Crypto lending platform Celsius has recently announced that it has now over $2.2 billion in assets invested by users from around the world. The new financial platform recently released a press release that shows their growth in assets during the last six months of its operation.
The Rise of Centralized Crypto Lending Platforms?
Celsius is a centralized crypto lending platform which means its model of operation is opposite to the Decentralized Finance (DeFi) philosophy. It is now increasingly being called Centralized Finance (CeFi). Basically, over here, we have a sort of fund managing company that takes your crypto and lends it out to big players in need of liquidity. The users then get interest from these deposits. According to Celsius, over 80% of the returns from the financial services are credited to their investors. The company claims that over $80 million in returns have been distributed among the investors so far.
This approach is different from DeFi as everything is centralized and you don’t get a choice on who to loan your money and at what conditions. The contracts are also kept in a centralized ledger and thus they are not fulfilled automatically. Overall, this does represent less choice and functionality than the DeFi options. However, the DeFi sector is still maturing and it will take some time for people to consider it a profitable lending option. So, here is where Celsius excels as it offers a real market-based solution with less risk as it becomes a third party guarantor like a bank.
According to Celsius’ CEO and founder, Alex Mashkinsky:
We have created more income for our customers than anyone else in DeFi or CeFi, and we have no plans on slowing down any time soon.”
The approach is seemingly working as Celsius has increased its holdings from $1 billion to around $2.2 billion during the last six months. Although the price increase in Bitcoin itself may translate to the fact that the increase in worth may just be due to the increase in dollar value due to a appreciating Bitcoin. Celsius has native token called CEL tokens and last month, the CEO made headlines by gifting more than $20 million worth of CEL tokens to his wife. He still remains the largest holder of CEL tokens around the world which does raises questions about the fair distribution of the token. Normally, founders only reserve a small portion of the token even to themselves.
All in all, the CeFi and DeFi sectors are expected to lock in further tussles in the future.
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