Pros and Cons: Earning Interest on your Cryptocurrency with Celsius Network

Updated August 3rd, 2021

Have you considered putting your idling crypto to work? Many choose to leave their beloved crypto on an exchange or wallet, letting their valuable coins collect digital dust — but what if you could increase your holdings while you HODL instead? If you’re anything like me, you’ve looked for opportunities to stack more sats on countless occasions.

That’s when I discovered Celsius Network where you can easily deposit your coins into their interest accounts and start earning passive income immediately with no fees or lock-up restrictions!

If you’d like a $50 BTC bonus, signup using code 1861129813 during registration. Deposit $400 and maintain the balance for 30 days to unlock your bonus!

So how do they do it? Celsius Network lends coins to hedge funds, exchanges, institutional traders, and by issuing asset-backed loans. Read more about how they are able to offer these rates HERE.

The beauty of their system is that it relies heavily on over-collateralized loans, meaning borrowers are required to provide collateral that is worth more than the loan they take out. This significantly reduces the risk to depositors as the value of such collateral drops they can liquidate the funds to recoup the value of the loan as a failsafe measure.

Celsius’ interest rates are updated weekly and can range anywhere from the lower single digits to double-digit APY on a variety of coins. As illustrated in their sample HODL announcements below:

So what makes Celsius so special? What are some of its shortcomings if any? Let’s find out!

What I Like about Celsius (Pros):

• Zero Fees — Make a withdrawal at any time for any amount without worrying about fees or penalties. This has to be one of the most attractive features of the Celsius platform. You’ll never be charged for accessing your own funds as long as the withdrawal amount is at least $1 in value. With Ethereum gas fees at all-time highs, this is a huge benefit for small-time investors. Celsius is paying reportedly $20 million/year to cover withdrawal fees and I’m extremely surprised they haven’t started passing on those fees to users as Coinbase Pro did last year.
• No Minimum Deposit Requirements — Although this has become very commonplace in the lending space when Celsius launched they were one of the few platforms that had no minimum limits for depositors. So you can earn interest on even $1. I’ve personally deposited $1 to test ou the service and earned interest, however little. This is a nice feature of Celsius, you’re free to deposit as little or as much as you like and test out the platform until you feel comfortable depositing more.
• No Maximum Deposit Limits — Unlike other platforms that limit the amount you can deposit at higher interest rates, Celsius allows all users to deposit as much of an asset type as they like and earn at the specified rate. Although they do provide a higher tiered rate for BTC (up to 1 BTC) and ETH (up to 100 ETH).

• Compounding Interest — They’ve finally added compounding interest after the community’s repeated requests (Yes!). This means the interest you earn will also earn interest (What is compound interest?). Just keep in mind, the APY advertised takes the compounding effect into account. If the interest for USDC is 8.69% with $1000 in your account, you will have $86.9 at the end of the year. Think of it like this, the APY listed is exactly what you’d receive if you leave your funds untouched in your account for one whole year.
• No Lockup Necessary — Celsius does not require locking up your funds for a given period while earning interest. Users are free to withdraw their funds at any time without being penalized.
• Platform Token Not Required — Celsius has their own utility token called CEL (What are CEL Tokens?) which incentivizes users to hold the token to earn better interest rates and lower rates for loans. But this is not required to use their service. Just keep in mind, if you opt for this option, you will earn your entire interest amount in CEL.

• Earn In-Kind or in CEL — As mentioned above, you have the option to earn your interest in-kind or in CEL, but “why would you want to earn in CEL,” you ask. That takes us to:
• Earn Higher Interest with CEL — Users can choose to earn higher interest depending on their loyalty level which is determined by their CEL to Account Balance Ratio — you can earn up to an additional 5%~30% (this is the big why!). More on this later. NOTE: U.S. Residents do not have the option to earn in CEL or higher interest levels and are currently limited to the in-kind base rates.
• CEL Earns Interest — Celsius now allows users to earn interest on the CEL held in their wallets, this is great news for users who invested in their platform!
• Weekly Payouts — Wake up to interest payments every Monday morning, like clockwork. Interest is calculated on a Saturday ~ Friday Schedule. Meaning, if you deposit funds on a Saturday, you will not receive your interest in 2 days, but on Monday the following week. Just something to keep in mind to avoid any confusion.
• Security Measures — As always, it’s recommended to use 2FA authentification when securing your account. Going beyond that, Celsius will notify you every time there’s a new login to your account via email. They will also require confirmations of address whitelisting and crypto withdrawals via email as extra layers of protection.
• Rebrand & App Redesign — A complaint I had for a while was their branding. Having cute characters and a more playful feel can work, but their execution felt off and inappropriate for a finance app handling billions of user funds. They’ve recently done a thorough redesign of their brand, website, and app that feels wholly refreshing and fitting. I approve of this change! The app is very similar to the previous version, blink and you might miss it, but the app itself seems more stable with fewer instances of crashes which was a complaint I had previously.

• Biometric Support Added — Although they’ve had quite a head start on BlockFi, they hadn’t incorporated biometric authentication (touchID/faceID)but finally, the wait is over! Users can quickly unlock their 2FA, circumventing the need for cumbersome 2FA codes, and quickly satisfy their portfolio addiction.
• Downloadable Earnings Statements — Imperative for bookkeeping and tax season, you can now download a CSV version of your transaction history.
• Instant Withdrawals — As long as you stay under the daily limit, withdrawals have, in my experience, processed nearly instantly. A fantastic and convenient improvement on platforms like BlockFi that take 1 business day to process withdrawals — although some users may prefer the time delay for increased security.
• Generous Instant Withdrawal Limits — For any withdrawals over $150k in a single asset type Celsius requires manual approval. This can take up to 24 hours to process (but often less). You are also limited to a cumulative $600K+ in total withdrawals in a 24 hour period, but this doesn’t mean $600k is the limit for daily withdrawals. You can withdraw as much as you’d like. $750K or $1 Million etc. The $600k limit simply locks your withdrawals for 24 hours after the request is placed (the withdrawal itself will usually process within that time). To explain this further, you can withdraw up to 150k in a single asset type up to 4 times or 300k each in 2 asset types and so on and so forth. HOWEVER, as soon as any of these withdrawals goes up in value while the funds are being processed and a single withdrawal value exceeds 150k (even a few cents like $150,00.10), the withdrawal limit will be triggered which means a potential delay in processing your transaction. So it’s often better to withdraw a little less than the limit with a cushion so you receive your funds without delay — especially during volatile market conditions (e.g. maybe request $145k instead of $150k). Also, if you withdraw more than $600k in one or multiple transactions, additional withdrawals will be locked for a 24 hour period. This will only be an issue for whales with significant funds spread across multiple assets. All in all, the limit should be plenty for most users as Celsius processes some of the quickest withdrawals in my experience.
• Your Cryptocurrency of Choice — With over 40 cryptocurrencies actively accepted on their platform, you can deposit your favorite currency and put them to work immediately. This is a staggering number compared to platforms like BlockFi that only have a limited number of cryptos they accept.

• Added Web Access— Celsius is no longer limited to the mobile app! They’ve brought the web app online, allowing users to access their accounts from your desktop or laptop without the need to download an app.
• Compliant with Regulations — Celsius follows all required local laws and regulations, as such, if their services are unavailable to you or only in part, there is most likely a regulatory issue that restricts access in your country or state. Celsius’ regulatory documentation can be found HERE.
• CEL Pay — Users have the option to pay other Celsius users through their CEL Pay service for absolutely free with the currency of their choice.
• Celsius Network Community — Celsius is the golden child of the crypto lending landscape — building their platform on a strong sentiment of hitting back against big banks — and they’ve understandably garnered many online fans. The community they’ve built is quite impressive and users are welcomed into the ecosystem with open arms in a way I haven’t seen with similar platforms. For those curious, I’d suggested visiting their community-run Telegram channel where you can meet and chat with like-minded individuals who use Celsius. This is a nice addition for users who prefer a more community-centric approach to investing.
• Celsian Website — Another feature spearheaded by the community is the Celsian Website. A feature to provide additional transparency and information to the Celsius community (Celsians). Here you will find resources including a transparency page providing running totals on a few main crypto holdings as well as a record of historical interest rates. It doesn’t provide a complete picture necessarily, but it is more than many other platforms provide.
• Promo Codes — Celsius often runs promotions to incentivize users to deposit additional funds to receive additional BTC here and there. This is a nice way to keep users engaged. The codes can generally be found during their AMAs or on their social media channels and telegram. Just remember to input the codes first, transfer the specified coin, and maintain your balance for the lockup period required.

• Get $50 in BTC — Download the app and input promo code 1861129813 during account creation (does not work afterward) and deposit $400 and maintain balance for 30 days, you will receive $50 in BTC.

Things to Consider (Cons):

• Weekly Rate Fluctuations — I think many users look for consistency when it comes to earning interest on a platform. We don’t want to be told we’ll earn X and then a week later have that change to Y. Although the weekly changes to their rates (which don’t seem to fluctuate as wildly as they once did) allow Celsius to adapt to ever-evolving crypto demand and supply — on the users’ side it can be unnerving having to stay informed of their shifting rates. They don’t specific rates that change each week, that responsibility is placed on the user to seek out. By keeping users informed of the rates being changed, it would improve the user experience immensely. Whenever rates are lowered, users may need to move funds out depending on their risk/value threshold. Of course, if rates increase I’m sure no one will be complaining!
• Slow Support — Many platforms have become overwhelmed with the demand and I’ve seen very similar issues on other platforms, so this is nothing new. I want to make it clear, Celsius support has resolved all issues I’ve brought up…they just tend to take their time. I’ve had to remind them of unresolved tickets in the past and it can be challenging to follow up on issues if no timeline is given. That being said if issues aren’t being taken care of within a month, that indicates to me it’s slower than what it should be. Don’t get me wrong, the issues always get resolved…eventually. It just requires the users to be extra diligent.
• No Sweep Function — Due to the nature of their perpetual lending system, users are always paid out on Monday for interest earned up to the previous Friday. But for those looking to withdraw their entire balance of a coin, you will always end up accumulating additional dust. Celsius could introduce a sweep function similar to Crypto.com allowing users to convert their dust into CEL.

• Complicated Rates — Previously, new users had complained about Celsius’ advertised rates being misleading. There was confusion around their base rate and multiple higher tier rates which not only require users to hold a significant portion of their balance in CEL (Rewards paid in CEL). There wasn’t a clear distinction between the two or a thorough explanation. Now they’ve added tabs to clarify which rates are for foreign users and rates for “In-Kind” vs “Paid In-CEL” on their homepage which should make things a little clearer. At the end of the day, I believe they should consider simplifying their rates as it makes it hard to keeping track of all the various rates they offer. Until then users will need to take it upon themselves to figure out Celsius’ loyalty levels explained in the following section “Higher Interest Rates Earning in CEL”.
• 24 Hour Address Lock — They only allow adding a single withdrawal address for each coin (BTC, ETH, USDC, etc). If you need to send funds to a different address, you must initiate it through the app. Changing a withdrawal address will place a 24-hour withdrawal lock on that specific coin. Better security, but more hassle.
• Must Pass KYC to Earn Interest — You can create an account and deposit funds to your Wallet without KYC; however, if you want to earn interest you must submit all required information including SSN for US users.
• Vocal CEO Alex Mashinsky — This is a bit of a contentious issue, but Alex is known to be a passionate figure. The obvious visionary behind the Celsius platform, he has gone above and beyond to provide a product that has pushed the space forward in more ways than one. However, I’ve found his outbursts on Twitter to be all too unprofessional. He often jabs at the competition in a way that goes beyond friendly bickering. I personally prefer company leaders to be fair and balanced, allowing the product to speak for itself. This may be a personal preference and one that obviously doesn't directly impact the product, but he seems to cause unnecessary drama online which I’m not a fan of.
• Country Restrictions — This is fairly standard and most platforms have restrictions, wherever you live, make sure to look over their restrictions to make sure you have access to the features you need. According to their website — No Celsius Network features are available to users in (or who reside in) Cuba, North Korea, Sudan, Syria, Iran, Lebanon, and other territories identified as involving high compliance risks. Celsius services are not intended to be used by users in (or who reside in) Japan, New Zealand, Israel, and any other jurisdiction which may limit or forbid the use of our services. CelPay is unavailable to users in (or who reside in) Alabama, Arkansas, Connecticut, Florida, Georgia, Hawaii, Iowa, Kentucky, Maine, Massachusetts, Mississippi, New Mexico, New York, North Carolina, Ohio, Oregon, South Carolina, South Dakota, Vermont, Washington, West Virginia. Interest-Earning is unavailable to users in (or who reside in) New York and Washington. Earn Interest on Stablecoins is unavailable to users in Texas. Borrow Dollars is unavailable to users in (or who reside in) California, Delaware, Georgia, Indiana, Maryland, Mississippi, Missouri, Montana, Nevada, New York, Ohio, Rhode Island, South Dakota, Tennessee, Vermont, Washington. USD Loans have some restrictions to users in Alabama, Arizona, Arkansas, Iowa, Kentucky, Michigan, Minnesota, New Mexico, North Dakota, Pennsylvania, Utah.

Higher Interest Rates Earning in CEL

So like many others in the space, Celsius Network offers higher rates for those (currently unavailable to US users) who hold their utility token. Keep in mind you MUST earn your entire interest in CEL. You cannot earn in-kind with this option, so even though their rates may be higher than others, this will need to be taken into consideration. I believe most users prefer in-kind interest vs earning in a platform token like CEL. If you prefer stacking BTC as opposed to CEL, you would need to convert the CEL to BTC on a regular basis on a lesser-known exchange where CEL is traded, losing fees and on the spread in the process. That being said, if you believe in the platform and see potential growth, this may be a good option for you.

Their loyalty program is calculated based on the ratio of CEL to the total wallet balance in USD. If your CEL balance is less than 5% of your total wallet balance, you are a BRONZE member, receiving no additional interest by earning in CEL. New users generally receive 1 CEL upon account creation which places all users initially in the BRONZE level (you must opt-in to earn in CEL). Holding a CEL Ratio of 5–10% puts you in SILVER with 10% bonus interest (e.g. 5% →5.5% APY), 10–15% in GOLD with 15% bonus interest (e.g. 5% →5.75% APY), anything above 15% gives you PLATINUM status with a whopping 25% bonus interest (e.g. 5% →6.25% APY). The entire interest will be paid in CEL. Your “staked” CEL will earn a standard rate with no bonus.

Conclusion

Celsius so far has had a spotless track record and I personally haven’t had many problems and minor issues have been sorted out through their support team. They very much embody the spirit of the crypto space and for those who might be keen on Defi projects, this may feel more at home for you in the Cefi realm.

I will continue to use them knowing my deposits are safe in their hands.

At the end of the day, as always, you’ll have to decide whether Celsius is the right fit for you! There are plenty of lending platforms out there with their own pros and cons — do your own due diligence and make sure you stay informed!

For further inquiries, you can always reach Celsius support at [email protected]

Happy earnings!

*With promo code 1861129813 we both receive $50 in BTC when you deposit $400 or more with Celsius. You will need to maintain the deposited balance for 30 days before the funds are released.

Code only works during account creation/sign-up and is NOT VALID afterward. You can create a new account with a different email if you’ve already created an account.