Celsius debacle after Terra’s implosion
The DeFi world has been dealing with many controversial news during the past months. Terra’s implosion shocked the market and right after that the business model of Celsius got questioned due to the withdrawal pauses.
TerraUSD and the token Luna collapsed in May and in the next month, on 12th of June, it was announced that all transfers, swaps and withdrawals of the platform Celsius have been paused.
Celsius was referred to as one of the biggest lenders in the community. These events took the whole market into a state of turmoil. Both projects had quite high interest rates. Around 20% was considered for Terra and 17% for Celsius. Thereby, the viewpoint of the market towards projects with high yields have turned more questioning than exciting.
The crypto market was already tumbling and struggling with the upcoming bear market; Celsius and Terra acted as catalysts to accelerate the slump. Based on the data provided by CoinGecko, the total crypto market value used to be around $3 trillion and now it has dropped to less than $1 trillion.
In addition, Celsius was also investing in stETH which is a staking token on Ethereum. But at some point stETH lost its peg to ETH, meaning one stETH was no longer worth one ETH. The value decreases made it hard for Celsius to prepare the funds for the community when they wanted to withdraw. They considered this pause an outcome of the extreme market conditions. Since the announcement, the leadership team of Celsius has been quite silent and the future of the network is uncertain. Many investors are afraid of not being able to access their funds ever again or to lose their homes due to getting liquidated.
Regulations regarding crypto lending
Crypto accounts are not insured by FDIC and if a lending platform gets hacked or goes bankrupt the users will lose all their money. What happened with Celsius might create a negative atmosphere regarding the regulations; however, we need to keep that in mind that failure happens in all the industries and not all the projects are here to stay. The decentralized finance strategies of Celsius might have failed but it does not mean all the other projects which are doing the same will eventually go down. It goes back to the theory of the survival of the fittest.
Paycer’s approach to the situation
After getting the banking license partnership, Paycer will be considered a regulated neo-bank which ensures the safety of the customer’s funds. The market is entering a crisis era which is full of fear and negativity; nevertheless, Paycer goes forward stronger than ever, and we have been delivering positive news regardless of the unsatisfactory situation of the market.
We believe that some companies, influencers, and community members of the crypto space will get filtered during these tough times and the fundamentally strong projects and communities will come out of this stronger than ever.
About Paycer
Paycer’s goal is to aggregate DeFi investments multi-chain and make them available to users without the need for their own wallet nor the expertise. This should allow anyone to generate a passive income in a world where banks no longer pay interest. Hence the Paycer team is developing a bridge protocol for DeFi and TradFi to combine the best of both worlds and make it available for retail clients #CeDeFi. Apart from the technical matters and the creation of a super easy to use final product. The goal is also to create a regulatory framework that allows the legal operation of a DeFi platform within the EU first and subsequently in other regions.
Currently, a DeFi platform is already available on paycer.finance on which Paycer tokens PCR can be claimed and staked. More features will go live soon. At the moment on Polygon but other blockchains will be integrated in the near future. Paycer is also working on a banking partnership to be able to combine DeFi with a traditional bank account. In addition to the development of the DeFi platform, the development of the final consumer product is also in progress.
Be sure to follow Paycer on social media for all the latest updates on product development. We have further exciting announcements to share very soon.
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