As promised earlier in the week the aim of this post is to publish and examine the costs of moving DAI from Coinbase to Celsius to take advantage of the higher staking rates offered. The model below presents real data although the calculations have been simplified.
After the crypto crash of early September, my investment model became a lot more conservative and now while keeping my Coinbase account active for daily and marginal trading I am pretty much moving most of the profits to Celsius to take advantage of their very attractive staking rates. This means that while the value of my Coinbase portfolio remains relatively static (allowing for market volatility) my Celsius is ever growing and with DAI being a stablecoin it means the underlying trend is always upwards. Celsius DAI will ALWAYS grow (their staking rate will far exceed any downward fluctuations in the DAI/GBP rate) and as an ever growing part of my portfolio it will become more significant over time.
Those of you who know me by now know that I love data and I love to break it down into more edible parts.
So here is the data (all prices are in DAI):
* This rate does appear to be slightly variable and is based on data available on 2nd December 2020
** This is a simplified calculation based on the same amount of interest being paid daily to the given 'recovery time'. This is slightly inaccurate (putting aside the small variability in the previous column). The two main reasons for this is that Celsius reward weekly and that I have calculated based on a straight line formula rather than compounding the interest. These two discrepancies more or less cancel each other out and therefore as a general impression the data provides a relatively good guide. The reason for the simplified approach is twofold. Firstly it makes the data more easily readable (especially to non-experts) and secondly for the expediency of space, within the post, I didn't want to stick a bigger Excel in your face than what was absolutely necessary.
So now all the explanations are over lets get down to it. The conclusion seems to be relatively simple. The more crypto you transfer the less it costs in gas. While strictly speaking this doesn't hold completely it is a good general rule of thumb. The most costly transfer in terms of percentage was when I moved 20 DAI and yet just a few days later when I moved 5 times as much the costs were similar and the percentage significantly lower.
The most important information is presented in the last column. This is the amount of time it will take to recover the gas fee (before making profits) by hodling and staking on Celsius. Even in the worst case presented above it was 175 days and then after that it is all profit. Transferring funds from Celsius to Coinbase is free so to benefit from using Celsius this figure represents the minimum amount of time your crypto should be held on Celsius.
So to put it simply
- Transfer in larger amounts to get that gas fee percentage as low as possible.
- Calculate the Recovery Figure (the amount of time it takes to get your gas back) and hodl for at least that long to make it worth while. Get that figure down as low as possible to start enjoying profits sooner.
- Think long term. Consider your Celsius to be untouchable to maximise the benefits. Maybe have a focus for it, a deposit on a property, a special holiday in 5 years time, a new car, a pension or anything you desire.
One final point to mention is that held DAI on Coinbase stakes at 2%. So the difference should take this into consideration, as the real figure is the difference between on one hand Coinbase's 2% return and on the other hand Celsius' 10.51% and gas fees. So long as it is hodled for long enough Celsius always wins.
The best way forward then is to build up your Coinbase DAI (staking at 2%) to at least 100 before moving it on.
And that is what we are all looking for - that winning formula
Stay safe, stay well and happy trading.