The Corporate Perspective
One of the leading crypto lending platforms, Celsius, has recently been all over the internet as having locked all financial transactions. Last Sunday Celsius announced that they were “pausing all withdrawals, swaps, and transfers between accounts to put Celsius in a better position to honor their withdrawal obligations to their customers.
While from a business perspective this doesn’t necessarily bode well for the company or its community of users, it’s important to remember that all this upheaval is happening in the midst of a bear market and what seems to be an overall global economic slowdown. Which, from a market perspective, we want to assure you that this downturn will end. Just like any market fluctuation, this economic slowdown, and bear market will have their end and a bounce back will occur. In light of the slowdown, however, it is understandable why so many companies: Celsius, Finblox, etc. are freezing financial transactions, imposing withdrawal limits, and curtailing, temporarily at least, the financial rewards promised to their customers. This isn’t to say that it is good, it isn’t, but it is understandable. They operate in the world of crypto lending, borrowing and trading. This means that these companies are taking customer funds and lending them out to generate revenue. Third parties can borrow this crypto in an un-collateralized manner most of the time and trade or use other financial operations with it. Hence these third parties can stake the crypto borrowed on other DeFi or CeFi platforms, which creates leverage and issues in case of asset/liability management. Vulnerabilities occur when companies do not take extra precautions and over-collateralize their assets when working in lending or to make sure that their asset liabilities are well matched. The reported problem with the aforementioned companies is that they do not have the solvency needed to support their operations in the future, or pay their current debts.
It’s important to remember that when companies do begin putting in these protective measures, it is both for the longevity of the company, and to also ensure that all their users are able to get the money that is theirs back into their own accounts. Given that these security measures should be an industry standard, it is the best kind of process they can offer.
The Needed Out
Now, while their actions are being put in place in order to protect all their clientele, it also shows either a lack of oversight or simple market miscalculations that can affect any business in the financial industry we are all functioning in. That isn’t to say there is no better way, however, and this is where Coinchange comes in to shake everything up. At Coinchange, the other side of our product is purely DeFi. We do not participate in the lending, borrowing, and trading of assets with CeFi counterparties or any other hedge funds or trading firms. Your assets are always on-chain and are always monitored by us. Our yield-generating strategies are price agnostic and do not involve timing the market. We deploy capital to the most liquid DeFi protocols, generating yield according to market traction as a whole.
Due to the fact that we spread out our protocols, not just over 8 or 10 different protocols, but 15 different protocols that have all been thoroughly researched and vetted by multiple DeFi researchers, all our users were able to earn yield even during the Terra USD crash. It may have slowed down yield rewards a smidge, but not in any real detrimental way.
As we’re always over-collateralizing and managing the asset/liability of all of our assets, in addition to the continued earnings despite the Terra crash, when we say the money of our users comes first, we mean exactly that. We always have the solvency to back up all of our users’ holdings, and our researchers are always working. Literally, they work day and night. Our staff is from all over the world so we’re actually working for you 24 hours a day! The most important thing to remember however is this: the bear market, just like the recession that is looming over us will have its end. Markets always fluctuate with ups and downs, and they will most likely continue to operate in this manner. When it comes to earning yield and rewards on whatever you chose to invest in the crypto market, be aware that you have options like Coinchange. I can’t speak to others, but we are operating with proprietary algorithms that are always being improved to enhance earnings, by a team that is actually working for you 24 hours a day, and are always ready to ensure that our users are always benefitting despite market trends.