So after a bad experience with Celsius Network I decided to write about it in order to offer the information to other investors or simply to people who are considering lending their crypto, or taking a loan using crypto as collateral.

First thing first: disclaimer. I did not get paid by anybody and neither did I get any other form of compensation for writing this post (but you are welcome to tip this article :-) I am a customer in good standing of Celsius Network, Nexo, Crypto.com, Coinloan, Compound, BlockFi and a bunch of other centralized and decentralized platforms, where I lend and spend crypto, and I borrow fiat and stablecoins, mostly for personal use, but often also for investment purposes. Ideologically I am biased towards decentralized finance, but from an investor perspective, and being a lawyer, I recognize DeFi still has some technical, legal and business limitations (this is a good subject for another post :-)

So coming back to Celsius Network and Nexo, I decided to try both platforms at the same time. First I loaned BTC on both platforms, then I borrowed 1,500 USD on both platforms, and I repaid the loan after about 45 days on both platforms.

My experience with Celsius Network was definitively sub-par.

When I lent BTC on the Celsius platform and then used the BTC as collateral to borrow USD, I noticed Celsius cancelled some BTC interest credit because I had interrupted the BTC loan before their weekly cutoff date . No warning. Just cancel the credit (!).

When I had to take a loan I went with a Loan to Value (LTV) of 25%, i.e. posted 4 times the BTC value (6,000 USD), to borrow 1,500 USD. I did this to get the lowest debit interest rate. But paying back the loan after 45 days they charged me a whole whopping 6 months of debit interest because the minimum duration of their loan is 6 months, i.e. if you pay back early you still need to pay 6 months interest to them in order to get your crypto released. It took me one whole week to get my crypto back , I needed to interact with an account manager who tried to be helpful, but still I had to go through a series of manual transfers, manually reverse automatic interest debit with the help of Celsius customer service, etc. Their customer service is O.K., but could not offer any reasonable explanation about why I was charged 6 months of interest for a 45 days loan, apart from the fact that this is foreseen in the loan terms. After the loan goes live , the Celsius app nags you every time you open your wallet with an invitation to make your loan payment (even if you just made a payment and next payment is due like in 29 days!). It was clear to me that the moment you take a loan with them they try to make as much interest as they can, and hold on to your crypto as long as they can, putting you through manual withdrawals/payments, making you interact with agents etc. Plus, you only benefit from their best debit interest rate if you make payments in Celsius token (CEL), or stake more than 10% of your holdings in CEL token, which I did. I also took credit interest in CEL when I lent the BTC (in order to have enough CEL to pay the debit interests on the loan and some more). But, when I was left with some change in CEL and needed to get rid of it, I realized it is not easy at all. CEL is listed on Switcheo, Liquid and HiBTC, with a decent liquidity on Switcheo only. On a 30day timeframe the token looks set on a downhill course (maybe linked to Celsius harsh loan terms? hehe), and at the end of the day, when I managed to change the CEL back to ETH, I realized I had made no money in dollar terms lending my crypto on Celsius, and I grossly overpaid (6m of interest instead of 45 days, i.e. 400% more than the low rate advertised) when I borrowed dollars on Celsius Network. Their loan terms are not flexible, forcing you to take their CEL token to get better credit and debit interest rates (respectively when you borrow from them or lend crypto to them), they reduce greatly the value of the savings/earnings because you need to deal in their platform token.

When I lent BTC on the NEXO platform the user experience was different. First, NEXO credits your credit interest on your account daily, not weekly, so you will get paid credit interest until the day you withdraw the crypto from the platform or you post it as collateral to lake a loan (no credit reversals). That is way fairer and more transparent than what Celsius does (weekly compounding and cancelling interest if you stop lending before their weekly cutoff date). Second, when I took a loan at 50% LTV (Nexo does not have the option of 25% LTV like Celsius, but their 50% LTV interest rate is better than Celsius, if you take interest in the same currency in which you lend), NEXO deducted interest daily from the credit line, so in a sense they give you a report of how much they are charging you every day.

Because I took a loan at 50% LTV, I could continue to get credit interests on the BTC which was not used as collateral (I did this on another platform, not on NEXO; Nexo does not pay credit interest on crypto, only on fiat and stablecoins) . The credit interest I made on the non-collateralized BTC offset the debit interest on NEXO. I did have to purchase some NEXO token to pay the debit interests and get a better rate (5.9%), but that was a minor issue, as they let you do it on the platform itself (Changelly integration). This as opposed as to having to open an account on Switcheo to get rid of Celsius' CEL tokens.

Finally, terminating the loan early did not cost me anything. On NEXO they charge full interest on the fist month but if you withdraw afterwards you do it without any penalty.

All in all it was a good learning experience. Neither NEXO or Celsius are optimal for lending crypto. Celsius gives interesting credit interest rate only if you over-collateralize and accept to deal with their token (which is a big turnoff). Nexo is not in the business of paying interest on crypto (presumably for business risk reasons). They give decent rates on fiat and stablecoins (8.6%). Not enough if you ask me, these days you can get 17% on short term payback guarantee loans in rubles and a few other currencies, 8% on peer-to-peer loans on the euro. Both Celsius and Nexo being insured up to 100m USD on their coldwallets, I would say the risk profile is comparable to the best p2p platforms in Europe (Mintos, etc.)

I like the way NEXO uses the oracle. It's predictable. It gives you confidence they have been in the business of lending money for a while. I did not get the same confidence using Celsius. On the borrowing side, Celsius conditions are much worse and would be illegal in most EU jurisdictions. I do not have the time or incentive to get in depth into their trade terms, but as a lawyer, I can tell you I don't like them. They are unbalanced to the side of the lender.

Again, I am not getting paid for this article, but I also do not feel in the mood of being nice to companies which do not deserve it. The above is not investment advice, just my personal experience. Please do your own research before using the platforms mentioned above.