Celsius (CEL) 101: The P2P Crypto Lending Platform
Zatrun Published at March 30, 2023

2022 was a tough year for cryptocurrency investors. This year was made even more difficult by a series of bankruptcies among crypto lending platforms. Celsius (CEL) announced on July 13th that it had filed for Chapter 11 bankruptcy after a month of turmoil. The struggling crypto lending institution made headlines last month by freezing customer accounts, which they attributed to “extreme market conditions.”

Court records showed that the crypto lending platform had $5.5 billion in liabilities and $1.2 billion in losses. The files say that the majority of the liabilities, $4.7 billion, represented customer assets. Therefore, it is possible that customers could bear the burden of the collapse.

The major bankruptcy of the platform in 2022 was the last in a chain of bankruptcies. Another lending institution, Voyager, shared a similar fate. Additionally, the collapse of hedge fund 3AC and crypto exchange FTX undermined investor confidence.

What is Celsius (CEL)?

Although designed for cryptocurrencies instead of fiat currency, Celsius (CEL) was designed to operate like a traditional bank. It was once considered one of the most successful parts of the decentralised finance (DeFi) movement. Celsius claimed to have 1.7 million users and $11.7 billion in assets under management (AUM) in May 2022. The company said it had lent over $8 billion and offered extremely high annual percentage yields (APYs) of up to 17% on cryptocurrency deposits until recently.

However, everything turned upside down in June. Celsius Network posted a note to users announcing that it had frozen assets, which led to a drop in the price of Bitcoin and other cryptocurrencies. In another announcement on July 13th, the company said it had $167 million in insignificant cash to support “certain operations” during the restructuring process.

Celsius is a blockchain-based cryptocurrency lending platform. The platform has been operating in the field since 2017 and has a significant presence in the field. The company offered various services as a lending platform and provided the best interest rates for Bitcoin loans. It developed an app to simplify BTC loans and expanded its stablecoin support. Thus, users could borrow in crypto with BTC and dollar-indexed stablecoins. A London-based team created the company.

Users could earn high yields from Bitcoin deposits through Celsius. Additionally, BTC loans on the platform had suitable interest rates for both lenders and borrowers. This allowed lenders to passively earn returns while enabling borrowers to make comfortable payments. In addition to BTC, CEL coin also supported other cryptocurrencies. Therefore, users could borrow with many digital assets.

What is CEL? Is It a Good Investment?

Celsius Network is a peer-to-peer lending company that facilitates borrowing and lending of cryptocurrencies. Borrowers can access fiat funds quickly by securing their cryptos as collateral and paying minimum interest. CEL coin is the native cryptocurrency of this platform. It raised $50 million during its ICO in May 2018.

CEL coin enables users within the Celsius ecosystem to earn higher interest rates on their savings accounts. Additionally, CEL coin holders can benefit from interest rate discounts when borrowing on the platform. Thus, CEL provides various advantages to its holders within the lending application. The more CEL coins you hold, the higher rewards you receive as a member. Platinum members earn up to 25% bonus rewards.

Due to continuous high inflation and aggressive FED interest rate hikes, crypto prices were under pressure throughout 2022. There has been constant selling pressure on crypto markets and other risky assets. We witnessed the elimination of industry leaders such as Terra (LUNA), FTX, and 3AC from the market in 2022. All of these have had a negative impact on the crypto industry, including Celsius.

Despite all this negativity, CEL coin has improved its position in 2023. The asset currently sits at the 305th largest position in the market. It has a market cap of $82.6 million and is listed with a $1.3 million trading volume. The oppressive environment of 2022 seems to have normalized in 2023. Therefore, a rally that may start soon could bring great gains to CEL token.

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