Celsius Network Weekly AMA– October 30, 2020

With Alex Mashinsky and Zach Wildes, Community Manager

This week’s AMA begins with some updates from Alex, followed by community questions. As always, the timestamp from YouTube is hyperlinked to each question below.

Summary: Alex starts off with a number: $300 million. While it took Celsius over a year to get to $300 million in net deposits, they’ve now nearly reached that over the past month. Celsius is also issuing a record number of loans (thank you, promo code!), and UK users should see the ability to take loans open back up this coming week. Alex also announced that Celsius will be adding COMP as a supported asset to the wallet soon, and that both XAUT and PAXG now have higher maximum LTVs (70%) due to the stability of gold’s price.

The long-awaited Proof of Community beta is rolling out on Monday—read an article about it here. This is one step toward CeFi becoming as transparent as DeFi, and Celsius is leading the way. On that note of transparency, Alex announced that of the 25 million CEL tokens to be released at $1.50 for employees, only 2.5 million will be sold initially, and these will all be sold OTC with a 5% bonus to buyers. Furthermore, 98% of Celsius employees committed to locking up their tokens for three years, further solidifying their commitment to the long-term success of Celsius as a company—no dumping here!

Finally, Alex announced that the community-led CelSwap was live, and would soon be onboarding liquidity providers via an application process. CelSwap is a Uniswap fork that will offer CEL-based pairs, and a 0.15% fee for swaps. Alex also announced that earn-in-CEL is coming very soon to the US for accredited investors. Furthermore, Celsius has plans to allow borrowing of other coins for retail users (not just fiat or stablecoins), as well as paycheck deposits directly to Celsius and some form of a fee-free debit card. Banks, we’re coming for you.

Lastly, as a public service announcement—Celsius has ended support for the old BitGo-based wallet addresses. Even though Celsius has not used BitGo following the move to FireBlocks over six months ago, these addresses were supported to rescue coins in case users accidentally transferred to an old address. This is no longer the case, and Celsius will not be able to recover funds sent to these addresses, so please, always check the address that you’re sending your coins to.

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. Close to $300 million net deposits in the last 30 days. Just to get to $300 million took us over a year—and now we’re getting it in a month!
2. Record loans. Yesterday, Celsius deployed over $150 million in loans. Celsius still needs more coins, and continues to raise the rates on many assets!
3. New assets coming. COMP will be added to the Celsius wallet, in addition to other new assets as well (some that are currently in the “coming soon” section). 👀
4. Increased LTVs on XAUT and PAXG. You can now borrow against these assets at up to 70% LTV, or earn 4.51% gold-on-gold (and even more in-CEL).
5. Biometric login is live! Go enable it in the app—it makes the whole process much smoother and easier.
6. $1.50 will be no problem. 98% of Celsius’ employees committed to a 3-year lockup for their CEL token. Only 10% of the 25 million will be sold, and that 2.5 million CEL will be sold OTC—with a 5% bonus for buyers. So if you’d like to buy a large sum of CEL token OTC, email otc@celsius.network. This will be first-come, first-serve.
7. Credit card rates have been lowered. For most of Europe, fees charged by Simplex (buying crypto with a credit card) should now be below 3% (used to be 3.5%).
8. UK loans open back up next week. Not only will loans be reopening, but UK users will also be able to benefit from their own promo code!
9. Let’s talk about accounting. In 1492, double-entry accounting was created, which is used by every company around the world. However, the blockchain has effectively created triple-entry accounting because it is in the form of a public ledger—even more secure and effective!
10. Inching closer to $2 billion. Celsius is getting closer every day to $2 billion in assets under management (AUM). And although it may seem like Celsius is still small, we’re already the second-largest asset manager in crypto—only Grayscale is larger than Celsius.
11. Updates to the Celsius website. We updated the Top 200 page to reflect Celsius’ CEL token holdings at the beginning of the Top 200 list. The partner page has also seen a nice refresher, with new descriptions of many of Celsius’ partners. Several other pages have seen nice updates as well—go take a look!
12. An expanded partnership with Chainlink. Celsius recently expanded their partnership with Chainlink to utilize Chainlink’s oracle functions for all coins and tokens offered in the wallet. This builds on Celsius’ existing partnership with Chainlink, which already included Celsius managing Chainlink’s treasury.
13. CelSwap is here! CelSwap is very similar to Uniswap (it’s a fork), but the big difference is that CelSwap is denominated in CEL token. Trading fees are 0.15% (half of Uniswap), and the other major difference for LPs (liquidity providers) is that you must register to be an LP first.
14. Use CelsiusHub to check on the flywheel. Another community project, CelsiusHub, uses numbers pulled from Celsius’ public API to show the health of the Celsius flywheel and to see how quickly the company is growing.

Community Questions

Q: Does Celsius allow you to pay off loans earlier than six months?

Alex: Yes, you can pay off a loan at any time! You just need to pay the first six months of interest. But for a 1% loan, that’s basically nothing.

Q: Could you give us an update on the Celsius swag store?

Alex: Yeah, there are lots of cool new items already up, and several more coming as well. Also, prices are being cut in half (down to $12!) for many old favorites, and everything is going to be made in the USA.

Q: What is Celsius’ process for adding coins? Why won’t they add DOT or VET?

Alex: Celsius purely chooses coins based on demand. If exchanges or institutions are asking to borrow a coin, then Celsius will add it. Chainlink was a perfect example—we’ve been working for Chainlink for a long time, but there was no demand to borrow it. Then, as soon as we had demand, we opened up deposits and we had a flood of LINK deposited to the app.

Q: How does Celsius’ security compare to that of a hardware wallet?

Alex: So, let’s compare Celsius—we have two MPC layers—to cold storage with BitGo, and to a hardware wallet. I think that a hot wallet with two MPC layers is actually safer than cold storage with somebody like BitGo, because it’s a completely different technology. Cold storage is old technology—it’s the most basic thing there is, so there are many more ways for hackers to break in. With cold storage, you have to trust people and facilities—and these are all things that can be broken.

MPC is something that is already being used by many regular banks today. This technology can apply to any type of security, not just crypto—many governments use it as well to secure their data. A lot of our team is ex-military guys and we rely on technologies that we already know well. When we were working for the Israeli government, there was no margin for error, so we think that these technologies truly are the best.

Now, comparing to hardware keys—hardware keys are very safe, but they are removable. We’ve all heard stories, and foul play is much more likely if others know that you have all of your crypto on a hardware key and especially if you have it with you.

For the next wave of people to join crypto—we think that our methods will be most useful to them. This is who we’re building our infrastructure for, not the “not your keys, not your coins” crowd. Those people are already capable of managing their own coins—we’re here to help people bridge the gap from traditional finance.

Q: When will US users be able to earn in CEL?

Alex: It’s coming very, very soon. We’ve gotten the okay from our lawyers, and are working on the paperwork to get this done for our accredited investors. You will have to hold the CEL for a year, but you will be earning in CEL. I’m not sure if it will happen this year or at the beginning of next year, but we are trying to launch it as soon as possible.

Q: Are there going to be options for Europeans to take loans denominated in Euros?

Alex: Yep, we are planning to offer loans in local fiat from about 50 different countries, many of which use the Euro but several that use other currencies as well. This should be coming very soon.

Q: What advice would you have for senior Celsians and engaging users who may be less familiar with crypto?

Alex: Each person has their own unique situation. At older ages, you want to avoid taking risks, and we pay great rates on stablecoins. For someone like Zach, he can take on the risk of a portfolio that’s higher in a volatile asset Bitcoin, because he has a much longer retirement horizon.

Q: Why is it that only accredited investors can earn in CEL? I thought the SEC allowed anyone to invest in tokens now.

Alex: The SEC has not yet ruled on any of these things—for now, it’s the same law from 1933. The law recently allowed more people to participate as accredited investors, but it’s still preventing those who may need it the most from joining in. Unfortunately, we can only do what we are certain is legal—we don’t want to endanger the rest of our community by taking risks to try and grow our business in ways that aren’t allowed yet.

Our main priorities are to always be able to return your coins and to always get you the highest yield possible. We have to protect that first, and then we can try things new.

Q: Any updates on Proof of Community?

Alex: Yes! The first piece of Proof of Community (PoC) is going live in beta on Monday—the first 60 or 70 people who have signed up for it should have it go live. When you get your interest, you should be able to check on it with a link in the email to verify that you received the interest that you were supposed to get.

Q: With no-lose lotteries becoming popular, do you think Celsius would consider starting one of their own?

Alex: No-lose lotteries—it’s like jumbo shrimp, right? There’s no such thing as free money out there. We all know that for a lottery, lots of people put in some money, but only one person wins.

Q: Will it ever be possible to borrow other coins as opposed to just stablecoins or fiat?

Alex: Yes, we are planning to offer any coin, and you can borrow just like an institution. We will open it up gradually, and some jurisdictions will be restricted, but the answer is yes. Also, shout-out to the DeFi protocol C.R.E.A.M.—you can now borrow CEL or earn interest on it there.

Q: Why do some coins not have 33% or 50% LTV options?

Alex: If the coin is volatile, then we will restrict the LTV. This is the same reason we added 70% LTV to gold, because it’s a very stable asset. We do this to protect our borrowers from liquidations. Celsius doesn’t want for liquidations to occur—we always want to help you HODL.

Q: BlockFi announced a partnership to allow lending on tokenized assets. Is this something Celsius wants to do in the future as well?

Alex: I don’t know much about that partnership (see here), but we’re sticking to what we know well—we’re the second-largest digital asset manager in the world. We’ve previously said that we want to add tokenized assets when they’re ready. Celsius will continue to search for innovative ways to safely provide you with the highest yield possible.

Q: Alex, how did you get all of your CEL token?

Alex: When we founded Celsius, we allocated tokens to the team. I did buy some tokens afterward, but probably 70–80% of them came from the allocation during the ICO. However, the largest holder of CEL token by far is Celsius itself.

The surest sign you can look at to see what we think of CEL token’s price is to see when Celsius is buying CEL token and when we’re selling it. Currently, we’re buying 100% of CEL for our weekly interest payments from the market. I think that makes things pretty clear.

Q: When will Celsius allow me to accept my paycheck directly into crypto?

Alex: We’re working on all of those things. We’re working on paycheck in, we’re working on debit card out—but I promise we will not launch a debit card that has fees. So this takes a little bit longer, because we want to do things the right way.

Q: How is it possible that Celsius has almost $2 billion in AUM but CEL’s marketcap is only $325 million?

Alex: So the marketcap is actually higher than that, because CoinMarketCap does not count deposited tokens in the Celsius wallet. Our marketcap is close to $500 million, but if you look at companies that manage funds, their valuation is typically much smaller than the AUM. Our ratio is pretty good, and our token marketcap may even be a little bit higher.

The ratio between the two has to do with the velocity of the money and how much you’re earning on the money that you are managing. Celsius is earning higher rates than almost any of the traditional money managers because we can get a higher rate from our counterparty (institutions) because our assets are in higher demand.

Q: When Celsius lends to institutions, do they actually send the coins on chain?

Alex: We do almost all of our transactions on-chain—there are very few that are not on-chain. Our average transaction is probably $5–10 million.

Q: Did the rates on ETH and USDC go down?

Alex: We adjust these rates from week-to-week based on how much we earn. So some weeks the rates will go up, but then some weeks they may also go down. We are profitable, and we do not subsidize our rates with any investor funds like many of our competitors do.

Q: Why do institutions borrow if they can just buy the coins?

Alex: It’s a very simple answer. If you’re an institution, and you’re dollar-denominated—meaning you’re holding $10 million—if you buy Bitcoin for arbitrage, and it drops 10%, then you’ve lost 10% in dollars. But if you borrow the Bitcoin from Celsius, you can still do your arbitrage, make money, and then pay Celsius back the same amount of Bitcoin with interest. When you’re borrowing the Bitcoin, the price is irrelevant, because you just have to return the Bitcoin, not any amount of dollars.

Q: Can I talk to someone to learn more about Celsius?

Zach: I just spoke to someone yesterday who had a lot of questions about stablecoins and all of the ins and outs of Celsius to help make them feel more comfortable. That’s something I really enjoy doing. I love talking about Celsius—Alex pays me to talk about Celsius for an hour and a half every Friday, so reach out to me at zach@celsius.network if you wanna talk about Celsius.

Alex: We are setting up a call center now, and you will be able to talk directly to people. For now, just send us an email—app@celsius.network, and we can assign you to someone who can reach out to you. We have nothing to hide, but we just can’t do it with everybody yet!

Q: How do blockchain forks get handled when your assets are being held with Celsius?

Alex: Forks are tough, because at Celsius your assets are lent out. With Flare, we came to an agreement with them about this, so we know we can handle their fork/airdrop. But when we see an important fork or airdrop, we typically recall the coins so that we can support the fork, and we’ve done this several times in the past. Right now we’re deciding which ones we support—so if one is important to you, let us know, or just withdraw your funds to a hardware wallet before the fork.

Q: Does Celsius still support the old BitGo addresses?

Alex: An announcement—there are still people sending funds to their old BitGo addresses, even though we haven’t been with them for more than six months. As of November 1st, we will no longer be able to recover those coins. So please, please, check your addresses and make sure they’re updated. If you’re sending large amounts, always do a test send first. The easiest way to make sure you’re using the correct address is to simply open up your wallet each time and check the deposit address.

Q: I love Celsius, I’m finally out of debt! Thanks to Alex and team for all that you are doing.

Alex: That’s it? That’s a great way to close it, with a thank you. We’re doing great because of you, but we only did great after we did good.

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

• Install the Celsius wallet (https://celsius.network/get-the-app/)
• Use a referral code during registration (137247d31d)
• Deposit $200 of crypto or stablecoins

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.