Deciding Between Celsius.network and Crypto.com
For crypto hodlers who are interested in earning interest on their savings, the two services that, in my opinion, are the best options are Celsius.network and Crypto.com. Both offer compelling propositions for being your choice of savings managers. There are many for whom neither is an option because "not your keys, not your crypto". They are not the audience today.
Crypto.com is likely the larger of the two companies in terms of assets. Depositors are able to collect interest in the Crypto Earn service. You are able to deposit your crypto in Earn for flexible, 1 month, or 3 month terms. I would compare these to money market or certificates of deposit in your traditional bank. Interest rates increase by 2 percent going from flexible to 1 month, or 1 month to 3 month. Thus, you will earn the higher interest the longer you lock up your deposit.
The Crypto Earn service is not intended for traders. Traders will start to get fidgety and scratching imaginary insects if they don't have access to their crypto. The best option for them is the flexible term, which allows for withdrawals. Hodlers, on the other hand, find that Crypto Earn is a great product for growing their assets independently of capital gains. Earnings can be compounded monthly for those who use the 1 month term. Or, earnings can be compounded quarterly for those who deposit for 3 month terms.
The main disadvantage, besides the deposit terms, is that Crypto Earn has minimum deposit amounts. This, again, is similar to certificates of deposit at a bank. Any serious crypto hodler would likely meet these minimums easily.
While on the topic of minimums, Crypto.com does also have their Credit service in which you can use your crypto as collateral to borrow. The credit is up to 50% loan to value on your deposit. According to their website, the minimum loan is $250 with a $500 crypto deposit. I can't verify this as the service is not available to United States residents. Interest rates depend on your level of MCO staking.
Finally, interest on your crypto is paid weekly and in kind. If you deposit BTC, you get paid interest in BTC every week.
Celsius.network does not require terms for depositors to earn interest. Simply having a balance is enough to earn interest. There is no minimum deposit for earning interest, which is paid weekly like Crypto Earn. This actually makes Celsius more convenient for holding dollar cost averaging deposits. You can deposit regularly, which gets added to your balance and increases the interest earned.
I have not been able to confirm that Celsius does not compound interest rates. My understanding is that they only pay interest on what you deposit. If this is the case, it is still not a deal breaker. The advantage that Celsius offers is that it is built around lending money using your deposits as collateral. Your collateral would include your interest earnings. The disadvantage of using Celsius to borrow against your crypto deposits is that the minimum loan is $1000 with loan to value ratios between 25% to 50%. Interest on loans is calculated based on your level of CEL holdings, loan to value ratio, length of the loan, and possibly other factors.
Celsius pays lower interest rates than Crypto.com because they do not offer any other services. Celsius does not have an exchange, debit card, or payment processing service. Thus, they are not able to subsidize interest rates as much. However, Celsius does reward depositors with 80% of profits, which is unusual for a financial service. Some of this benefit materializes in lower interest when borrowing.
One problem I have with Celsius is that they are conscious about compliance. However, the business is better suited to depositors from outside the United States. The Celsius token, CEL, cannot be purchased from the website, nor can it be used to pay interest at a higher interest rate. There are a handful of cryptos that are available to US customers for deposit and interest earnings.
Personally, it is not an easy decision. I like what Crypto.com is doing to make the adoption of crypto more widespread. However, their Credit service is not available in the US. I keep having to liquidate my savings to meet budget shortfalls. Celsius does offer credit service in the US. Their business philosophy is also one which I support. Crypto.com pays higher interest.
It is not an easy choice between the two. They have made good services that can only improve with time as they put more effort into building out their platforms. In the end, I may have to use Celsius for my savings and Crypto.com for spending. The decision will hinge on my ability to borrow against my holdings. If Crypto.com ever brings their Credit service to the US, I would have to strongly consider it again.
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