In life, we should always find ways to leverage what we have. An often cited example is making money work for you. In the wise words of Warren Buffett:
If you don't find a way to make money while you sleep, you will work until you die
There exists many traditional ways to invest your hard-earned money. By increasing levels of difficulty:
- Securities -> dividends / capital gains
- Bonds -> coupons / capital gains
- Physical Precious Metals -> hedge, capital gains
- Real Estate -> higher quantum, rental incomes / capital gains
- Angel Investing -> highest risk, highest rewards
Today, I want to mention a particular crypto investment, because it has the lowest barrier of entry.
Say hello to Celsius Network. A platform where the common people are able to take a loan at a reasonable interest rate starting at 4.95% (20% lower when one uses $CEL tokens to pay back the interest). On the other side, those who 'stake' their cryptocurriencies in the Celsius Wallet will receive interest for being lenders. Essentially, we become our own bank.
The other guys try to charge as much as possible and use the dollar based interest income to pay themselves and their rich shareholders and investors. Celsius takes interest income and gives most of it back to our community. We take dollars and convert them into BTC, ETH and other coins so we can distribute them to all our members every week.
Welcome to the future of finance - Decentralized Finance (DeFi).
On Celsius Network, one could potentially earn up to 7.5% interest by depositing your cryptocurrencies into their wallet. Interests are paid every week on Monday. By opting to receive interests in their native $CEL token, one could earn up to 25% more, depending on the ratio of $CEL value held relative to your other staked tokens. No withdrawal fees or early termination fees.
For example, you are a firm believer in $OMG and have purchased them via Binance. Since you wish to HODL $OMG, you would leave them in Binance. Then, you discovered 'staking' $OMG in Celsius wallet yields >5.75%. Why would you leave them in Binance? You wouldn't. Withdrawing $OMG from Binance costs 0.78 $OMG = $2!
It becomes obvious that your long term hodl of $OMG tokens should be put to good use within the Celsius' loan platform, cashing in on the 5.75% interest PA. This is called letting your money work for you. In traditional banks, your money is constantly being deflated. And the banks actually 'use' your money, loan it out to others, collect >4% interests and returns you how much? A measly 0.1%-1.5%, not even enough to beat yearly inflation.
Looks and sounds too good to be true, right?
How secure is your money (ie. staked cryptos) on the Celsius Nework?
We currently use BitGo as our custodian. They are the best in the business, being used by many of the top exchanges and companies. Whenever coins are being lent out from our pool of assets, they are over-collateralized. This means that anytime an institution borrows coins from us, they provide up to 120% of the value in another form of collateral.
All BitGo accounts are “multi-sig,” meaning no single person within the company can make withdrawals going out of the system without the multiple parties approval.
What if there's a crypto black swan or if Celsius declares bankrupt?
Agree there's always a much higher risk attached to cryptocurrency investments, and given that many crypto projects declare funds drying up, etc. (read exist scam), you should always be careful and only invest if you feel right. Counterparty risks always exist. As for a black swan, no one can know before-hand and it can happen to any asset class, not confined to just cryptocurrencies.
Since action speaks louder than words, I have already transferred ~$285 worth of $DASH into Celsius. I'm looking at cryptos which yield >5% (look at pictures above). Hence, next would be $ZCASH, $0x, $OMG. For stablecoins, I'll likely go with $DAI.
Let's wait for the interest (if any... hahahah) to be credited next Monday. I'll do an update then. In the meantime, if you would like exploring this loan platform, please use my referral link here and we both could get up to $20 in $BTC.
What other crypto loan platforms are out there? Any that is safer and/or more lucrative? How different is their loan model/protocol?
Please free feel leave your comments below and let's explore their benefits together!
Disclaimer:
This is my personal view. I am not a financial adviser nor affiliated to any investment advisory. Your decisions are yours and yours alone. Please Do Your Own Research (DYOR).
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an interesting read. I hope it turns out well as i'm pulling towards investing.