About one month ago I decided to try Celsius Network out because I had a small amount of ETH I wanted to put to work. As I am not a good trader, it came naturally to go for a platform offering saving/investment plans.
After having done my own research I thought that Celsius, founded by Alex Mashinsky, deserved a try even if it is a custodial wallet, meaning that you do not own the keys of your wallet. Something making me a bit uncomfortable, but that is it.
After a month, and after having got in touch with some other people using the platform, I thought it could have been worth to share some thoughts on what could be a good strategy to earn there because the number of options available is pretty wide.
To add to complications, on Celsius you can decide to deposit a certain asset, but to paid interest in Celsius tokens (CEL): if you decide to do so, you’re going to receive a higher interest rate (APR) depending on the amount of CEL you have deposited in respect of the total of your assets. The maximum spread is granted when this ratio is above 15%.
Before getting to the different possible combos, I think everybody should answer to a couple of questions to understand which fits the best to one’s own risk profile.
1. “How big is my risk appetite?”
2. "For how long do I want to stay in the plan?"
The first question is particularly important because if you want to hunt the highest possible profit, you must go for the highest risk solution. But never forget that this hunt can end in a huge loss if you are in the wrong asset in the wrong moment.
The second is also important because it also has to do with risk. Short term profit is better achieved with daily trading, while long term earnings are fitting best to saving/investment plans.
Once you have answered to your question and decided how much you want to put at stake (never risk what you cannot afford to lose), you could go for one – or more – of these combos
- A. HIGH RISK
This is the typical “all in” strategy. You deposit one asset and you decide to get paid interests in the same currency. This choice is good for those who think that their asset(s) will gain a significant value in the given period. Its true that they will receive a lower interest, but the expectation is that the capital gain will be higher than the difference between the basic interest and the premium one (including the potential appreciation of the CEL token). If you expect a strong bull run on that asset, this is the best option.
- B. MEDIUM RISK
A little bit less risky is to deposit an asset and to decide to be paid interests in CEL tokens. Going for this option means that it would be better to balance your portfolio in a way that your ratio stays constantly above 15% to maximize the spread between the basic interest and the premium one. In case of a strong bull run on the basic asset, you will probably earn less than you could have earned, but you will not actually suffer an actual loss. Your cost would be more likely an opportunity cost. In case of a bearish trend, the interest you gain will give its contribution in “reducing” the loss
- C. LOW RISK
This is probably the option fitting the best to those who want to earn in the long run. The combination should be a deposit in stable coins and to go for a payment in CEL tokens. At the time of writing, coins like Tether, USDC or BUSD give an appealing 11.90% per year if your ratio CEL/Total asset is above 15%. Stable coins, by definition, should keep you free from the risk of volatility and the only part of your investment subject to this risk will be the earnings. But o good timing in liquidating the excess of CEL would surely let you minimize the chances of a loss
Of course, if you own a good capital, you can mix the three strategies depending on the target profit you would like to achieve as the platform gives you the opportunity to select to be paid in CEL currency by currency
This is only a short overview and maybe I will go in some more details later because some other topics should be worth to be evaluated.
If you found this useful and you would like to join the platform, you can download the app here use my ref code 15691399fa to get an additional 20 USD after you have deposited your first 200 USD
(Crossposted from Uptrennd as I am planning to add on this topic also here)