Celsius Investment Thesis — Part 1 — What is the Cel Token (really)?

Hey everyone, my name is Josh. I work as a data scientist in my day job and have been using the Celsius wallet since 2020. Disclosure: I am long Cel Token.

I believe in democratizing investment research, sharing ideas, and working together to make better investment decisions. In light of this belief, I am sharing my personal Celsius investment thesis with the community, in hopes that it will help spur thoughtful discussions and help us all make better investment decisions.

Many of my articles will be a stream-of-consciousness of what I am thinking at that point in time. Some of my investment thoughts WILL change overtime as new information becomes available and as I grow as an investor. Therefore, the purpose of these articles is to help me document my investing journey and I am inviting you to come along with me for the ride!

Part 1 — What is the Cel Token (really)? 7 Comparisons.

I’ve mulled over this question for a really long time, and to me, it’s a really important question to ask because as an investor I need to know what I’m investing in and why I’m investing in it. So, in my first article I’d like to discuss what the Cel Token means to me and what I think are its core value propositions as an investment.

First, the Cel Token is a vehicle to distribute a portion of the cashflows generated by Celsius (the company) to Cel Token holders (HODLers). This is very much like a dividend equity, whereby shareholders are entitled to some portion the company’s cashflows by means of a dividend payment. The mechanics of a dividend stock is like this: The Company earns cash from their operations and then distributes a portion of that earned cash as a percentage of the value of the underlying security to shareholders. For example, if Apple stock is worth $100 and pays a 2% annual dividend, then at the end of the year each shareholder will earn $2.00 in cash by simply owning the stock.

The cashflow distribution mechanics of the Cel Token is different than a traditional dividend stock. The cashflow distribution model is through a combination of: (1) token buybacks, (2) in-kind interest, and (3) earn-in-Cel interest.

To illustrate: Celsius earns cash from its operations, then that cash is used to buy Cel Token on the open market, then those Cel Tokens are distributed to token holders as a cash-like dividend. By comparison, it’s as if “automatic dividend re-investing” were turned on automatically when holding Cel Token. There are other cashflow distribution mechanics as well, such as reduced interest rates on loans, and though this does not give cash to the token holder, it does save them cash when paying back loans.

Phew, that was a long one! In my opinion this first point is really important to understand. Every other point below is more straightforward.

Second, the Cel Token is itself a cashflow producing asset in perpetuity, kind-of like a bond or rental property. Here’s how it works: the Cel Token can be borrowed and interest is paid according the borrowed amount, that interest paid is the cash-flow produced by the Cel Token itself. Perpetuity means that the interest payments don’t have an end date, so as long as you hold the token you are entitled to the interest payments.

Third, the Cel Token is a utility token used within the Celsius Network ecosystem, kind of like a token used in an arcade. Except by playing in the Celsius arcade you are reward with money instead of stuffed animals. Both are good but one is better.

Fourth, the Cel Token provides loyalty perks, kind of like airline loyalty points. These loyalty perks are things like: early access to beta-features, being listed on the Top-200, and extra interest by being in the bronze, silver, gold, and platinum tiers.

Fifth, the Cel Token can be used as instant loan collateral, like a home equity line of credit. It’s fast to get a loan, there’s no credit check, and it’s a great way to collect cash from an asset that has appreciated without having to sell the underlying asset. By the way, the borrow interest rates are incredibly low.

Sixth, the Cel Token can be used as a store of value, kind of like Bitcoin or gold. Cel Token has a fixed supply of 695,658,161 Cel Tokens and at the moment has stable or increasing demand. I think that the “Flywheel Tokenomics” proposed in the whitepaper are really good at maintaining demand for the token and many other writers have spoken at length as to how these tokenomics work.

Seventh, the Cel Token is a promise for a better future, like Tesla (full disclosure, I am also long on Tesla stock, have been holding for several years, and plan to hold into the foreseeable future). In my opinion, Celsius Network’s longterm advantage is their ethos of “Always working in the best interest of their depositors.” And Celsius has a noble mission, to “Enable financial freedom for everyone through the blockchain”. These aren’t just words to the Celsius team, they really mean it, and show it through their business model — up to 80% of revenues back to the community through interest payments.

In summary, the Cel Token is fundamentally a new kind of asset. As an investor it helps to us wrap our heads around something new by comparing it to things we are familiar with. To wrap it all up, here’s a little graphic that distills what the Cel Token means to me as an investment.

In subsequent articles I will present the different metrics and operational milestones that help me monitor the health of this investment .I am a 10x buy-and-hold investor. Based on my current research and information, I have confidence to hold the Cel Token for at least 3–5 years and that it will 10x (sustainably) within that time.

If you’d like to talk further, feel free to reach out to me on Twitter @JoshuaTjo.

My work is unpaid, but if you found it useful, please consider tipping me a coffee, it would be much appreciated.

You can also sign up for the Celsius Network using my referral code. We will both earn $30 in BTC when you make your first deposit of $200 and keep it in the app for more than 30 days.


Image sources:

Dividend stock: https://www.investopedia.com/dividend-stocks-4689744

Bonds: https://www.marketwatch.com/story/how-to-buy-bonds-2016-07-24

Arcade: https://www.groupon.com/deals/arcade-bowlero-corp-sp2021

Cel Token Flywheel: https://celsius.network/cel-token-explained/

I believe in critical thinking.