Celsius, which currently has $50 million USD in assets under management, will now enable Dash users to deposit their money on the platform and earn interest and take out loans on their Dash with no minimum or maximum lockup.
— Celsius Network (@CelsiusNetwork) April 11, 2019
Celsius is able to offer returns to users that range from 3% to 7.5%, with Dash currently being the highest, since they hold coins in wallets owned by “BitGo and lent out to hedge funds/exchanges/institutional traders”. However, they enhance solvency since “up to 150% of the value is provided in another collateral (typically USD)”, according to their FAQ page and an in-depth analysis by one of their members. Interest payments are calculated weekly Friday-Thursday and paid out, in the same cryptocurrency as what is deposited, on every Monday. However, the interest is not compounded since they “rather give consumers the highest rates possible” and “compounded interest is simply not a sustainable business model at this time”.
— Celsius Network (@CelsiusNetwork) April 8, 2019
The platform does not have a minimum or maximum deposit, but does limit daily withdrawals to $20,000 USD per day. A user can withdrawal more, but must “email [email protected] and verify their identity” with KYC documents. As an additional security measure, they lock-in the first wallet that funds are sent to from the platform to prevent incentivizing hacking and changing destination addresses. Furthermore, since they use BitGo as a custodian, they benefit from BitGo’s $100 million USD insurance policy.
Borrowing using cryptocurrencies
Celsius also enables users to borrow money using cryptocurrencies, which is a step towards meshing the cryptocurrency world with the current model of finance. Borrowing via cryptocurrency also helps stabilize the cryptocurrency markets since crypto enthusiasts can get liquidity for their various projects without having to sell off massive amounts of funds. Celsius offers very competitive terms, even when compared to traditional banks, such as six or twelve month loans, no pre-payment penalties, and rates starting at 4.95%. The borrowing rate does depend on the loan-to-collateral value ratio, which is understandable considering the relatively high volatility of cryptocurrencies.
Nevertheless, Celsius stands out among other cryptocurrency lending and borrowing companies that often charge high rates and have onerous terms. This allows Celsius to pursue the original goals of cryptocurrency to introduce more consumer-friendly and accessible finance to more individuals. Celsius also plans to introduce their own token soon, which will give users better rates on the platform.
Dash completing the adoption loop
Many got into cryptocurrencies to escape the system of the traditional banking sector, but lending and borrowing is still part of a healthy economy when done properly. Thus, platforms such as SALT are starting to emerge that enable cryptocurrency to be used in the lending and borrowing process. This will further enable individuals in the Dash community to actively improve their well-being without selling off Dash during a market upturn, which will also help enhance stability. Now individuals can save their Dash to get returns, borrow against their Dash to pursue projects, merchants can accept Dash, and consumers can spend Dash that they have earned. As Dash continues to grow, it is growing as a complete environment that can be self-sustaining rather than only focusing on one area of growth