ollowing some heavy debates on our Telegram channel
in regards to Celsius Network between February and April, its CEO Alex Mashinsky has offered to have one member representing our community and signing a non-disclosure agreement in order to get a special access behind the scenes and confirm the veracity of Celsius’ recent statements. Once the NDA was signed, I consolidated around 20 questions from the community. Some were posted on our main Telegram channel, while others were sent to me directly in order to stay anonymous.
Last week, I got the opportunity to talk with Alex. While I’m not able to share every detail, there are certainly things that Alex himself said I could share with the Celsius Community. “We’ve got nothing to hide”, the CEO mentioned. The call actually lasted twice as long as initially scheduled and was explosive! We talked about many different topics and as you can imagine, after closely following this project for eight months now, I was quite excited to talk to Alex for the very first time.
Partnerships & Growth
So, the discussion started right away on partnerships. “Don’t be nice, hit me!”, Alex said. So I explained that some members vividly remember him saying back in December that huge partnerships would be announced in January… and then January passed and nothing…, which was a clear example of over-promising and under-delivering.
When asked about it, it was very clear to me that Alex is trying to complete some of these deals as soon as possible and that he is extremely excited about those, probably a reason why he perhaps talked a little too soon.
Alex shared with me some specific partnerships that are currently being worked on. He told me the names of the companies, the current status and details on the negotiations.
Are some of these partnerships big? No. They are enormous! Now, will they materialize? That’s another question and without any doubt the most important one. What is certain is that today the user base of Celsius is not huge. 92,500 KYC users as of last week, or 28,000 active users. And the reason I mention this is that as a comparison, some of the partnerships could help drastically increase these numbers. With the current organic growth it would take Celsius years to reach 1 million user and even longer for their own target of 100 million users they want to bring into crypto, so while I am a strong believer in organic growth, a few key partnerships could help reach this number in a much smaller (and realistic) timeframe.
Celsius Network & CEL
Celsius Network 2019: User +820%; Assets Under Management +1,100%; $CEL +355%
One of the main concerns mentioned by some of the community members is that Celsius started to use the CEL Treasury for parts of their Interest Payments to users. So we dove into this topic. Why would Celsius use the CEL Treasury? Well, the answer is quite simple. Why would they not. It’s there as part of the White Paper. Since Celsius started to pay interest in CEL Tokens, they were buying 100% of the CEL Tokens they distribute as interest on exchanges. This changed in 2020 and now they will use the Treasury as well. It’s a way to grow the firm.
Again, Celsius has nothing to hide. One employee of the company shed some light on the concept of buying CEL on exchanges. He explained that Celsius likes to buy CEL when prices are low, how they believe to add the most value to the Token price and that they buy at least 50% of the weekly CEL interest on exchanges.
Furthermore he showed me a chart about 2020 and how Celsius bought so far $900,000 of CEL on exchanges & used $400,000 from CEL Treasury. Also he explained to me that even though they buy now less of the CEL interest on exchanges, the $ value of what they buy on exchanges is still a multiple of what they bought 6 months ago.
Too good to be true
As most of you know already, Celsius is stating to give 80% of their revenues back to the community. I explained that when you hear this particular number, it feels like a “too-good-to-be-true” statement. Not only this, but how can we trust that Celsius actually redistributes as much? I could sense the frustration in Alex’s voice, as he explained that indeed, Celsius is not only redistributing 80%, but actually, some weeks, Celsius has been giving back more than 80%. As Celsius Network grew quite quickly, the 20% is now enough to cover for the costs of running the firm.
Alex shared that he doesn’t know any competitor that gives that much and to him, this is a game changer. Meanwhile, some competitors use their investor dollars to subsidize their rates, while Celsius’ distribution is a product of their earnings. This shows that Celsius Network’s model is a sustainable one.
My recommendation to Alex, on behalf of our community, was that while it’s great to hear about this 80% figure all the time, it might be much more powerful to get the actual number. Imagine saying “Celsius redistributed 81.4% in April 2020” or “in Q1 2020.” Whether additional details are shared or not, providing the exact figure would seem like a great move to me.
Meanwhile, I also shared that some are complaining about the lack of transparency.
On the 80% and transparency aspects, Alex explained that Celsius Network is currently being audited by a leader in that space. At some stage, there will be even more information shared with the Celsius community. So the goal is clearly to move forward and continue to share even more information to the Celsius community.
Alex understands that some might want things to take place even much faster, and if you know Alex you know as well how fast he wants to progress. But this is a process and things are definitely moving into the right direction.
On a personal level, I find it highly ironic that some would complain about a so-called lack of transparency while some competitors do not even show the number of KYC & active users (or any numbers for that matter), no Asset Under Management (AUM), no deposits onto the app, no earnings etc. To me, Celsius is the example of an organization that shares beyond what is being asked from a private firm.
So yes, there are reasons to be very, very excited, but again my goal here is not to share any type of expectation that would probably not be met by everyone. As an avid book reader and amateur writer, I know well enough that the power of imagination is always more powerful than reality. So no, I will not tell you that things will be amazing and that you should invest in CEL. As a mature investor, you need to make up your own mind by doing your own work.
But if there is one thing I can say, it is that I’ve received confidential documents that confirm the most important statements from Celsius. Obviously there are more things to discuss but I initially wanted to first cover the most discussed and important items.
I use this opportunity to thank Alex Mashinsky for being an active member of our Community and for having given us this incredible opportunity and to have taken the time to answer questions himself specifically.
The Next Level
Oh, but there is… one more thing. I can reveal to you something that will probably be the source of many, many discussions. Celsius Network has been secretly working on a complete new branding. I’m not talking about an iteration of their design, I’m talking about a totally revamped corporate identity. That means that there will be a brand new official Website as well as a redesigned mobile app. And boy, was I amazed by it!
You would expect it to be modern, right? Yes, it is modern, but it is also so much more than that. If I had to summarize, I would use one word: bold. The new design is bold. It is totally fresh and original and not your usual flat — and often asepticized — modern look you see everywhere. I already know it will spark lots of debates. Some will probably dislike it while some will fall in love with it. And that’s good. You don’t want to be aiming for average. I am beyond excited about that! This will, in my view, take Celsius Network to the next level and bring the A-game to the crypto lending space.
My personal view is that the current strategy of Celsius is heavily focused on the technicality of crypto and on the financial system. I don’t think it’s a message that talks to the vast majority of people. As I mentioned to one employee of Celsius, my girlfriend doesn’t care about the banks or the Fed or inflation. To her, Celsius Network is inaudible. My view is that you have to talk to the individual. How can Celsius change people’s lives? This new design is doing just that, focusing on the human and not on the politics or technology. Of course, crypto enthusiasts — such as me — love to talk about the details, my view is that if Celsius wants to reach 100 million users, they will need to talk about how it can change people’s lives.
And I can tell you it already changed mine.