Celsius Network - Legit passive income or ponzi?

No one can answer that but you. What if you had 5000 btc on mtgox back in the day? It's always possible a cex gets hacked/ your funds stolen. There is also smart contract risk. But ultimately you have to decide what you are comfortable with.

bump. Does anyone know if Celsius Network is audited or has insurance?

It's not a ponzi scheme, but these rates are not sustainable in the long term. It's a startup and you are being paid VC money.

Hey user. So, I did a ton of research on celsius recently, and I came to the conclusion that it's pretty legit. I had the exact same vibes as you, it seems too good to be true.

First, there's basically a 0% chance that it's a scam because of the people involved. Alex Mashinsky is fucking based, he's started multiple billion-dollar companies already, and has a strong vibe for disrupting monopolies and giving people access to better services (see all his stuff developing VOIP). He’s already made it, there’s no way he started some piddly crypto company to rugpull investors, ruin his reputation, and go to jail. Also, the company is insanely compliant with all laws, registrations of their business etc. They are totally above board on all that shit, not some scammy situation like DeFi devs just dumping on investors.

cont...

support.celsius.network/hc/en-us/articles/360002174718-Do-you-have-an-insurance-policy-

So I should be fine putting in my money now, but expect interest rates to fall over the long term?
I can certainly deal with that. I just want to have some level of security knowing they won't suddenly disappear with my funds.

Second, the way they make their profit and high returns ends up making sense. Basically the premise of the service is, there's a thing called 'Institutional Lending' which consumers don’t have access to. It’s banks lending shit to other corporations or banks. It’s a super profitable and super safe business. What celsius does at it’s core is, gather crypto assets from depositors, and lend them out to make profit. Note that this IS a centralized platform, so if you are totally averse to centralization it’s not for you, but its entirely equivalent to having your coins on Coinbase. The revolutionary thing about Celsius is this: They pass on 80% of their revenue to us, the depositors. That’s 80% of *revenue*, not profit. That’s why the rates are so high. The reason this seems unrealistic is bc of how hard we are getting fucked by banks right now. When you deposit your money or stocks with banks, they are fucking lending them out w institutional loans, making tons of money, and passing like 0.1% of the profits back to you. In interviews Mashisky said “it’s not that we’re that great, its that the banks are THAT bad”. The rates are great we’re just not used to them bc we’re usually getting fucked so hard.

> but expect interest rates to fall over the long term?
Yeah that's basically my understanding. They are subsidizing those rates to acquire more users.

3/

So, the question isn’t “is it a scam?” imo. The question is “is it safe?”. Like, the company isn’t going to rugpull, but what if there was some catastrophic security breach. I’m not a fintech or blockchain engineer, so I’m not qualified to assess the nuts and bolts of their security, insurance, etc. But as far as I can tell it’s all best in class? Recently the app went down because their fucking GoDaddy server that was used for frontend fucked up, it was absolutely cringe, but the backend security, payouts, etc was all unaffected. Also one really important thing: the company over-collateralizes their loans to institutions, so if they lend out 1 million dollars of BTC, they require the borrowing company to put up 1.5-2x MORE dollars worth of collateral than they are borrowing. So if the borrowers defaulted, they are totally fine and your funds are safe.

From what I've read looking up the company, they reduce or eliminate collateral requirements for non-retail investors, so there's still some risk of default.
But I appreciate at least knowing that they are insured.
Thank you for the link.
This is extremely helpful info and clears up a lot. Thanks for passing it on.

Who the fuck do you think is borrowing your money at 12%+ interest rates while providing collateral? No one. They generate income by putting your money in perpetual futures, uncollateralized loans and farming shitcoins. Some user found a smart contract that was 17% from liquidation with $20mil in link in it. The cash rate is what, like hurr durrrr but dey is insured
Read the fine print, the only thing you MAY be insured for is a hack which they have supposedly $100m for while having billions in assets. Maybe 1/10th of your stack is insured.
> risking your stack for

Does the insurance mentioned here cover anything related to security breaches, as far as you know?
I'm sold from what you've said already, but I'm curious, if you happen to know.

4/

But, at the end of the day, something bad could happen, a hack being the main possibility. Celsius has said that if this happens, they will refund customers out of their own balance sheet so nobody loses funds. But, if that disaster was big enough, maybe we don’t get bailed out? If this happened with a bank, the government would probably step in and do some TARP bullshit and pay back savers. But I doubt the government would come bail out a bunch of autists for their crypto. So, that’s the main worry. But I’m 100% certain it’s not a scam, and the rates esp for stablecoins are fucking amazing.

Right now, I’m holding about 5-10% of my network in USDC in celsius. I’m probably going to start storing some of my linkies there too, but never more than half of my stack.

All in all I think Celsius is genuinely revolutionary. I just wouldn’t go all-in quite yet in case some crazy black swan happens.

Also, while the 10% return is dank, remember that the interest counts as income so you have to report it as income on your taxes,and pay income taxes. So depending on where you live that might be only 5-7% interest. Still destroys banks, but not as good as average returns of an S&P500 ETF (gains, not dividends, SP divs are like 1-2% right now I think). So your priority should probably be: max our your tax free savings accounts (roth/ 401k), buy as much crypto as your risk allows (BTC/LINK/ETH imo), and then keep all your spare cash in Celsius getting dank returns.

>Jlmake sure you keep your health score higher like 3-4
>tfw started with 1.7 down to 1.4 to 2.1 now when i deposited 2.1k link, borrowed 12.8k usdc at $13 on the way down from 20 to buy 975link and deposited that to bring my linklet stack from 3.1k to 4k
wew lad. I ordered a trezor t and did celsius for a week before moving to trezor then aave. Wish i did this sub $5

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It says in plain English that interest generating activities are not insured. There is zero transparency where your money is, so chances are it's uninsured. I don't know why I'm trying to help you. Just go on their telegram and see the number of morons that are invested in it.

I don't have any special insight into the insurance. It could be what this user said is right and it's only 10% Like I said, risk of hacks is the major risk of this company, just like keeping your coins on coinbase or binance. But like... this is the company's entire business, and they are moving huge sums (I think 2 billion in assets rn?), I imagine their security is good since it's life or death for them. Also fwiw Chainlink is holding some of their assets w Celsius, that's what led to the whole Jessica Khater episode. Take from that what you will, overall if it's good enough for Sergey it's good enough for me.

The loaned out money doesn't matter if it's insured because they are overcollaterized. If the borrowing company defaulted with your crypto, Celsius just keeps the 1.5-2x deposit they have from the company. Insurance on the loans isn't an issue imo because the overcollateralization provides more security than insurance ever would.

doesn't blockfi pay 8.6% over their 10%... if like you said, blockfi is pretty secure and safe... is that extra 1.4% or whatever worth it? I don't anything about blockfi, but you mentioned that it was safer and insured.

Most of the loans are short-duration

>implying that these "institutional investors" are actually overcollateralizing their loans
I still have not seen ONE argument for why "institutional borrowers" are paying 12%+ interest on loans when the cash rate in America is 0.22%. The ONLY reason they would come to celsius for money and pay a premium is for either
> a) under or uncollateralized loans
> b) off the books activities, i.e. dodgy shit
> c) ???????

There are lots of reasons. i think Celsius avoids loans for short sellers, but I'm sure that's one of them. I think a big one is Arbitrage. If you're smart and build infrastructure that lets you rapidly take advantage of a 1% difference in price between exchanges, you could make insane profits really fast, but you need to borrow crypto for liquidity to do it. Also, exchanges might need liquidity for their platform, I think they're a big customer. Putting collateral to get loans is also useful bc, rather than buying and selling it yourself, you're not selling and incurring taxable events (every crypto-crypto trade). I don't pretend to understand the institutional lending but it's a totally different market comparing tiny little consumer loans and mortgages with the multi-million dollar loans that institutions need. It's not a world any of us has access to, it's strictly for huge banks and companies, except for Celsius which has the aggregate capital from depositors to be in the business as well.