click here for a step-by-step guide for onboarding with Celsius.

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