How Does Interest Work On Celsius Network?

So how does interest work on Celsius Network? How does it actually work and when does it get paid out to you?

In this short article, I’ll be going over how exactly it happens, and give you some idea of what happens in the background. 

Let’s take a look.

How Does Interest Work On Celsius Network

Celsius Network, is a crypto yield earning platform, which gives you a wallet where you can deposit different assets. In exchange for you providing the network with those assets, the company will then provide liquidity to other institutions, and will charge a small interest. This interest, is what then gets paid out to you and other users of the platform.

This is essentially how the interest on Celsius Network, works.

Celsius Network as opposed to other banks and lending platforms, for one, doesn’t have shareholders, which means that it can distribute most of the earnings of their yield and profits, to its network users first, before paying itself.

But also, they don’t only have one source of income, like other institutions do. They have multiple sources from where they generate income, which means that they’re a better structured comany.

So what are some of the ways that Celsius Network can generate yield for its customers, money for investments and profits to keep growing the business? What are some of the different legs to the business?  

Some of these include:

Sec Lending

This activity is one of the core profit generating strategies of Celsius Network. The company, with the help of the community assets, offer to give other established institutions loans, at a premium interest rate.

These loans are always over-collateralized, and the institutions are always thoroughly studied and approved or denied beforehand. 

The reason companies are willing to ask the Celsius Network for loans (and Celsius Network willing to give them out) is because of the credibility of the company.

Also, the loans are easily paid off, when some of these institutions are doing things like, short-term bidding on Bitcoin prices on the spread between the price of over 200 exchanges. In those scenarios, it’s easy for them to make a 2-5% gain and repay their debts to the Celsius Network company.

Investors

Another way Celsius Network has to generate money, is to partner with companies and investors. 

Recently, Celsius Network raised over $400 million dollars in the midst of regulatory pressure, which they then used to buy mining equipment, and even acquire smaller companies (not with the same amount of money, of course).

Celsius Network has the assets to repay the investor money (off of their own treasury) in case it doesn’t pan out, but if acquisitions are done strategically, this is another way the company can keep paying stable yield to their customers. 

Mining

A third and very powerful strategy to generate income that the company has, which not many competitors have, is their mining investments.

With over 300 million dollars invested (700 million up until this moment and as of the writing of this article) in bitcoin mining, not only is Celsius Network deploying its assets onto the marketplace to generate their yield…they’re now minting their own assets that they can both keep for themselves, and pay out in yield to their community, making the company one of the top crypto mining entities in the United States, possibly in the world.  

How Does Interest Work On Celsius Network 2

Defi – Decentralized Finance

Another way that Celsius Network generates yield, is by providing liquidity in DeFi pools like Compound, Aave and Badger.

Essentially, the way this works, is Celsius Network deploys some of their assets in an exchange protocol, and they take a fee of the transactions that occur there. 

So for example, they can provide the BTC in a BTC/ETH pair (in some cases both of the pairs need to be provided), so that people can trade in and out of the pairs, and they take a cut of the transactions fees from that exchange.  

Ecommerce

This last one, is probably the smallest of their income streams, but it’s nice to have it here, and this includes their online apparel sales.

I’ve personally bought a t-shirt from their store, (and I never buy t-shirts from online stores) so even though you might think that nobody would buy anything there, I can assure you that there are people out there who will.

And even though this is probably the smallest of their income streams, this is another way that they can justify paying their customers yield, every week, non stop, for 4 plus years. 

Putting It All Together – Weekly Market Buybacks And Distributions

Finally, with the income generated from these (and other) income streams, Celsius Network then either distributes the rewards or goes out into the marketpalce and buys the corresponding amount of assets (like in the case of the native token CEL) to have it available in the customers wallet, on Monday of each week.

And the company has been paying out its members, every monday, weekly, without fail, for over 4 years now.

All transactions, buybacks and CEL token burns, can be verified via the blockchain.

Become A Celsian – Get $50 In FREE BTC!

If you’re interested in becoming a Celsius Network user, you get $50 in free BTC, by creating yourself a Celsius Network account, and making an initial deposit with them.

To get your free $50 in BTC, you’ll want to:

  • Create an account, through the official site, here
  • Enter the referral code for our website: 110665b3ee
  • Fill in your information
  • Make an initial deposit of $400 worth of any of the allow assets
  • Maintain that deposit for at least 30 days.

You’re free to remove it at any time, but you’ll not get the rewards if you do so. If you need a more detailed tutorial, you can check out our article on that, here.

I’ve personally been using the Celsius Network platform since March of 2021, and it’s been absolutely awesome.

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