BTC PULSE
No Result
View All Result
Play Now
No Result
View All Result
BTC PULSE
No Result
View All Result
Play Now
Home Blockchain

Celsius Network Blasted for operating like a “highly leveraged hedge fund.”

by Dalmas Ngetich
Jun 15, 2022 - 12:00 am
in Blockchain
Celsius Network Blasted for operating like a "highly leveraged hedge fund.”

The Celsius Network has recently received lots of criticism following the loss of millions the protocol experienced in the ongoing bear market. Lucas Nuzzi, the head of research and development at Coin Metrics, was particularly displeased with the protocol’s approach to investment. He blasted the network for exposing investors’ funds to risks that are not worth the marginal yield.

Celsius calls itself a "network" or a "lender"

But in reality, they operate more like a highly-leveraged hedge fund.

Their business model consists of deploying user deposits across DeFi protocols with the goal of maximizing yield.

1 A thread on what went wrong 🧵 pic.twitter.com/MQgLN3xAE5

— Lucas Nuzzi (@LucasNuzzi) June 14, 2022

Celsius’ Investment Framework

Celsius serves as an investment intermediary for cryptocurrency users. The protocol accepts funds from investors in BTC, ETH, SOL, and some stablecoins, then stakes these funds in DeFi protocols to earn appetizing gains. Celsius then returns a part of the profit to investors while keeping some profits.

Lucas Nuzzi pointed out that Celsius’ investment framework was solid during the crypto bull run. However, the network has failed to maintain its clean sheet recently.

Last December, the network deployed WBTC to the BadgerDAO protocol but eventually lost about $120 million worth of WBTC when the protocol was hacked. Undoubtedly, investing so much in a protocol that young raised many questions for the Celsius network.

Celsius also had investments in UST worth $500 million or more. The investment protocol was able to pull out some millions before Terra’s UST crashed to zero. However, losses were incurred in millions of dollars already, again, with funds from investors.

It seems the storm is not over yet for Celsius, as it currently battles against liquidation. Celsius has 24K BTC in Maker Vault, and the downward spiral of BTC means their holdings may get liquidated soon.

Interestingly, the network has been actively adding BTC to its position recently, with over 6K BTC added in the last two days to prevent liquidation. The current liquidation price for its BTC holdings is $17,000 per BTC. As it stands, no one wants a trend reversal for Bitcoin more than the Celsius team and its investors.

Finally, Celsius holds $500M worth of stETH. Its stETH holdings cannot be unlocked until the ETH merge is complete. The protocol is running out of funds, and if the ETH merge is further delayed or the market conditions keep worsening, Celsius will pay heavily for its poor investment strategies.

Tags: BlockchainCrypto
Dalmas Ngetich

Dalmas Ngetich

His primary focus is on technical analysis (crypto is, obviously, *not* crypto without the twirls of price action), the magic of DeFi, and NFTs. He is specifically training his eyes and effort on DeFi—and how the tech is changing investment, opening up opportunities for everyone—and the possibilities of NFTs.

Related Posts

Exterior view of the Czech National Bank building in Prague, symbolizing the institution’s financial strategies and innovation.

Bank of England Governor Says Stablecoins Could Reduce Reliance on Banks

October 1, 2025

Andrew Bailey says stablecoins could reduce UK reliance on commercial banks by separating money from credit, signaling a...

blockchain

Spacecoin Executes First Blockchain Transaction Through Space

October 1, 2025

Spacecoin has achieved the first-ever blockchain transaction through space using a nanosatellite, marking a milestone for decentralization and...

The headquarters of the Autorité des Marchés Financiers (AMF) Investor in Paris, France, the regulatory body warning investors against ByBit.

French Officials Pressured Telegram to Censor Moldova Election Posts: Durov

September 28, 2025

Pavel Durov revealed French intelligence pressured Telegram to censor Moldova election content in 2024, which he refused, citing...

Wall Street financial district with Bitcoin symbol representing institutional adoption

Bitcoin skepticism fades as nations gear up for adoption, says Samson Mow

September 28, 2025

Samson Mow predicts nation-states will move from skepticism to rapid Bitcoin adoption, fueling global FOMO and a rush...

View All
BTC-Pulse LogoTransparent

© 2024 BTC-PULSE. Disclaimer: The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.

Info

  • Learn
  • Price Prediction
  • Events
  • Press Releases
  • Sitemap

Company

  • About Us
  • Terms of Service
  • Privacy Policy
  • Contact Us
  • Advertise

News

  • Altcoins
  • Bitcoin
  • Ethereum
  • NFT
  • Regulation
  • WEB 3.0

©2024 BTC-PULSE – All right Reserved.

No Result
View All Result
  • About Us
  • Advertise
  • BTC-PULSE
  • Contact Us
  • Events
  • Privacy Policy
  • Sitemap
  • Terms of Service