Why Celsius can offer loan at 1% and give 6 % at interest…

Celsius har ansökt om företagsrekonstruktion coh stängt av all verksamhet så länge. Har du tur får du pengar tillbaka…. Ta det försiktigt och kom ihåg – Not your keys….


Celsius is one of my favourite services in De-fi. I get interest at my crypto and they give loans to people that want to loan money with safety in crypto. When they start to offer loans for 1% and still give 6-8 % in interest I was wondering – what is that? Can I borrow money – put them in savining – and get more from it. Of course not – but it took me some time to figure it out.

4 Times in safety

If you want to borrow 1000 USD from Celsius you need 4000 USD as a safety. That cryptos will be locked until you have payed back the loan. If you don’t pay back Celsius can sell your crypto and get money from it.
But crypto that you use at safety will not give you some interest. And here we find the big reason why “loan to save” is not a good way.
You will not get the interest

If you take loan over 1 year you have to lock 4000 USD in crypto in that year. If it is BTC you will not get the 6 % interest that you can get if you just save it in Celsius. That is 240 USD that you don’t get.
And the same time you get 1000 USD and have to pay 1 % for that in USD. That is 10 USD.
LOAN – Miss 240 USD and PAY 10
But it matters what you do with your 1000 USD. Where are the price of BTC going?

Change of value is the key

In this example you use BTC as safety for the loan.
If you think value will go up more than 20 % in a year
You can take a loan at 1000 USD and lock up 4000 USD in BTC for that loan. You buy BTC for this 1000 USD. If the value goes up 20 % you earn 200 USD and pay 10 USD for it. = +190
If you think value will go up more than 30 % in a year
You get 300 USD – 10 = + 290 USD
If you think value will only go up 5 %
You just keep it in savingmode and get your 6 % and that is + 240
Maybe I have calculated something wrong but the point is that this loan is only good IF you think the price of BTC will go up very very much lot in 1 year. If not – it is better to just take the interest.

And – Do you (like me) dont like the new profile that celsius have? I do not like this young, cool and chewing chewinggum style. It looks more like a shop for candys than a unbank-service