Celsius, an ethereum-based lending platform, announces today its plans to disrupt the consumer credit industry by enabling quick and easy peer-to-peer loans, swapping out big banks and their exorbitant fees for colleagues, friends or other Ethereum token holders. Celsius will focus its efforts on supporting millennials, the generation that often suffers the most at the hands of credit lending services—a phenomenon we’ve seen recently with the rise of the student and consumer debt in the U.S. Celsius is building the future of consumer credit by migrating credit scores and legacy data to the blockchain and incentivizing millennials to build a new digital identity and credit score that includes their social and digital footprint. This process encourages the creation of a community of lenders and borrowers with lower loss factors and higher on-time payments, enabling greater credit limits at lower interest rates.
Celsius will hold an ICO for its Degree token in January, but the company just initiated its presale of $30 million from accredited investors. Celsius has added many notable names to its advisory, partner and investor groups including serial entrepreneur Jeff Pulver, co-founder of Vonage and VoIP Pioneer; Chris Dannen, founder and partner of Iterative Capital Management; Ismail Malik, founder of BlockchainLabs; Lou Kerner, top blogger on Medium; and Miko Matsumura, founder of Evercoin.
In the U.S., $1.1 trillion, one-half of all the consumer credit issued, is currently controlled by six of the largest banks. Centralized financial institutions like to offer credit to many of their richest clients—those who have well established and pristine credit histories. This trend means that younger generations, such as millennials and Gen Zers, are often not approved for consumer credit and general purpose loans because they have limited credit scores, are in debt from student loans or are spending most of their income on rent in major cities. When and if a millennial receives a loan, he or she is faced with strict payment terms, high annual interest rates and high fees, leading to a modern-day Catch-22. Millennials are subject to very high interest rates, which makes it harder to save or pay off bills, but if there’s a missed payment, the interest dramatically increases and their credit score is immediately impacted; preventing any chance of refinancing or forgiveness. It’s an endless cycle that has caused a huge debt crisis for America’s youth. Celsius’ peer-to-peer lending platform is designed to transform the global consumer credit landscape.
Celsius challenges the status quo of the increasingly monopolistic banking system, especially when it comes to restrictive consumer lending profit-driven policies. Rather than going to big banks that will deny or overcharge them, Celsius allows its members to lend to other members and earn five to 10 times more than what their bank is willing to pay for such deposits. Members can also borrow money from their peers, whether it be for a short-term loan, to help pay off existing credit cards or student loans at much lower rates than existing credit cards or consumer credit lines provide. A borrower shares with the community information in his/her digital profile to obtain the loan; however, the more information one provides, the lower the interest rate and higher the credit they will obtain. In addition, Celsius incentivizes on-time payments, unlike the big banks, which offer higher interest and larger monthly payments when payment is late. The more on-time payments a user has, the lower his/her interest rates will be and the higher their credit limit will be increased.
Celsius offers its users a variety of features, including:
- Peer-to-peer lending: Individuals within the network can apply to receive instant credit from other trustworthy network members, depending on transaction history and digital profile.
- Digital credit score: Celsius will issue each user a credit score based on their digital identity and any other user uploaded data including FICO credit scores and past transaction history on websites such as Amazon and eBay.
- Global Network: Borrowers can leverage guarantors from all over the world who are willing to vouch for them and join their digital wallets to expand their credit limits and lower interest payments.
- Insuring the credit: Celsius provides insurance so that if the borrower defaults, Celsius covers the portion of the principal loan amount for the lender and is responsible to recover the money owed to the lenders.
During the ICO, users will be able to join the platform with a small purchase of Degree tokens. The money collected in the ICO will be used to form a general pool of money, with other funds coming from accredited investors to cover development costs and any initial losses and create a base of capital lending for the organization. The token, however, will be used as a utility or membership token, rather than for security or trade. Upon joining, members will be issued a smart contract with a credit limit and low interest rate within minutes of applying.
“Celsius is attacking one of the biggest problems out there for millennials,” said Alex Mashinsky, founder of the Celsius Foundation, “The banking industry as it is currently formulated fails to offer any real solutions to the current consumer credit and high-interest student debt crisis. Banks have no incentive to fix the problem, as the majority of their profits come from these loans. Celsius offers a real solution and is helping to build the future of consumer credit.”
Celsius has engineered a new global platform to enable peer-to-peer credit lending. Individuals within the network can apply to receive instant credit and apply for loans from other trustworthy network members depending on their transaction history. Using an ethereum-based smart contract marketplace, Celsius is providing an opportunity for everyone to participate in an ecosystem of credit lending. The platform offers peer-to-peer lending bydigital credit scores at low interest rates. Celsius will also enable borrowers leverage guarantors all over the world who are willing to join their digital wallets to our smart contracts to expand a borrower’s credit limit and lower their interest payments further.