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Celsius – The P2P Decentralized Credit Protocol Built On Smart Contract Technology

celsius consumer credit blockchain

The modern credit system is a mess, particularly for millennials and the Generation X youths.

Unlike previous generations, today’s youths can only hope for the best in buying or even renting a house because of the flawed credit system; the simple act of opening bank accounts is still a tedious task for many as they do not have credit nor do they save money enough money to do so.

Aside from the youths, estimates suggest that there are nearly 2 billion people in the world who are unbanked (individuals who don’t have access to banking and financial services).

The situation gets even more depressing when you consider that even individuals who earn a consistent salary cannot get enough credit for good financing options.

With the advent of the blockchain and cryptocurrencies, however, financial services, especially in the lending sector, are starting to improve for the better.

Smart contracts and the inherent properties of the blockchain enable financing options to be served globally with lower fees and better efficiency to many individuals, even to underbanked and unbanked individuals.

The blockchain, however, has several limitations.

For Bitcoin, the cryptocurrency has only been partially adopted recently and even then, they’re primarily accepted as forms of payment which makes it limited functionality-wise; legally, it is still a grey area in many countries.

In Ethereum, smart contracts are light years ahead of normal contracts but they are immutable which means that it cannot be fixed at all by anyone in the case of errors or bugs.

At the same time, smart contract codes have to be flawless as it can be hacked and manipulated by attackers otherwise, leaving absolutely zero room for error.

Introducing Celsius

celsius logoCelsius is a P2P and blockchain-powered global credit network designed to improve the efficiency of modern credit and financing systems.

The main goal of Celsius is to create a modern platform for P2P lending while developing a future-proof protocol for the upcoming generation of financial services; instead of being a centralized platform, Celsius will be powered by a collaborative community of members globally.

Aside from that, Celsius aims to deliver the best financing options for both lenders and borrowers by promising attractive interest rates as well as easy access to all financial services.

With offices in a series of cities including New York and London, Celsius is led by Alex Mashinsky, the company’s CEO with an extremely impressive resume behind his back.

Mashinsky’s previous experiences include the foundation of GroundLink, Transit Wireless, Elematics, and Arbinet, amounting to a very impressive $3 billion in exit deals.

How does Celsius work?

There are 4 types of loans in the Celsius platform:

  • The platform will enable millennials to establish a digital credit score and be issued a credit line; the credit can then be accessed by a sponsored credit card from Celsius.
  • Celsius will also allow the platform’s users to expand their credit limit against their own cryptocurrency asset holdings they have at Celsius. The extended credit can be easily accessed through several options.
  • Members can also choose to lend any cryptocurrencies they own and earn up to 5x the normal interest rates they get from banks.
  • Finally, members can borrow cryptocurrencies in a secure and transparent manner

  • To safeguard the platform’s ecosystem, both lenders and borrowers on Celsius are verified and carefully selected to prevent fraud.

The platform’s services and products are primarily targeted to millennials as the platform believes that the group is the generation that struggles the most with the current credit scoring and financing systems.

So, how does the platform really work?

All credit scores and history of users will be recorded and verified on the blockchain which is then used to create unique digital identities for clients. The same identity will include the client’s social and digital footprint for verification purposes.

What this digital identity does is to encourage the creation of a community of lenders and borrowers with lower-risk levels and one that settles loan payments on time.

With this system, Celsius hopes to provide higher credit limits, lower interest rates, and a better overall financing experience to borrowers at the end of the day.

celsius ethereum member credit

For new users, they will be automatically issued a smart contract with a credit limit and a low-interest rate just for signing up.

As mentioned earlier, users can lend their assets to other members and earn interest rates that are higher than what a traditional bank offers. This works both ways as borrowers also pay lower interest rates than what a bank would offer.

This is only possible as Celsius eliminates intermediaries (like banks) completely which removes the exorbitant fees and lengthy processes involved.

Lenders may worry about borrowing their money to risky individuals, but that’s not a problem within the Celsius platform.

Each user in Celsius is assigned a credit unique based on their unique digital identity. Unlike normal credit scores, users have the ability to improve their own credit scores by uploading financial proofs.

For example, a user may upload his or her past transaction history on websites like eBay or Amazon to better their credit score.

In the rare case that a borrower defaults, Celsius has an insurance platform built-in to protect lenders.

With the insurance system, Celsius covers a portion of the principal loan amount for the lender; after that, they’ll take necessary actions to recover the money on behalf of the lender.

Celsius will arrange a smart contract with multiple lenders to consolidate funds for a single loan to an individual. In this way, multiple lenders can limit their individual default exposure while still being able to extend loans.

The Celsius token sale

The Degree (DEG) token is a utility token for the Celsius platform.

Token holders will be able to join the platform while the money collected from the pre-sale and token sale will be used to form the initial base of capital lending for the platform.

Here are the details of the upcoming DEG token sale:

Token name: DEG

Token base: Ethereum (ERC-20)

Token supply: 1,000,000,000

Token sale duration: 25th of January, 2018 – TBA (pre-sale is currently LIVE)

Token sale target: $100,000,000 (hard cap)

Token exchange rate: $0.20 = 1 DEG

Celsius’s Website

Celsius’s Whitepaper