Celsius Network Weekly AMA– September 18, 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 with some updates, beginning with news that Celsius’ ETH rates continue to climb– now at 6.5% APY in-kind, and up to 8.77% APY in-CEL. DeFi yield farming (~7% of Celsius’ portfolio) is still providing massive returns, and Celsius is passing those along to depositors. And as Celsius continues to grow in users, AUM, and interest paid– CEL token continues to do the same. It’s been a great few weeks for CEL token, and holders are seeing its price skyrocket further over the past week. Alex will also be featured on an upcoming episode of the podcast Bankless. It’s my favorite crypto podcast, and is the best place to stay up-to-date on the newest in the Ethereum ecosystem. If you haven’t tried it out, give it a listen wherever you find podcasts– Apple, Spotify, or even on YouTube.
Alex also announced that Celsius will be listing Uniswap’s new UNI token in the wallet– and that their finance team would be working through the specifics next week. Additionally, as Celsius’ in-app swap moves closer to becoming a reality, Alex asked for users to send in their favorite swap pairs so Celsius can make sure to include these at launch– you can read more about the in-app swap in last week’s AMA. Additionally, as of this past Wednesday, PAX Gold is live in the app (for US users as well), offering 4.51% gold-on-gold– and users will soon be able to buy it directly in the app as well.
Finally, Alex spoke a bit more about the partnership with LINE, which Celsius formally announced this week. LINE has more than 460 million users, and working with a company this size will vastly grow Celsius’ community and the company itself. Although Celsius just went live with LINE’s US exchange BITFRONT, Alex mentioned that there were launches in the works elsewhere as well. And don’t forget– Proof of Community, Celsius’ novel, open-source, blockchain-based method of verifying AUM and interest payments– is also just around the corner. I’m know I’m biased, but it sure feels like an exciting time to be in the Celsius community.
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
- ETH rates go higher yet again. ETH rates are now as high as 8.77% if you’re a platinum member and earning in CEL. If you’re earning in-kind, you’re earning 6.5% ETH on ETH. These rates update every Friday, so if you have ETH in your wallet– you’re already earning.
- Great rates still on dollar loans. You can still borrow at 1% APR (0.7% if you pay your interest in CEL!)– but it’s hard to know how long this is going to last. Now is a great time to pay off debts or bills.
- CEL token is having another great week. CEL is above $0.60 cents this week for the first time ever, after being down around $0.36 just a few weeks ago. CEL is a slow-release token– there’s a limited supply, and Celsius is releasing their CEL holdings at a very low (or negative, due to CEL interest payment buybacks) rate to the open market. Coins like ETH and XRP (among others) are inflationary, and are consistently increasing in supply. Celsius cannot mint more tokens, and is not dumping them on the market– something that has been seen recently with many “fair-release” coins that are farmed. It’s also important to note that as the market cap increases, the price of CEL token is increasing as well– meaning that CEL token holders are capturing that increase in value. Other tokens pump their market cap by releasing more token onto the market– but Celsius does not– and in fact, Celsius is one of the largest buyers of CEL token every week to pay out interest. If you want to look at all of the wallets where Celsius (and others) hold CEL, check them out here.
- Celsius will be listing UNI in the app. We’ve already figured out a way to generate yield on UNI (Uniswap’s new governance token) and will be submitting it to our finance committee next week. Hopefully we should be able to list this pretty quickly.
- Alex is going to be on Bankless. Bankless is an amazing podcast– one of the best out there to learn about what’s happening in the ETH world. Alex will be interviewed on an upcoming episode.
- AMAs are now everywhere! You can now watch Celsius’ AMAs live on YouTube, Twitter, Periscope, and Facebook– so you can catch up every week on whatever your favorite platform may be.
- Celsius just shattered 2021 projections. Alpha Sigma Capital, a Wall Street analyst, published an analysis of Celsius a few months ago– and Celsius has already surpassed forecasts for both CEL token price and total AUM.
- Send in suggestions for swap pairs! In-app swaps are coming soon– and Celsius wants to know what your favorite pairs are so they can be included at launch. Reach out in the Celsius Telegram group with your suggestions!
Community Questions
Q: If I take a loan with Celsius but continue to deposit more of the same collateral, will I still earn interest on the amount above my loan collateral?
Alex: Yes, this is automatic– you don’t need to do anything. Whatever is not locked up as collateral you will be earning interest on. We’re also able to swap your collateral between different coins– say the rates on ETH go up, and you want to change your ETH collateral to XRP collateral– just reach out to loans@celsius.network.
Q: Why haven’t retail borrowing rates adjusting in line with the low borrowing rates that banks get from the US Federal Reserve?
Alex: In 2006, the US Federal Reserve would pay banks 3–4% when they made deposits with them, and banks passed along these rates to users with interest rates between 1–3%. At the same time, the average credit card interest rate was 18.7%. Now, in 2020– banks are able to take 0% loans from the Federal Reserve, and banks are also not required to put up collateral when they borrow. Instead of passing these savings along to consumers, credit card rates are higher than ever. As always– banks are not your friends.
Q: Will Celsius ever open an office in Australia?
Alex: Yes, we are hiring people there! We’re looking for traders, asset management/deployment, DeFi experts (farmers), and lending– and we want 24/7 coverage for these services, so it will be great to have people in this time zone to complement our offices elsewhere.
Q: Does Celsius plan to seek an official bank charter just like Kraken?
Alex: Congrats to Kraken on being the first to get one of these licenses– these are state licenses that allow them to do many things that a bank would do. Celsius does not need these licenses though– we don’t act as a custodian, but we could use Kraken as a custodian or for other services. Getting this license would not help us– but we are focusing on other licenses, like our lending and custody license in Australia.
Q: Will you enable PAXG purchases in the app?
Alex: Yep, PAX Gold is one of our favorites. We will ask Simplex, our credit card partner, to enable it for purchase inside the app. It is live in the wallet as of this past Wednesday (September 16th). And we don’t care where you buy it– just don’t forget to transfer it to your Celsius wallet so you can earn gold (or CEL) on gold!
Q: If you were in your 20’s, how would you use gold, crypto, and other assets to help reach retirement?
Alex: I still feel like I’m in my 20's! There is no right answer– each person has their own unique financial situation and needs to do what is best for them. But one thing I do think is that people don’t save enough in general. If you want to increase your savings, I would suggest increasing your non-dollar denominated assets– things like BTC, ETH, CEL, and gold. And the biggest advantage that a young person has is that you can price-average your purchases over the course of 40 years (also know as DCA)– and this will protect you from price fluctuations over time.
Q: What’s the best way to independently verify the assets that Celsius holds?
Alex: The best way currently is to watch our inbound wallets and do chain analysis on them. But even better than that– we will be going live soon with our Proof of Community (PoC). PoC is a blockchain-based system that allows Celsius to cryptographically verify that we are paying out correct amounts of interest and that we have the AUM that we say we do.
The point of this is we’re trying to be as transparent as possible. I know that people may think that paying 11% on stablecoins isn’t possible– especially when banks pay 1/1000th of that. And so people think that we must be lying, because there’s no way that their banks are lying to them! But realistically, the banks could pay you these same rates, they just choose not to– instead, they pay their earnings out to their shareholders.
Q: Will Celsius always be able to pay out these high interest rates?
Alex: This is a special situation– yield farming in DeFi is temporary. I think we have less than 7% of our assets in yield farming– and most of our business is still the traditional lending to institutions and dollar loans to retail users– but the yield farming is paying off extremely well.
Again, we could be keeping some of this extra money for ourselves– but we can’t enable Proof of Community if we’re going to be stealing money from our depositors. At Celsius, our transparency is how the community holds us accountable– and we’re still not charging any fees! We’d love for our competitors to start copying those parts of our business as well.
Q: What happens if I can’t make an interest payment on a loan?
Alex: You can always pay the interest from your collateral, or pay the interest payment from any of the other coins in your wallet. And even if you’re late on a payment, we’re not going to charge you a fee.
Q: Will Celsius be lowering the minimum loan size?
Alex: We are going to lower the minimums– I think it’s going down to $500, so you would only need $1,000 in collateral to take a loan. The reason we can’t lower it much further is because we are still automating many of these functions within the loan process. I know we’re coming out with a big release in a few weeks that should help lowering it to $500 and even lower possibly in the future.
Q: How do compound interest and earning-in-CEL lead to financial freedom over time?
Alex: If you’re a math whiz, you understand it right away– but it’s a hard concept to understand! When you think about only one year at a time, the interest doesn’t seem like anything– but after 10, 20, even 50 years– it truly adds up and the growth is exponential (the formula for compounding interest is A=P(1+r/n)^nt).
None of the assets Celsius earns yield on pay out compounding interest– but Celsius pays compounding interest out to its depositors– because we know that this is the best way to grow your wealth, and so we enable this for our community.
Q: I have BTC and ETH in a Gemini account– how do I transfer them to Celsius to start earning interest?
Alex: It’s very simple– you download the Celsius app, sign up and do KYC, and then we give you addresses for your BTC and ETH wallets. Go to Gemini, say you want to withdraw– and do a small test the first time to make sure you’re sending it to the right place. Once you verify it’s correct, then you can send the rest.
You just should be careful, because most places charge you withdrawal fees to withdraw your assets– so small amounts may not be worth it. But Celsius never charges you withdrawal fees– we pay for your fees!
Q: How can I help Celsius grow and become a smashing success?
Alex: There’s lots of things you can do– one of the best ways is by contacting Zach and becoming an ambassador. Our ambassadors can do all kinds of things– making music, translating articles…maybe even writing up AMA transcripts? :)
Celsians.com is a great example of what some community members made on their own. We also have some ideas of things we still want to do, but we’re looking for new ideas from our ambassadors as well. I think one of the biggest untapped opportunities in the crypto space is bringing women into this world. Crypto is almost 90% men, but women spend 70% of the money in the world– so we are missing out on a huge chunk of the population and of the spending power in the world! Until we bring in women to crypto at a similar rate as men, we will never reach the widespread adoption that we all talk about.
Q: Is Celsius working to support a Euro stablecoin?
Alex: Celsius doesn’t pick winners and losers– we have a process to decide whether we can add coins. They need to work with our wallet infrastructure (MPC), be a stable, safe product, have a good community, and most importantly we need to be able to generate yield on that coin. We think Europeans who own Euros should be able to do the same thing that Americans do with their stablecoins– and the minute we have a great solution that we think is safe and reliable– we will add it to the app.
Q: What’s the best way to accumulate my first Bitcoin?
Alex: One satoshi at a time. It doesn’t matter what you start with– you just need to work at it. Put every spare dime you have into it, and let the power of compounding interest do work for you. Each person has their own way of saving– but you need to decide how much you want to bet on Bitcoin.
I think it’s important not to bet money you’re not willing to lose. No one here can tell you that Bitcoin is going to $100,000 or $1 million– it may go down to $5 tomorrow. All we know is that we think it’s got a brighter future than the US Dollar.
Q: What would be the best way to integrate crypto payments into my small business?
Alex: There are plenty of companies that do this well– BitPay, Bitcoin.com– among others. Celsius’ goal is not to enable you to trade and spend your Bitcoin, we want to help you save and HODL. Trust me, you don’t want to spend your Bitcoin and end up like the Pizza Guy– just save it.
Q: How does the investigation into Tether affect Celsius’ partnership with them?
Alex: It doesn’t– Tether is a financial investor, but what happens to Tether is not what happens to Celsius. We think that they’re a great organization and we work with them every day– but they have to deal with their own issues. Their legal issues are definitely something they need to deal with. The truth will come out– I don’t know what the truth is, and I don’t have any more knowledge than anyone else on this topic– but I know that eventually it will all be resolved.
Q: I just signed up with Digifox, an app that earns interest using Celsius– will my Celsius wallet combine with my Digifox account?
Alex: We are partners with Digifox– our API is integrated into their account. To earn interest on the coins, Digifox pushes your coins over to Celsius, and to withdraw them they pull them back– but your accounts will stay separate.
Q: What is Celsius doing to prepare for the next bear market cycle?
Alex: We’re always prepared. Harumi (Celsius’ CFO) and I run scenarios every few days– for instance, what happens if ETH drops to $30? And we actually simulate our portfolio, and what we have to do, and what we need to do with our assets.
But we’ve already passed one of these tests in the real world. On March 12th of this year, Bitcoin dropped almost 50% in less than 24 hours. Celsius had no liquidations of our institutional clients, and only liquidated some collateral for seven retail clients after we spoke with them and they decided they didn’t want to add more collateral. It all comes down to Celsius and the community all acting in the best interest of each other.
Q: When will we be able to buy more shares in Celsius’ equity?
Alex: I don’t know when it will be– we are open for investment at a much higher valuation, but I imagine it will probably be $400–500 million. Our AUM is growing, our community is growing, and we’re the most profitable we’ve ever been– that’s why we keep raising the rates!
No one pays interest anywhere close to what Celsius does, though. You can go to defirate.com and compare. And they don’t even list Celsius! We’ve got the highest rates, and they won’t compare us.
Q: Could you speak more about Celsius’ partnership with LINE?
Alex: One of the largest investment and technology conglomerates in the world, SoftBank, owns LINE. LINE has 460 million users– 10x more than all of crypto put together. And LINE is getting heavy into crypto, just like other tech companies such as Robinhood and PayPal. When companies this size join crypto– it’s huge news– and it’s even bigger news that they chose to work with Celsius. Working with companies of this size– and bringing interest income to 460 million people– that is how you can grow the community and grow the company. We’ve launched in the US with BITFRONT, and are planning to launch elsewhere with LINE as well.
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
