Hey friends 👋
Back in August, I wrote a post called Why I'm trying out Celsius about well... I think you can guess what it was about 😜 The tl;dr on that post is that I know people who absolutelu love Celsius as a way to grow their crypto investments without having to go outside their comfort zone (read: they aren't down with DeFi). Celsius is a very regulatory compliant company with a well-known CEO famous for having founded a number of very successful companies. To top it off, the returns Celsius users get are nothing to turn your nose up at, consistently performing as well, long term, as many popular DeFi protocols; in some case better 📈
Now I'm a big fan of DeFi (check out my posts about DeFi on Polygon and Celo networks), and I think it offers a number of clear advantages, as well as countless unique opportunities. It also offers some risks... But I've said before that I personally prefer a mixed approach. If someone takes control of my metamask, or the government cracks down on DeFi somehow, I'm going to appreciate having hedged my bets ⚖️ So I took advantage of a small signup bonus, and, well, signed up. Soon, I added some more, and then a little more still, and then came their new stablecoin bonus, and I jumped on that too!
One thing I like about Celsius is that you can get paid in the token that you're going long on, aka HODLing. For example I deposit Bitcoin into Celsius and I'm paid 6.2% in Bitcoin, or I deposit Ether and I'm paid 5.35% in Ether or I deposit USDC and I earn 8.88% in USDC—beats the hell out of a savings account at a regular bank! 😂
But there's actually another option: you can be paid in Celsius Tokens ($CEL)...
What is CEL token?
$CEL is a reward token for users of Celsius Network. It is not a governance token, nor is it used to pay for transactions, but it does have a very unique value proposition 👀
First off, CEL has a capped supply.
Second, all tokens have already been distributed, and Celsius buys back tokens from the market to pay users their rewards. This means there is constant buy pressure 📈
Third, as of Friday, October 1st, CEL is delfationary 😳
I'll come back to that because I want to point out a few more unique features.
You can borrow against your $CEL. Yes, you can take either super low interest rate cash or stablecoin loans against your CEL tokens, and if you pay off your loan using CEL, you can get a further discount on the interest. Here's an explainer from the Celsius website.
What benefits do I get paying off my loan with CEL tokens?
The CEL token is a utility token with real rewards. CEL tokens gives you access to higher rates on earning and lower rates on loans. That means that if you pay interest on your loans with CEL tokens, you will receive up to a 30% discount on all of your interest payments. For more information on how to use CEL tokens to pay off your loan and all its benefits, please visit our website here.
Not bad, eh. And if you aren't taking a loan against your celsius, you'll be earning 4.86% on all the CEL in your wallet 👌
But wait there's more
As I mentioned before, I prefer to take my Bitcoin and Ethereum rewards in-kind because I want to grow my stack, but for some cryptocurrencies, there is a marked advantage to choosing CEL.
On stablecoins for example, you go from 8.88% all the way up to 11.21% 🙌
That's a pretty noticeable jump but that's not all...
- On SNX you'll go from 13.99% → 17.78%
- On MATIC, you'll go from 10.51% → 13.30%
- On DOT, you'll go from 8.86% → 11.20%
And the more of your portfolio you hold in CEL, the more benefits you get. Check this out ⬇️
So now you know some of the key benefits of CEL as it was, let's talk about the massive change that was just announced...
CEL Becomes Deflationary
On Friday, October 1st, during their weekly AMA live stream, Alex Mashinsky, the CEO of Celsius announced something big: effective immediately, every week, Celsius will buy back and burn an amount of tokens proportional to 10% of the amount of CEL paid out to Celsians 🔥
👏 This 👏 Is 👏 Huge 👏
The amount of deflationary pressure that will be added from this move can not be understated. Alex pointed out that the move was inspired by Ethereum's EIP-1559 proposal—where the base transaction fee is burned instead of issued to miners—that went into effect recently. For those who don't know, burning tokens means (of course) that the total supply decreases. This has the inverse effect that new issuance has, creating scarcity, and increasing the value of existing tokens 📈
However, Ethereum still has inflation, so while on some days, EIP-1559 actually causes Ether to become deflationary, on other days, it just reduces the overall new issuance (which is still very good, mind you!). Interestingly, re: ETH, following the switch to Proof of Stake, Ethereum's issuance will fall, and it is expected that it will become fully deflationary. You can learn more as well as see real-time totals of burned Ether here 🦇 🔊
CEL though, as I mentioned above, has a capped supply. So this is almost more akin to burning Bitcoin. The supply will only fall, thus there is an absolute guarantee that the value of the coin will go up as a result. How that's reflected in the token's price action is always to be seen. The market is after all, not entirely logical 🤷♂️
But just in pure terms, each CEL token's value (as a percentage of the total) will now be increasing every Friday, when they burn tokens live on the AMA. For the first ever event, they burned 52,682 tokens, or roughly $295,546 USD worth of tokens 😯
Another great thing about this, is it incentivizes users to choose CEL. Since the amount burned is proportional to the amount paid at in rewards, users now have an assurance that CEL is a good investment choice, and they know that by choosing CEL, they help guarantee more will be burned 🔥
Here's how I see the best option playing out: invest assets you want to HODL (like perhaps MATIC or SNX). Earn in CEL. Your CEL will also earn you CEL 💰 If you ever need a loan, borrow against your CEL (so that you don't stop earning from your better assets), and repay in CEL from your rewards paid in CEL, for a discounted rate 🤓
Another option is to accrue a bunch of CEL, and when Celsius launches their long awaited no-fee swaps, trade for other coins you want to HODL, and earn with those, either choosing to earn in CEL or in-kind. There's really no wrong approach here. Just keep in mind, none of this is financial advice 🙅♂️
Conclusion, Referrals, and Promos
So there you have it. I already found the CEL rewards to be a reasonable value proposition, though as I mentioned on Bitcoin and Ethereum, I prefer to grow my stack 💰 But now, I see a really compelling case to earn in CEL. What do you think? Let me know in the comments.
By the way if you're new to Celsius, you should absolutely use my referral code for $50 of free Bitcoin when you deposit $400 or more of any assortment of cryptocurrencies. You only need to keep your deposit in there for 30 days to get the bonus, and withdrawals are free, so you've got nothing to lose! 🙌
On top of that, there's a few new promo codes that you can use even on top of that referral! I've actually written about two of them already.
This huge stablecoin promo is too good to miss! I personally took advantage of it for $50 of free Bitcoin. And if you're going long on Cardano, check out this offer for $40 of free ADA when you deposit $400. Lastly, for those of you who are big into the Binance cinematic universe, you can get $40 of BNB when you deposit $400 of BNB for thirty days. That's code BNB40. No article about that one, sorry.
So that's that. A month and a half into using Celsius and I'm a very happy customer. As I've said, I personally like to hedge my bets...
...and this is one hedge I'm feeling very good about. So check out my referral if you want to, and feel free to let me know what you think about Celsius, the new burn mechanism, and this post in general in the comments below.
And until next time 👋
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