Celsius Suspends Operations

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The bear market is taking out anything that has shown any bit of weakness, Luna has been the big failure of this cycle, but that contagion is still yet to work its way through the system. We're already seeing TRON's USDD peg break, while Neutrinos USDN peg is also taking a clobbering.

But the biggest peg break of all and one with the most fallout is the stETH peg, a synthetic asset used to stake ETH on the POS beacon chain and still have access to the value of that ETH.

Where does the money come from?

Celsius Network's popular lending platform offers massive yields to its users but to get that attractive returns, they've been taking on massive risks, like aping funds into Luna, MakerDAO, stETh and other DEFI protocols to farm rewards and then using that to pay weekly returns to the rehypothecated funds.

Now when people are flush with cash, deposits tend to cover withdrawals and gives you breathing room to take risk, but when redemptions outweigh deposits, you are forced to liquidate assets to cover redemptions.

As liquidity withdraws from the market, these business operations margins get crushed and if you don't have runway or buffers you're going to run into trouble, which is what's likely to have happened to Celsius.

Cel token getting sold off

To add further insult to injury Celsius also has a native token CEL, which they are basically responsible for maintaining buying for or it goes to zero, putting more pressure on their capital.

As trust in the platform erodes and risk appetite dries up, trying to hold up CEL token has become a harder proposition.

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Celsius calls time out

Due to the number of redemptions, Celsius first paused showing its outflows and inflows which is used to publish weekly while this week they've paused all operations. Capital can't go in or out, and to me, this is more of a default than anything else.

People are obviously freaking out now thinking their funds are no longer SAFU which was always the case when you take on custody risk, but now it means something because you can't pull out your funds.

I don't feel for these people one bit, if you want to chase yield you have to pay the price. If you don't want to verify and you want to trust, you have to pay the price for your poor decisions.

A scramble for cash

Celsius is a big player in the crypto market and if it goes under, it could have widespread ramifications as that capital is liquidated putting further selling pressure on the market and could pull others down with it.

So there will be an incentive to save it, who will? I don't know but we'll see.

Nexo has already offered to buy their books and provide liquidity for customers but the initial offer was rejected.

The amount of victims in the shitcoin spice is going to increase, and while the maxi's warned you, everyone thought they were born on 3rd base and hit a home run. Now they're realise they were never even in the stadium and left out in the cold.

Sources:

Have your say

What do you good people of HIVE think?

So have at it my Jessies! If you don't have something to comment, "I am a Jessie."

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8 comments
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Hahah shitcoin spice, here’s the southern grandma again! :D

I didn’t keep up too much with what Celsius was doing and how but did leave a little bit of funds on there. It would suck to lose them but that’s the gamble nature of it. It wasn’t anything to freak out about but would still be a shitty loss nonetheless. I wonder if I can write it off at the end of the year in taxes or not if it is gone lol.

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Lol I have no clue, would be interesting to see if the government gives you an "out" for investing in a ponzi, as far as I know here, you eat the losses straight up, otherwise anyone could just stay they invested in scams and lost money to earn a tax write off

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(Edited)

this bear market is showing which projects are solid and which are not. Hive will hold up without problems.

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Lol Surviving means nothing if all you're doing is fading into obscurity, how many people are using tumblr these days? It "Survived" and where is it today

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CEL was such a trade lately, but unfortunately, I haven't jumped in it.

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Lol don't worry, you'll find something else to get rekt on

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Generational top was November 11-21, 2021. The house of cards started falling apart immediately after. We're all so resolutely fucked it's not even funny anymore.

I have no mouth and I must meme.
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