Celsius (CEL)

Celsius

Type	Token on Ethereum
Total supply	700,000,000 CEL
Website	https://celsius.network/

CeDeFi platform that got in major issues during the 2022 market crash.

Basics

• Founded in:
• Mainnet release:
• Based in:
• From this overview blog (12-2-2021):

"Celsius is one of the first banking platforms for cryptocurrency users, where you can earn interest, borrow cash and make payments/transfers."

• From Messari: "Celsius allows crypto holders to deposit their holdings in order to earn interest as well as borrow U.S. dollars with their crypto as collateral. Hedge funds can also borrow crypto in order to create short positions, and their interest payments go to pay depositors. 'Celsius will use a modified Black-Scholes algorithm to generate the amount of deposit required from borrowers for each coin. The interest paid for each coin will be produced algorithmically, but borrowers may compete for a better chance to loan coins by bidding in a reverse auction market. Earnings will be allocated daily based on amount available, seniority, coin market popularity, market volatility, and Celsius treasury fees. The token earnings will be transferred directly into the lenders’ wallet. Traders will be obligated to deposit a fee, in CEL, to initiate the loan of coins and execute their position"

History

• In the 2022 bear market Celsius got into deep trouble and had to cover its loans and losses. Keyfi and 0x_b1 founder consequently sued Celsius after it had previously been the main partner for Celsius's yield creation (8-7-2022).

• A report by Arkham went deeper into the details:

"According to Arkham, from August 2020 through April 2021, Celsius sent 0xb1 $534 million of crypto assets in 260 transactions ranging in size from $1,000 to $28 million. 0xb1, in turn, invested these funds in various DeFi yield-bearing activities, which included providing liquidity on decentralized exchanges (DEX), as well as lending and borrowing on Compound and Aave.

0xb1 also reportedly purchased a selection of NFTs worth $6.3 million, which included CryptoPunks, Beeple art, and several other projects.

“Assuming Chainalysis' audit is correct, 0xb1 had over 10% of all Celsius' assets under management in late 2020,” said Arkham, adding that in the five months following the audit Celsius sent 0xb1 another $180 million of their customers' crypto assets.

The report adds that 0xb1 appears to have returned $1.13 billion of crypto assets to the crypto lender between February and May 2021, which corresponds to a 111% profit if denominated in U.S. dollars.

“More plainly, had Celsius held these assets instead of sending them to 0xb1, their value would have been $1.52 billion – close to $400 million more than what 0xb1 appears to have returned,” says the report."

Audits & Exploits

• Bug bounty program can be found [insert here].
• Is centralized (10-11-2020) according to DeFi Safety:

"We are removing Celcius Network from the list because after checking, it is not a Decentralized platform. Its centralized, so our process won't work. We can't review it."

Bugs/Exploits

• Celsius Network appears to have lost ~$50M of its own users’ funds by getting caught up in the BadgerDAO hack. Seemingly from giving infinite approval (5-12-2021).

Governance

Admin Keys

• Was classified CeFi on the HackerNoon rankings of 25-4-2019. "CeFi products are custodial, use centralized price feeds, initiate margin calls centrally, centrally determine interest rates, and centrally provide liquidity for their margin calls."

• A BIG side note, is that the blog was written by Kyle J Kistner who is Chief Vision Officer at bZx. He gave his own project the highest ranking. What a surprise.

Token

Launch

Token Sale was held on 26 Mar 2018 and took 1 day. It collected 50M.

• 40% Presale
• 10% Crowdsale
• 27% Treasury
• 19% Team
• 2% Partners
• 2% Advisors

Utility

• From this overview blog (12-2-2021):

"The CEL token grants you some benefits, such as increased payouts."

The token allows users to:

1. become a member in the Celsius platform
2. deposit/loan crypto in the Celsius wallet
3. apply for dollar loans
4. pay/earn interest on loans

Coin Distribution

• From Cointelegraph (28-10-2020):

"Celsius CEO Alex Mashinsky gifted wife Krissy 15 million CEL tokens as a birthday present, worth an estimated $20 million at today’s prices. Mashinsky is still at the top, but now his wife would be the third largest token holder according to the list."

Tech

• Whitepaper can be found [insert here].
• Code can be viewed [insert here].
• Built on: Ethereum

How it works

• From Messari:

"The algorithm for distributing CEL tokens to lenders is a modified proof-of-stake, where time and amount play a key role. The allocated CEL tokens will be distributed daily in a way that will benefit both small sum lenders and higher sum participants

The Celsius system decides daily what amount of CEL tokens should be distributed. The algorithm regulates the distribution by considering system costs, market status, and trade orders volume"

• From Cointelegraph (28-10-2020):

"The platform borrows from one set of clients and issues crypto collateral-backed loans to institutional clients while collecting the difference in interest. Eighty percent of the returns generated is paid to members and the community, while 20% goes to Celsius.

It is essentially with regulatory compliance and CEO Mashinsky in control."

Oracle Method

• Plans (31-3-2020) to use Chainlink’s price feeds, while Chainlink will use Celsius’ treasury management solution for its BTC and ETH cryptocurrencies.

Roadmap

• Can be found [Insert link here].

Usage

• It manages over $680 million and has paid more than $17 million in interest to the owners of its 100,000 active wallets, it claims (22-6-2020). 
• From Cointelegraph (28-10-2020):

 "According to the official website it has processed over $8.2 billion in loans, has over 200,000 active users, and almost $1.6 billion in community assets."

Is it trustworthy?

• From this extensive blog criticising Centralized and Decentralized Finance (16-12-2019):

"Public history of Celsius Network began with an ICO in February 2018. The stated utility for the token is supposed to be:

Discount token on interest and fee payments

Lenders can earn higher interest if they choose to receive it in CEL. Holding more CEL in ones wallet further increases these earnings

The $50M raise jump started the lending ecosystem and Celsius is now a successful lending platform. The marketcap of CEL at the time of writing is $13.8M.
The token itself has a weak velocity sink (staking tokens to earn higher interest in the token), however, there seems to be no utility, which would provide any fundamental buying pressure.
All bullish momentum will therefore be purely speculative. If one chooses to earn their interest in CEL, they are exposed to a highly volatile asset without legitimate markets. The only regulated market for CEL is IDEX, which suffers from chronically low liquidity.

Celsius Network Ltd is registered with the U.S. Security and Exchange Commission (IRS number 824381219; SEC CIK #0001739052 ).
It is incorporated in 35 Great St. Helen’s, London, EC3A 6AP United Kingdom. Their interest rates are very competitive and they offer interest on assets that are not available by other platforms (for example 0x and ORBS). Their insurance policy is similar to that of NEXO and therefore there is no assurance that the lent assets are insured. As their documents state:

Celsius has a 20k USD limit for automated withdrawals. Over 20k, your withdrawal will need to be confirmed with an authority inside the company. Regarding security of funds, the only assurance is that an audit “in final stages” with an unspecified entity. They promise to publish the results on their website. Nice.

The only way to use Celsius Platform is through their smartphone app, which is frankly weird if one plans to lend more than just their change on the platform.

Summary:
+ Decent yield
+ Exotic loan collateral choices
+ Registered with SEC
+ Withdrawal policy
- Who are the borrowers?
- Only accessible through a mobile app
- Weak explanation of high yield"

Pros and Cons

Cons

• Hasn't been honest (28-7-2020) about its collateral.
• Is centralized (10-11-2020) according to DeFi Safety.

Team, Funding, Partners

Team

• Full team can be found [here].
• Celsius Foundation; London, England, has 28 employees.

• Alex Mashinsky; CEO of Celsius

Funding

• Tether is the lead investor in a funding round for $10 million, which wasn’t open to the public.

• From Cointelegraph (27-8-2020):

"Celsius (CEL) Network has raised $20.17 million from more than 1,000 investors with one day to go in its recently extended crowdfunding offering. Celsius trumpeted it’s $10.7 million raised from 39 investors on the first day of the offering, but it then took 44 more days to raise the next $10 million. It emerged that Tether had tipped in $10M."

• Raised $400 million in equity funding, the company said (12-10-2021). Last year, the company raised $30 million in an equity round led by Tether at a pre-money valuation of $120 million.

Partners 

• Partnerships

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