Celsius Network Weekly AMA ft. Gem– July 10, 2020
with Micah Winkelspecht, CEO and Founder of Gem!
Today’s AMA begins with some questions for Micah about the Gem integration here, followed by some great updates from Alex, and ending with community questions. As always, the timestamp from YouTube is hyperlinked to each question below.
Summary: You are now able to buy crypto in the wallet (BTC, ETH, USDC) through Celsius’ integration with Gem. Celsius and Gem have been working on this for a year, and they’re very proud of it. Current rates are 0.75% in the US for ACH and 1% in the EU for SEPA– these are Gem’s fees, and Celsius is actively working on ways to reduce and/or subsidize them.
Alex gives some important updates about the funding round, including the fact that Celsius’ first valuation is the largest of any lending company in this space, that this is Tether’s largest investment in one company and this is the most any company has raised post-ICO. Alex also lets us know that Celsius will be hiring an outside firm to conduct an audit of Celsius’ AUM, to show the interest Celsius is earning and to prove that they are paying 80% back to depositors.
Finally, Alex explains that we will be seeing more coins and a higher transfer limit added to the bank transfer in the future, as well as reduced fees and more countries supported. Regarding CEL token, he says we should be able to borrow against all coins/tokens in our wallet (including CEL) in about two weeks, and that he hopes to increase CEL-on-CEL interest after this is implemented. Additionally, Celsius is aiming for users to be able to vote on company decisions in the future, including about which coins will be added, and will be adding Euro and Euro stablecoin support. Lastly, Alex discusses the fact that Celsius took out a PPP loan– a decision he stands by and did to protect Celsius’ employees and community at a time of massive uncertainty in the world.
And if you’d like to earn interest on your crypto, gold, and stablecoins with Celsius, scroll to the end for instructions on how to get $20 in BTC when you sign up.
Micah: I’m an engineer– I started in video games and then migrated over to internet and web services. In 2013, I went back and read the Bitcoin whitepaper and realized how important this technology was going to be. So I decided I was going to quit everything I was doing and focus on Bitcoin, at a time when that was a very crazy thing to do. I told myself I would spend at least 10 years doing it, and I’m on year 7 now.
Q: Why did this take us a year to launch– why was it so hard?
Micah: I think dealing with a legacy infrastructure of any kind is going to be difficult because there so many different types of things you need to handle– it’s not built for the 21st century. So what we’re trying to do here is build bridges for these systems into the 21st century.
It’s tough because it’s a patchwork system– every different jurisdiction you work with has different rules and regulations, and so we need to seek out partners in all these different regions who can serve these markets. We’re currently working with several payment processors and are currently adding more, including one in Africa so we can add functionality for users there. But one of the big challenges going from fiat to crypto has to do with regulations around KYC/AML– there are so many strict regulations around this process, which means that there are many places where it can break down. And this is an ongoing area that we’re constantly looking to improve.
Alex: We’ve already had several hundred people already use the service, which is really great especially since we haven’t even formally announced it yet. And we’re always looking to build a bridge between fiat and crypto– fiat is where all of the money is, and we want to help bring it in. So this is why Gem is so great, because it helps us build this giant bridge to bring all of that money over more effectively.
Micah: And Celsius is doing a great job bringing this to real people. It has a clear use case– and I think ultimately what has become clear is that people are seeking yield, and money will flow in that direction. Banks have really let this slip away– the best interest I can get with a bank is 1%.
Q: How many providers did you have to link together to build this bridge between fiat and crypto?
Micah: We’ve launched with two payments providers, one in the US (Wyre) and one in Europe that covers 33 countries (Coinify). But there are a lot of other partnerships that we need to build and integrations we are developing. For instance, we’re working with Onfido to integrate KYC within our widget– in Celsius’ case we obviously don’t need this since you already work with them, but this will be really useful for other wallets.
Our main product is a drop-in widget that can make it easy for app developers to add a simple, on-rails integration of fiat to crypto. So that includes connecting to banks, liquidity providers, and is different for every jurisdiction. And one of the things I was excited about with Celsius is that we were able to design our integration so that you couldn’t even really tell that you had left Celsius’ app.
Q: What is your opinion on what is going on today in current fiscal policy?
Micah: I think the funny thing is that people keep saying that you couldn’t have predicted what’s been happening, but people in crypto have been predicting a financial situation like this for years. I got into Bitcoin because I saw that it was a scarce resource that couldn’t be printed at will– and it’s always been a hedge against money printing. And I can’t even blame the federal reserve– printing money worked after the last financial crisis, and it’s the only tool in their toolbox– so they’re not just going to let the system melt down.
We see Trump tweeting every day about how “the stock market is at an all-time high, and this is a success story that hasn’t even caused inflation in the markets!” But how does an all-time high in stock and asset prices during a pandemic when no one can go out, spend money, and consume services– how is that not inflation? This is clearly inflation of asset prices.
Alex: And most of this is going to the 1%– most Americans don’t have most of their assets in the stock market. Eventually, the rest of the world is going to stop trusting the US Dollar as we keep printing more and more of it, and a switch to another currency as the world’s currency will be a huge problem for the US. I just don’t think there’s a good way out of this.
Q: What do you think is going to be the last straw financially?
Alex: When you look at how many other fiat currencies around the world are failing or are on the edge– Lebanon, Turkey, Brazil, Argentina. All of the debt from these countries is going to have to be refinanced, and it’s a bunch of dominos. But if all of the dominos start falling, and people stop trusting the US dollar, then you’re going to have to move into a non-correlated asset like gold or crypto. I don’t see it happening tomorrow– maybe in five years– but the fact that the fiat dominos have started falling tells me that it’s much closer than most people think.
Micah: I’m mostly concerned right now because Wall Street has taken the same playbook from the mortgage industry in 2008 and moved them into corporate debt markets, stacking risk on top of risk. And now the Federal Reserve is going out and funding these companies directly and buying corporate debt.
Alex: Since 2008, $3 trillion of corporate debt was used just for stock buybacks. CEOs get a huge bonus when they hit their numbers, and to do this, they borrow debt, buyback stock off of the market, which increases their earnings per share and then pay themselves a huge bonus because they hit their targets. And all they’ve done is borrow money, spend it on their own stock– and now the average American is left holding this debt, because the Fed is buying it up, borrowing money from our children and robbing them.
And so before I get too carried away, thank you for joining us Micah– we’re so excited to be moving forward working with you to enable all of our customers to onboard their fiat.
Click here to see some updates from Alex on Celsius, which we’ve summarized below, again with linked timestamps:
- Investment from Tether– $10 million USD. They decided that we were worth $120 million pre-money valuation, and Tether spent six months doing their due diligence on Celsius. This first valuation is higher than any other lending company, like Compound or BlockFi– and what this tells you is that investors are seeing Celsius as a more valuable company than its competitors, in large part due to the community.
- Funding on BnkToTheFuture– we currently don’t have any more spots left for US investors, but we are going to try and keep it open until we get everyone through the queue, and currently have raised over $16.5 million. We raised this money because of the costs for applying for various licenses in different jurisdictions, as we are expanding everywhere to provide better local service and comply with local laws.
- New incentives following raise– $20/$20 for referring new users, and $100/$100 bonus for new referrals who take loans. Details about this will be live on the website soon.
- Neutrality is not in your best interest– Celsius is not a neutral service like Uber who links drivers and riders, or Compound/DeFi linking up lenders and borrowers. Celsius’ mission is to represent the depositor, and extract as much as possible from the institutional borrowers. Aggregating our users allows us to extract more from institutions than other platforms.
- Back to the Tether Investment– This is the most Tether has ever invested in a single company, and the most that any company has raised post-ICO. Celsius is an exemplary model of delivering on things that we promised in our early whitepaper.
- Twitter FUD– If you have a question about what Celsius is doing, please feel free to ask anyone on the team. We are conducting an audit by hiring an outside service to verify our assets under management (AUM) and also audit the interest that we are earning and the fact that we are paying out 80% of our earnings– so if you wait a little bit, you will see that coming out.
- Why Alex is so passionate about Celsius’ mission– Crypto needs these services that everyone in the world needs. “The Dream” is not having any concerns in retirement– having your money earn enough to pay your bills. Most people can’t earn enough on their savings, or don’t have enough money or fancy advisors, especially in the face of inflation. But if you invest in an asset that appreciates, with compounding interest, and you use the interest (but not the principal) to pay your bills, you will achieve The Dream. There is no way that you can accomplish this with fiat, but with Celsius, you can. We give you options– gold, crypto, and stablecoins, and allow you to earn on all of them.
Q: Are there any plans to work with Gem to reduce the bank transfer fees?
Alex: The fee is currently 0.75% in the US, 1% in the EU– but these are not from Celsius, they come from our providers, and we are working on ways to subsidize them. We can lower fees by showing high usage– with high usage, we can get to a higher tier with lower fees. But I agree with you– I’m not happy about these fees either, I want to lower them just as much as you do. The community needs to grow, the number of transactions needs to grow, and then the providers will improve their fees.
Q: Will there be more supported countries from Gem by SEPA?
Yes, so we heard earlier from Micah that they’re working on African countries and Asian countries as well. Because we do KYC, we can build the bridge over to traditional finance with KYC and AML, making sure we are compliant– but this is so much more work than just allowing everyone to take part. If we don’t keep our community free of bad actors, the regulators will come and crush us for it.
Unfortunately, there are just a lot of restrictions depending on where you live– and this is sadly something we cannot control. We work within the rules that exist– we currently do not have leverage to go to the regulators. But the good news is that the Chief Legal Officer from Coinbase left to work under Steve Mnuchin at the US Treasury and has been advocating on behalf of the crypto community.
Celsius will also be adding GBP support next week, and Simplex also supports many other methods. While Simplex does have fees, if you’re getting money back on your credit card then those fees are a bit more reasonable.
Q: When will be able to purchase more than just ETH/BTC/USDC via ACH?
These are choices are influenced by regulatory restrictions, but we also wanted to start with a small set to make sure everything was working smoothly. But the plan is to add all of the coins Celsius currently offers, and even including ones Celsius currently doesn’t offer yield on.
Q: Can we increase the bank transfer limit?
Yes, the restrictions are currently to make sure everything is running smoothly first. But I think the cap in the US is something like $10,000. We want to make sure there are not any bugs or any holes in the transfer process that hackers can exploit– and our security team at Celsius is definitely the area that we have been beefing up the most recently.
Q: When will be be able to borrow against the CEL token?
We will be adding the ability to borrow against CEL and every coin in your wallet– and this is maybe two weeks away, coming very soon. You will be able to borrow stablecoins or fiat against CEL token– but I definitely don’t recommend leverage though.
If you want to retire with enough money, do not use leverage! You can’t know if a specific asset is going to go down 50, 60, 70%– and we don’t want for you to get liquidated. Don’t let greed prevent you from reaching your goals of retirement– the goal is not to die with the most money, the goal is to make it through the journey. Focus on savings, compounding, and spending as little of your investments as possible.
Q: Could you speak more about Celsius taking a PPP loan?
Yeah, so the US government wanted to encourage US companies to avoid terminating their employees. There’s still tremendous uncertainty– but nothing like it was back in March. We had to shut down our offices, and we didn’t know how the crypto community was going to react– the fact that people gave us more coins could’ve gone the exact opposite way. Everyone could’ve withdrawn their coins, and then we would’ve had to let employees go. So we decided it was in the best interest of our community to take this loan– and this was before we raised the money, so even though we had some assets, and token reserves, it was a very stressful situation and we needed it. I think we did right both by the US government who issued it to us and by our users. I don’t regret at all taking the PPP loan– and we’ve gone by the requirements of the loan, and have even hired more US employees than we had before taking the loan.
Q: What is the best way to get the maximum benefit from Celsius?
It’s different for every person based on your financial situation. If you have lots of cash, obviously you don’t need loans, and you should max out your yield and compounding by depositing into the app. But if you have lots of crypto assets, then maybe it is better for you to take some loans– especially if you have high-interest credit card debt. It drives me crazy when people have high debt on their credit card– they’re wasting so much money paying off the interest on that debt!
Q: Can more CEL token be printed?
No– you can check this yourself in the smart contract itself. That’s the beauty of the smart contract.
Q: Will Celsius offer voting by depositors on which new assets will be listed on Celsius?
We want for our users to vote on everything. There are over 200 consensus mechanisms out there, but I don’t think each community has figured out exactly how to best allow their communities to vote. But this is in our whitepaper, to allow our community to vote on issues.
However, adding coins is not a beauty contest. Our issue is whether or not we can earn yield on it– and so we prioritize assets that can earn yield. So we prioritize these assets that can make our users yield, and people who like these projects are going to deposit and earn interest on it.
Q: How should I decide which coins to purchase as a noob in crypto?
It’s like a zoo! There are so many animals out there, which is the best one? But really, you have to do your homework– see which projects are out there to change the world, and which ones are out to do the best job. And sometimes, the price of these assets can act as a thermometer for how the community feels about the project. I would recommend you pick something that you really like and stand behind it.
Q: Will CEL-on-CEL interest be sustainable when CEL is above $3?
Yes, earning on CEL has to do with the profitability of our process and our ability to earn yield. In two weeks, when we launch lending against CEL token– we will have less tokens we are paying interest on, which means more assets to lend out– so this will allow us to pay even more! My plan is to increase interest on CEL, especially once our users can use CEL as loan collateral. But yes, it is sustainable. More users equals more deposits, equals more loans, equals more interest income, creates higher CEL prices, and keeps the CEL flywheel turning.
Q: What goals have you set within Celsius for the next 12–18 months?
We are here to enable community– instead of spending money on advertising, we want to keep giving back to the community. Give $20 for referrals, $100 for loan referrals, and we hope to increase this even further.
Our job is to get more institutions, and create more partnerships. We are here to enable the community, but the community is the one who is gonna grow this, not us. So if you have great ideas to help us, join us as an ambassador and we will empower you to do that, wherever you may be.
Q: Will we see loans in Euros and support for Euro stablecoins?
Yes and yes, we’ve applied with the FCA– a regulator in the UK. We are partnering with people like Bitwala in Germany and other people in other countries in Europe who hold other licenses, but the plan is to be fully compliant and localized in every country in the world. However, as you can imagine, if that was easy, then everyone would have already done it already. But when we apply in these new places, people look at us like we’re crazy, and we have to explain to the regulators why what we are doing in our users’ best interest.
Want to unbank yourself with Celsius (and get a free $20)?
- Install the Celsius app https://celsiusnetwork.app.link/137247d31d
- Use a referral code during registration: 137247d31d.
- Deposit $200 of crypto or stablecoins
You will earn $20 in BTC once you hold your deposit for 30 days
