We’re going to share how we go and get ourselves some free money each week using the DeFi crypto app called Celsius. We’ll review the app – it’s features and safety and what we learned (and how much moolah we made) in the past week using the Celsius Wallet to earn passive income from cryptocurrency.
This is part 4 in our series DeFi: the new financial frontier where we explore DeFi crypto and the new rules of making passive money online. We’ll post links to Part 1 to 3 of our DeFi series at the bottom of this post.
What is Celsius wallet?
Celsius is a DeFi crypto platform that provides personal financial services – like banks do – but instead for investing in cryptocurrency. The company, headquartered in London, focuses on the financial services they say the big banks have forgotten about – fair interest rates, zero fees and fast transactions. Celsius have existed since 2017 but their service offerings have exploded over the last 12 months as more people enter the decentralised finance market to find banking alternatives to earn interest on their hard earned savings. The Celsius platform is now available to users in more than 100 countries around the world includ.ing Australia, UK, Canada – all the usual suspects
Celsius operates mainly through Celsius app, which is available for iOS and Android and is where you can access their financial services. Although it’s not strictly a crypto wallet, the app acts like a crypto wallet is some of its functions and features. We downloaded the Celsius app a week ago and started to use their services.
What can you use Celsius wallet for?
Earn interest on DeFi crypto and Stablecoins
This is the main reason we decided to give Celsius wallet a go. Frankly, we’re tired of earning zero percent interest on money in the bank. Low interest and growing inflation are a feature of the new money game in a post pandemic era. They’re also a big part of why financial freedom seekers need to get educated about the new rules of money and pivot with their financial independence strategies.
We transferred some crypto into the Celsius Wallet from other cryptocurrency exchanges a week ago. Here’s what we learned about earning interest on our crypto using Celsius Wallet:
Interest rates. Over the week we earned interest rates of between 5% and 13% across a number of different coins. Celsius calculates your interest earned every Friday and total interest earnings are updated each Monday. Every Monday, they also send you an email with the new rates that they are offering that week. That is another thing to know about DeFi lending products like the Celsius one; the interest you earn changes with the forces of supply and demand for that particular coin in the market (as well as some other factors). A free market for money lending not controlled by central bank dictated interest rates! What a novel idea.
Crypto coins and tokens – higher interest higher risk. At present Celsius wallet supports over 40 coins and tokens in their lending (interest) service. We earned rates as high as 14% during the week. We only lent crypto that we own with zero dollars in – which means that we bought the crypto previously, the price went up and then we sold a portion and took our initial investment out. This is part of our strategy to manage the risks of crypto price volatility. It effectively means we are earning interest of between 5% and 14% with zero risk.
Stablecoins – high interest, lower risk. The other thing that we lend on Celsius is stablecoins. We received an 8.8% APY on two different stablecoins – USDT and USDC. Earning interest on stablecoins is the lowest risk product on Celsius. This is because the price is not subject to the large fluctuations that other crypto can experience. You can learn more about stablecoin earnings here. There are no minimum deposits for Celsius, which is also a great feature if you want to test it out or teach your kids about crypto and financial freedom. We diversify our stablecoin lending across a few different stablecoins as another a risk management strategy.
Flexible terms – get your coins out at any time. Now unlike DeFi crypto staking products that require you to lock your cryptocurrency into smart contracts or lending protocols for a nominated period, you can lend on Celsius with flexible terms. You simply follow the withdrawal process in the app, go through all of the in-built security features like 2FA and PIN code confirmation and enter the blockchain public key for the address you want to send your crypto to.
Like with any cryptocurrency transaction, you have to make sure the address is correct and you’re using the right blockchain network for the coin you want to transfer but this is pretty easy. For example, if we wanted to withdraw some ETH, we would log in to a crypto exchange like Binance or Coinspot, grab the correct deposit address generated from within that platform and copy and paste that address into the Celsius wallet withdrawal screen. Voila!
CEL token – The other thing to know about Celsius interest rates is how Celsius token works. Celsius has a token that they use to provide interest rate ‘boosts’ for ‘Celcians’ that use their service. The ticker is CEL and the token is traded on decentralised exchanges like UniSwap or on FTX. You can also buy CEL directly in the app but we don’t recommend this due to the fees charged by third party providers. You can opt to earn your interest in either CEL or in the currency you deposited. If you hold and earn in CEL you will receive a higher interest rate on your coins. The more CEL your hold as a percentage of your total holdings, the higher your earnings rate.
Celsius interest calculator. One of the best features of the app is their in-app interest calculator. You simply scroll to the coin you want to lend and put in how much of that coin you have. It then calculates your earnings over a week and a year.
One thing about Celsius Wallet is that it currently offers one of the best rewards around for ETH or Ethereum. It’s not easy to find good flexible interest rates for ETH (where you can take your ETH out at any time) because staking ETH carries the condition that your coins are locked in the protocol until ETH version 2.0 is released. This could be in 2H 2021 but it might be also be later. If you have ETH, and don’t want to lock your coins in for an undefined timeframe, you can get 5-6% interest on Celsius.
If you want to get yourself on Celsius and would love some free Bitcoin, you can use our link and put in our referral code 1910143eb7 once you login in and set up your account. You can enter the code by going into your profile in the menu.
You get $40 worth of BTC for your first transfer of $400 in more. T&Cs apply but you basically just need to leave the $400 in there for 40 days.
How does Celsius crypto interest work?
We find that people are automatically suspicious of the higher interest rates that you can achieve in DeFi crypto. A lot of folks think that all DeFi is just Ponzi schemes. It’s always good when it comes to your finances to approach new products with a good deal of caution and scepticism. And crypto is a literal minefield of scams and fraud. That’s why we’re here to report back!
So let us explain how Celsius offers the interest rates they do. Under the Celsius business model their rewards (interest) are funded by their lending business. They lend the coins that users transfer into the app onto hedge funds, institutional traders and exchanges, as well as other corporate partners. These partners deposit up to 150% collateral (in crypto) to secure the Celsius loan and they pay Celsius interest on that loans. Celsius also lends US dollars directly to app users – with digital assets as collateral – and earns interest from those loans.
One risk in this model is very large movement (50% plus) in the underlying value of the coins used as collateral for Celsius on-lending. A large swing in the traded price of coins loaned by Celsius may initiate a margin call on the loan. If this happens, Celsius takes ownership of the collateral to secure its position (and yours!). The margin call process comes from traditional banking services but there is a different level of risk involved for borrowers because of price volatility in cryptocurrency.
A word of warning about borrowing crypto
Celsius also offers a borrowing product where you provide your own cryptocurrency as collateral to borrow either fiat currency (US dollars) or more crypto. You might ask – why you would borrow against your crypto? Well, its a form of leverage where you can continue to hold your crypto coins and have them move with market fluctuations but access value in them at the same time. You borrow coins to leverage your market return on those coins for example or put them to work somewhere in the DeFi system.
We don’t do this. We don’t use leverage when we’re investing in cryptocurrency because as we explained above we don’t want to be exposed to the risk of a margin call if there is a sharp drop in crypto markets while we sleep. This literally just happened in May 2021, and liquidated A LOT of leveraged positions across a number of large lending and borrowing protocols.
None of this is financial advice dear readers – we’re just sharing our experiences. If you’re going to borrow or use leverage, that is up to you in the true ethos of crypto which is about managing your finances the way you want. It all depends on your risk appetite.
Is the Celsius Wallet secure?
The Celsius app has some great security features to protect your crypto. When you set up Celsius wallet you are required to set up an App Pin Code (like with your banking app) and provide your KYC or ‘Know Your Customer’ details. This includes name, address and ID document. Verification occurs within minutes and then you’re all ready to start earning, and borrowing.
BUT, before you do anything make sure you head into the menu and set up the additional security features for the App. This includes turning on their biometric security access if you use that feature on your mobile phone, setting up 2 factor authentication, and also setting up “Hodl mode’. Hodl in crypto language means ‘hold’ or stash your coins rather than trade or sell them. Hodl mode is an extra layer of security on withdrawals only. It prevents any withdrawals from your account without a separate PIN code. Remember to write everything down in a safe place peeps!
The final word
In our first week on Celsius Wallet we earned $19.90. That’s US dollars so around $25 Australian. Now it’s not enough to break the bank and make us rich, but all we did was download the app, set up the wallet and its security, and transfer some cryptocurrency and stablecoins in that we already had and was sitting around doing nothing. We also did it in a way that sought to manage risk.
It literally took about 10 minutes to set up a little low risk cryptocurrency passive income stream of $100 per month. And Celsius wallet isn’t the only crypto wallet we use while investing in cryptocurrency. Across our different accounts, the passive income that we earn adds up.
We diversify across coins and across cryptocurrency wallets to manage risk and find the best yields. It’s just like not having all your eggs in one basket. We also don’t go for any of the leverage cryptocurrency investing strategies and avoid strategies that might have a high exposure to impermanent loss.
Like we always say, the fat stacks are out there financial freedom seekers. You need to get educated. We hope we’ve helped you do that here today! If we have, please remember to use our links and codes – get yourself some free BTC and help out our blog too! 🙂
As always dear readers – this is not financial advice. Invest at your own risk and always do your due diligence.