Alex Mashinsky, the founder of borrowing and crypto lending platform, Celsius, on January 22, 2020, announced in a Twitter AMA (ask me anything), to implement compounding interest on crypto deposits. While making the announcement, Mashinsky said that from February 01, 2020, Celsius would implement the compound interest on the cryptocurrencies deposited in its wallet.
The Celsius Community has requested to introduce the compounding feature so that it could compete with BlockFi and other traditional financial services in the market. Celsius Network commented on the introduction of the compound Interest stating,
“You asked for it, and we delivered! Starting February 1, interest income on crypto deposits will officially be COMPOUNDING! That’s right-all the coins in your wallet will now be earning interest on interest!”
The AMA also announced about other changes that the Celsius Network would go through, like revamped loyalty tiers, ability to lending against EOS tokens, and collaboration with Korbit which was a South Korea-based crypto exchange.
According to a report, after the implementation of compounding interest, if a user makes their first deposit of bitcoin, then they would get APR (Annual Percentage Rate) of up to 8.1 per cent.
A report by a media publication stated that in August 2019, Celsius Network lent $2.2 billion against crypto and became the fastest-growing lender of the cryptocurrency. Later, by November, the overall loan amount was doubled and hit $4.45 billion.
The Crypto-lending platforms are slowly becoming popular among its consumers because it provides them with an opportunity to earn interest in their deposited assets. The platform also enabled the tokens so that it could be used as a guarantee against cash and stablecoin loans.
Celsius Network also offered different interest rates to its consumer for depositing a broad range of popular cryptos like Ether (ETH), Bitcoin (BTC) and Litecoin (LTC) and coins such as Bitcoin Gold (BTG), ZCash (ZEC), Dash (DASH), and EOS. They could even get higher interest rates of up to 10 per cent on a selection of stablecoin.