How-To Hodl Like a Pro (with Celsius)

After a meteoric rise, over the past 6 months, the crypto-sphere has reached a state of unrest. There have been a few different reasons suggestioned as to why the markets are currently unsteady. Personally I have accepted it to just be the nature of the world, things that go up must come down and we've still sitting on over 200% YTD gains for BTC alone, not to mention the explosion that some alt-coins/tokens have had. It is a little shortsighted to think it can always go up.

Despite the recent unrest my strategy has remained constant. The aim of game is simple "Accumulation of Crypto Assets", there are many strategies to this game, some opt for playing the trading mini-game, others like to wish on a star and buy small cap gems to hope for a big leap later to change their position. For me the rules of the hodl are simple:

• 1.) Save a little and save often - I have a monthly buy of BTC that I've been doing for around 2 years. Not a massive amount so it doesn't need to impact my current quality of life.
• 2.) Put assets to work - This is the process by which I try to maintain passive gains on investment to increase my position over time.

As you can likely already see this strategy doesn't focus on massive short-term gains. What it does offer though, I believe is an easy way to invest and increase my portfolio over time. I see it akin to being a regular banking saver but with a little higher risk and possibly better reward (given it is in a speculative unregulated space). 

In today's article we're going to look at how Celsius, and specifically the crypto-earn product, can be used to maintain forward momentum even in downturns. Remember, none of the information I provide here is financial advice, cryptocurrencies are considered high-risk and as such it is recommended to never invest more than you can afford to lose.

About Celsius

So what is Celsius? Well, I guess we can think of Celsius as effectively a crypto-bank and, though that would be an over simplification, the analogy works. Celsius offer financial products in a similar way to traditional banking, the main twist being that the focus is on crypto-assets. The key thing Celsius are trying to do as well, as reflected in the products they offer, is to make a space where we are ably to actively use our crypto rather than simply hoarding it like some Tolkien-esque dragon. To do this, they have three core offerings to the regular retail crypto-investor.  

Earn

Arguably the most well known product provided by Celsius is the passive earning platform. The way this works is simple, if a user deposits any amount of a supported asset they immediately start earning interest on that asset, which is payed in-kind (or if chosen, in CEL the native ERC20 token) weekly into their account. There is no lock in period, no threshold amount required to earn, if you are a minnow, guppy, shark or whale all are welcome and have access to the same base rates. 

Just looking at the numbers above it is amazing to see how much the platform has attracted since Celsius 2017 inception. But you may be wonder where these interest payments fund come from and how it is sustainable? Well, when you store assets with Celsius they lend them out to others, the interest we're seeing is the earnings from the lending side of the business which has two main levels.

• Institutional businesses: "lend out the coins users transfer to hedge funds, institutional traders and exchanges, among other corporate partners. These partners can deposit up to 150% collateral with us to secure the coins we lend them and they pay us interest on those loans."

• Retail Customers: "lend dollars to our customers - with digital assets as collateral - and earn interest from those loans as well."

- How do you earn the rewards to pay your customers? Is this a ponzi scheme?

Borrow

As mentioned previously the other main product, which helps support the earning side of the business, is borrowing capital. Note that for the purposes of this article we're talking about retail customer borrow. How this works is simple, say we want to access some of the capital in our hodl'd crypto, but we don't want to sell it all and lose our portfolio position. Instead, what we can do is take a loan against the underlying crypto assets.  Starting at $500 this borrowing allows us to get short term access to the crypto we hold. 

Loans can be taken out over 0.5 to 1.5 years, can be repaid early without penalty and can have between 25% and 50% loan-to-value (meaning you if you wanted to borrow $500 you would need at least $1000 of crypto held to collateralize the loan). Note here though the lower the LTV reduces risk on Celsius' side which means we get access to much lower rates than with higher LTV, in fact as low as 1% (good luck getting a loan at that value on the high-street!). There are also benefits to CEL token holders as well which, if interest is paid in the native token the rate drops as low as 0.75%. 

The downside of loans against collateralized crypto are that for the duration of the loan the underlying crypto doesn't continue to earn passive income. But if it is a case of selling crypto to get at the value of it, or loans against it at 1% then I know which I would choose. 

Pay

The final product on offer with Celsius currently is something that is often overlooked but on the surface looks to be a great solution for person-to-person transactions. CelPay is a payment platform that allows users, from their Celsius accounts, to pay another person, or be paid by someone, in crypto without any fees. While not yet common place I can see something like this growing in popularity over the coming years as a way of transferring funds to family/friends without cashing out and without paying gas fees. We're still a while off from this common place in society because worldwide crypto hasn't yet been accepted as a retail payment medium.  However, it is nice to think about a future where you go out for a meal and when your friend picks up the tab in BCH, you then CelPay them for your portion in crypto, it is a nice vision let's hope it isn't so far away.

Passive earning

As a hodler the most important aspect of the the Celsius platform is the passive earning, but before seeing how lucrative it can be it is worth consider Risk (with a capital "R"). Where are the risks and how are they mitigated?

• Are my funds safe while in the wallets?
  • This is a good question Celsius employ industry standard wallet protection insurance while the funds are held in company wallet.  Both Fireblocks and PrimeTrust (the asset custodians) provide insurance on digital assets held by Celsius. This means that should Celsius suffer a hack these funds are secured.
• Are funds lent out by Celsius safe?
  • Well the short answer to this question is both yes and no. To an extent yes they are reasonably safe, in that there is a requirement for the borrowers to provide underlying collateral. However, this isn't 100% safe and although it is a substantial safety net, it isn't guaranteed. However, in order to close this gap Alex Mashinsky (Celsius CEO) indicated back in Feb2021 that they are in the process of developing an insurance policy to protect assets while they are being lent out. This is fantastic news for hodlers and really catapult's them above the competition being the first to offer something like this I believe.
• Are my funds safe from Celsius?
  • Well this is the regular custodial/non-custodial dilemma. It is in Celsius' best interest to maintain a community driven profit generating model. However, central to that model is that assets are willingly transferred to Celsius' wallets where they hold the private keys. This is where the bank analogy makes more sense, it is a trust based system where the users trust that Celsius will not prevent access to their funds. This for me is a risk that needs to be weighed up on an individual basis, I personally am happy with this risk but mitigate by choosing to not have all of my crypto in one place.

So after having considered risks what about the earning itself? Well there are currently 41 different assets (with more in the pipeline) on which it is possible to earn passive income, ranging from stablecoins, to the top two (BTC, to ETH), to other well know favorites like MATIC, XLM and BCH. Personally I make the most of the following as I've not found better places to earn elsewhere:

• BAT (Basic Attention Tokens) - 3.51%
• ETH (Ethereum) - 5.05%
• BCH (Bitcoin Cash) - 4.51%
• COMP (Compound) - 4.6%

Over the past 6-8 months I've earned a decent ~$300 interest across these and other assets which, albeit a small amount in crypto terms, is more than I would have just holding these coins/tokens in my wallet. In that time I've also moved numerous assets in/out of the platform as and when the rates become more favorable here over some of the other platforms I use (DeFi, Nexo, YouHodler, BlockFi etc..).

One of the real gems though that means for me Celsius will always be my first stop is that they have stayed true to their zero fees policy even while other platforms have backtracked due to the rising tide of Ethereum gas fees. This for me takes a certain conviction, any other business could have justified to themselves that moving the goalposts made sense. Celsius however, stuck to their guns meaning that even if you hold a small amount with them you know you will always be able to get at it and move it if you need to sell it without needing to factor in a bunch of network and withdrawal fees. 

Bonus'

Deserving it's own section the bonus' that Celsius have offered over the time that I've been a member have been excellent and really should be worth considering as a core benefit. The main one of these is the referral bonus, this offers both the referrer and an referee $40 bonus if the new member opens an account and transfers in (and holds for 30 days) at least $400 of any supported asset. This is paid in BTC and is effectively a 10% bonus for one month, great deal!

• My Referral link if you are interested in joining up. https://celsiusnetwork.app.link/146589688a 

In addition to referral bonus' they also offer promotions throughout the year allow us to boost our savings. The current offers they have are as follows:

I've taken part in quite a few of these bonus programs so far and have earned a solid 0.00406 BTC (~$150) which is in addition to any referrals or reward earnings. As you can see these reward stack up nicely over time. I will definitely be taking part in the above bonus' as well.

Final Thoughts

As you can probably tell I'm a big fan of the Celsius platform, more than anything I don't think I've seen another similar platform engage with the community, and deliver on, what they are asking for as much as Alex and the Celsius team have.

• Zero fees........check!
• Added security/insurance........check!
• Welcome bonus'........check!
• Existing customer bonus'........check!
• Regular (weekly) AMA and community engagement........check!

Plus now they have put together a web based platform on top of the previously app based model, making managing your portfolio even easier. Well done Celsius, great work on the web app, looks great.

For me though the real win is having my funds holdings continue to earn (even a small amount) on a weekly basis allowing me to stack-up with very little effort and reduced risk.

Thanks for reading the article, hope you enjoyed the summary of the what Celsius has to offer and how it can help hodlers to keep building our portfolio, good luck y'all!

References:

• https://cryptoslate.com/celsius-ceo-alex-mashinsky-announces-self-insurance-all-its-users-coins/
• https://celsius.network/
• https://support.celsius.network/hc/en-us