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Celsius liquidation: Crypto lending platform repays Maker loan to lower risk

By News

Edited by Lewis Page

06:58, 7 July 2022

Celsius Network (CEL) cryptocurrency
Celsius crypto lending platform repays Maker loan to lower risk – Photo: Shutterstock

Celsius, the crypto lender which halted withdrawals and was reported to have been cutting jobs, has been said to be making loan repayments to lower risks.

Blockchain data indicates that Celsius, which has been making loan repayments since mid June, has so far repaid $183m of its collateralized cryptocurrency debt to Maker.

Maker is one of the largest decentralized lending platforms. Debt was repaid in Maker protocol’s native stablecoin, DAI.

DAI to US dollar

Data also showed that one of the transactions resulted in the release from Maker of 2,000 Wrapped Bitcoin (WBTC) that had been posted as collateral.

WBTC is the compatible version of BTC for the Ethereum blockchain. It is a token with 1:1 peg to BTC, which means BTC holders can easily convert their BTC into the wrapped version and use it across the Ethereum network.

Celsius Network is a peer-to-peer platform for decentralized finance (DeFi) allowing users to borrow and lend, and trade a broad range of cryptocurrencies.

The crypto lending platform supports a broad range of digital tokens including mainstream names like BTC, ETH  and MATIC.

Celsius promises an annual rate of 18% for users who deposit SNX with the lender, according to its website.

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SNX to US dollar

Celsius Network is a custodial asset manager for decentralized finance opportunities, providing regulated access to loans and yield, and takes a fee for that service without exposing users to the hassle and risks of self-custodied crypto

The crypto lending platform promises withdrawals and redemptions in the event users want to exit their positions, but Celsius ultimately manages the positions on behalf of investors.


0.00 Price
-11.320% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 22:00 (UTC)
Spread 0.00000338


0.32 Price
-4.090% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 22:00 (UTC)
Spread 0.0090


2,212.40 Price
-1.250% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 6.00


0.62 Price
-1.880% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 22:00 (UTC)
Spread 0.01168

CEL has seen wild price gyrations since news of liquidity problems on the lending platform emerged, when it put a halt to withdrawals

CEL to US dollar

Two things put Celsius Network in a sticky situation: the use of on-chain leverage and stETH (staked ether).

Celsius accesses leverage through permissionless on-chain DeFI money markets such as MakerDAO to provide users with a low borrowing rate. In other words, Celsius takes BTC and ETH deposits from users and deposits them to borrow DAI.

Maker works in the manner where you put $1.50 of volatile collateral (ETH for example) in and borrow the DAI stablecoin. 

ETH to US dollar

If the value of the collateral falls below a threshold, it is liquidated to repay the loan and prevent bad debt. In short, liquidate your customers’ loans to repay your own. And crypto prices have been collapsing.

Celsius crypto offered robust yields on ETH of 8% using a derivative of ETH known as staked ETh or stETH. stETH is the brainchild of LidoFinance, and does not actually exist yet.

ETH is transitioning to a proof of stake concept, a process known as the Merge.

In simple terms, stETH is a token which will only vest once this update is complete, which according to analysts spoke to recently it could “happen next year at best”.

Markets in this article

Bitcoin / USD
41734.30 USD
-372.9 -0.890%
1.0248 USD
0 0.000%
Ethereum / USD
2212.40 USD
-27.92 -1.250%
0.81428 USD
-0.00995 -1.240%
Synthetix / USD
3.663 USD
-0.099 -2.690%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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