Celsius Network is facing a liquidity crisis (95% confidence interval given public info)
Here's why this matters to "depositors" who have loaned their coins to Celsius
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Here's why this matters to "depositors" who have loaned their coins to Celsius
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👇🏼 🧵
What is a liquidity crisis?
A liquidity crisis is when an entity has a lack of withdrawable assets or "easy to convert" assets
This thread will focus on how #CelsiusNetwork has all the characteristics of a liquidity crisis
A liquidity crisis is when an entity has a lack of withdrawable assets or "easy to convert" assets
This thread will focus on how #CelsiusNetwork has all the characteristics of a liquidity crisis
How do such crisis occur?
Liquidity crisis can stem from:
1. large losses
2. mismatch in liquid liabilities and illiquid assets
3. increased demand, decreased supply of liquidity
Liquidity crisis can stem from:
1. large losses
2. mismatch in liquid liabilities and illiquid assets
3. increased demand, decreased supply of liquidity
1. Liquidity crisis can come from large losses
Celsius has lost $70m in a hack
Celsius has lost $70m in a hack
Celsius Network lost another $50m in another hack
Celsius also lost some funds held in LUNA and Anchor Protocol, although according to official sources, these amounts are not life threatening.
Through onchain analysis, it's been found that Celsius Network is the direct culprit for starting the LUNA UST depeg crash that has caused multiple suicides among crypto bros.
So at least $120m of depositors' funds have been lost. This is definitely expected to be more since Celsius has not been forthcoming on their total losses to portfolio.
2. Liquidity crisis can come from mismatch in liquid liabilities and illiquid assets
Only 27% of its ETH is not locked up
If the merge fails or gets delayed, Celsius is grandly f*cked by further illiquidity
Only 27% of its ETH is not locked up
If the merge fails or gets delayed, Celsius is grandly f*cked by further illiquidity
3. Liquidity crisis can come from increased demand, decreased supply of liquidity
Their asset under management is dropping in BILLIONS and counting
Their asset under management is dropping in BILLIONS and counting
It is calculated that 50k ETH per week is being withdrawn. Investigators calculate that redemptions can only continue normally for 5 more weeks at this rate before Celsius defaults or bankrupts
So Celsius Network and Russian born CEO Alex Mashitskyy has managed to fulfil all the criteria to start a liquidity crisis
1. large losses (YES)
2. mismatch in liquid liabilities and illiquid assets (YES)
3. increased demand, decreased supply of liquidity (YES)
no bueno
1. large losses (YES)
2. mismatch in liquid liabilities and illiquid assets (YES)
3. increased demand, decreased supply of liquidity (YES)
no bueno
Now that we know the bad shape of Celsius Network, let's look into our otter crystal ball and try and foretell the chain of events that will happen
Thankfully, liquidity crises happen all the time. Let's dive in
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Thankfully, liquidity crises happen all the time. Let's dive in
👇🏼
First, Alex Mashitskiyy will first try and block withdrawals of assets.
This part has already come true, with a suspicious HODL MODE that only allows users to withdraw after they jump through more hoops. This buys Celsius Network some valuable time
This part has already come true, with a suspicious HODL MODE that only allows users to withdraw after they jump through more hoops. This buys Celsius Network some valuable time
To the fools and paid shills that parrot #Celsius's claim that they are trying to root out people abusing the referral promo campaign
Please think critically
The way to stop that problem is to nerf/cancel the referral campaign
Not blanket hold many users' funds hostage
Please think critically
The way to stop that problem is to nerf/cancel the referral campaign
Not blanket hold many users' funds hostage
Second, rats will flee the sinking ship.
Insiders who can clearly see what's going on will start to leave.
In this case, Celsius has already lost its auditor. Losing the auditor is a MASSIVE RED FLAG
Insiders who can clearly see what's going on will start to leave.
In this case, Celsius has already lost its auditor. Losing the auditor is a MASSIVE RED FLAG
Third, users' trust in the organization will be eroded
Regardless of the amount of coins in custody, as long as a trust crisis occurs, a game of reverse chicken happens
The first who loses trust and withdraws gets the full sum back
The most trusting fools lose their funds
Regardless of the amount of coins in custody, as long as a trust crisis occurs, a game of reverse chicken happens
The first who loses trust and withdraws gets the full sum back
The most trusting fools lose their funds
Fourth, valuable info like what's in this thread will spread and leak out on how severe the liquidity situation actually is, which will further erode trust.
It will be impossible for retail users to fully trust Celsius again...
It will be impossible for retail users to fully trust Celsius again...
... which will further exacerbate the liquidity crisis.
After all, even small termites can collapse a large wooden bridge.
The fuse is burning and it is a matter of time before this explodes over.
After all, even small termites can collapse a large wooden bridge.
The fuse is burning and it is a matter of time before this explodes over.
Fifth, the chain reaction sets off. Once the customers' trust reaches a critically low value, a bank run will happen, because no one wants to be left bagholding a $120m loss by Celsius with their own money.
Everyone rushing out will realize how small the emergency exit door is.
Everyone rushing out will realize how small the emergency exit door is.
Sixth, smart money whales move first and withdraw their large funds. Once a whale withdraws from Celsius and sells their stETH, the death spiral will begin.
450,000 stETH has a 45% slippage while trading to ETH on @CurveFinance
Not saying that it will all be swapped in 1 go
450,000 stETH has a 45% slippage while trading to ETH on @CurveFinance
Not saying that it will all be swapped in 1 go
@CurveFinance It would be naive to think that this chain reaction of
bear market losses > illiquidity > auditor rage quit > users lose trust > bank run > death spiral
will not happen because its a fat tail event
LUNA/UST has shown us how badly investors gauge fat tail event risks
bear market losses > illiquidity > auditor rage quit > users lose trust > bank run > death spiral
will not happen because its a fat tail event
LUNA/UST has shown us how badly investors gauge fat tail event risks
@CurveFinance Please protecc your friends and yourself by sharing the first tweet in this thread.
I spend time to investigate and write these not to FUD, but to point out the insane risks people are holding in supposedly safe investments.
UNSECURED LENDING TO CELSIUS IS NOT SAFE!
I spend time to investigate and write these not to FUD, but to point out the insane risks people are holding in supposedly safe investments.
UNSECURED LENDING TO CELSIUS IS NOT SAFE!
@CurveFinance Once again, credits goes to the top minds in this CT space, braving the paid shills reply guys to investigate and sound the alarm for retail folks like you and me.
@mikealfred
@SilvermanJacob
@yieldchad
@SultanDman
@bigshortbets
@kiki520_eth
@mikeburgersburg
@mikealfred
@SilvermanJacob
@yieldchad
@SultanDman
@bigshortbets
@kiki520_eth
@mikeburgersburg
@CurveFinance @mikealfred @SilvermanJacob @yieldchad @SultanDman @bigshortbets @kiki520_eth @MikeBurgersburg To the people in the replies who allege that I am a paid FUDDER
Please think critically; who would pay me?
My motivating factor in sounding the alarm is to minimize the fallout when Celsius inevitably hurts investors who thought they have their investments in a safe place
Please think critically; who would pay me?
My motivating factor in sounding the alarm is to minimize the fallout when Celsius inevitably hurts investors who thought they have their investments in a safe place
@CurveFinance @mikealfred @SilvermanJacob @yieldchad @SultanDman @bigshortbets @kiki520_eth @MikeBurgersburg This thread above is a continuation of my previous thread on #CelsiusNetwork, which you can find here
@CurveFinance @mikealfred @SilvermanJacob @yieldchad @SultanDman @bigshortbets @kiki520_eth @MikeBurgersburg You can read the unrolled version of this thread here: typefully.com
hehehe 30 likes. thanks for appreciating your otteroooo threadoooor
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