A Deep Dive into Earning In-Kind versus In-CEL

We are asked this question periodically. Should I earn in-kind or in-CEL for assets in my Celsius Network wallet?

In this deep dive, we explore the differences in Return on Investment (ROI) when you choose to earn in-kind or in-CEL. With the Celsius Loyalty Program, international users can opt to earn ‘bonus reward rates’ if they choose to earn their rewards in-CEL tokens. The amount of bonuses depend on your Loyalty Level and the current bonus structure is as follows:

Loyalty LevelCEL RatioBonus
Interest
Rewards
Platinum25% – 100%25%
Gold15% – 25%15%
Silver10% – 15%10%
Bronze5% – 10%5%
No Loyalty0% – 5%0%
Loyalty levels are dynamic and will change with changing wallet balances. This includes new transfers and withdrawals as well as market fluctuations (i.e. change in asset prices). Please note that US Users are unable to take advantage of bonus reward rates at this time.

In our deep dive, we take a look at earning rewards on your USD Coin (USDC), a stablecoin that is pegged 1:1 to the USD. We will explore the differences between:

  1. earning in-kind versus in-CEL (for all Loyalty Tiers) over a one (1) year period
  2. earning in-kind versus in-CEL (leaving as CEL) versus in-CEL (converting CEL rewards back to a stablecoin) over a one (1) year period for Platinum Level only
  3. earning in-kind versus in-CEL (leaving as CEL) versus in-CEL (converting CEL rewards back to a stablecoin) over a three (3) year period for Platinum Level only

The Assumptions

As with any deep dive, we need to make assumptions in order to calculate return on investments and make snapshot comparisons. Numbers, reward rates and returns are subject to change at any time. Here are the assumptions we’ve made in our exploration:

  1. Initial Investment is 1,000 USDC which is equivalent to $1,000 USD
  2. USDC reward rates for international users is 8.88% APY in-kind or 11.21% APY in-CEL
  3. APY reward rates are based on weekly compounding over 1 year.
  4. In the examples where a user converts their in-CEL rewards to a stablecoin, the expectation is that this conversion happens as soon as the rewards are paid out
  5. No changes in Loyalty Level during the time period analyzed (dependent on the users’ CEL Ratio which includes deposits, withdrawals and asset price changes)
  6. USDC market price should stay at 1:1 with the USD. However, CEL token price fluctuates. Therefore, the total return on investment will ultimately depend on the CEL token price. If CEL goes up, your ROI will be higher. If CEL goes down, your ROI will be lower.

We will give you a summary for each of the 3 comparisons in addition to an explanation. The actual spreadsheet calculations and numbers are posted at the bottom of this article for reference.

Deep Dive #1:
In-Kind vs In-CEL Over 1 Year

Reward
Type
Loyalty
Level
ROI
(1 Year)
ROI
(Comparison)
In-KindAll8.88%
In-CELPlatinum10.90%22.72%
In-CELGold10.03%12.98%
In-CELSilver9.60%8.07%
In-CELBronze9.16%3.15%
In-CELNone8.90%0.16%

As you can see here, the ‘bonus’ rewards (ROI Comparison – far right column) for choosing to earn in-CEL do not directly reflect the ‘bonus’ rates for the Loyalty Levels. For example, the ‘bonus’ for having Platinum Loyalty and choosing to earn in-CEL is 25%. However, after 1 year, your ‘bonus’ ROI amounts to 22.72%. Why is this?

This is because the USDC is earning at a rate of 11.21% APY in-CEL. The rewards are paid out in CEL tokens every week and continue earning rewards weekly, but at a lower rate of 4.86% APY in-CEL. Therefore, the rewards are earning at a lower APY compared to your initial principal (USDC).

The same goes for every Loyalty Level. The Gold Level users can get a 12.98% ROI (compared to the 15% ‘bonus’ rewards advertised). The Silver Level users can get a 8.07% ROI (compared to the 10% ‘bonus’ rewards advertised) etc.

As mentioned in The Assumptions, we are assuming that CEL token price does not change. If CEL goes up, your ROI will increase. If CEL goes down, your ROI will decrease.

Deep Dive #2:
In-Kind vs In-CEL (leaving as CEL) vs In-CEL (converting CEL rewards to stablecoin) over 1 Year

Reward
Type
Loyalty
Level
ROI
(1 Year)
ROI
(Comparison)
In-KindPlatinum8.88%
In-CEL
(leave as CEL)
Platinum10.90%22.72%
In-CEL
(convert to USDC)
Platinum11.11%25.12%

A Celsius user can choose to convert their in-CEL rewards (CEL tokens) back to a stablecoin on an external exchange and then redeposit into their Celsius wallet. If they keep that stablecoin earning in-kind, then they will effectively receive 8.88% APY in-kind (stablecoin) on their CEL rewards. This is a higher APY when compared to the 4.86% APY for CEL.

Therefore, you can see that your ROI over 1 year is 25.12% greater than earning USDC in-kind (11.11% vs 8.88%).

As mentioned in The Assumptions, we are assuming that CEL token price does not change. If CEL goes up, your ROI will increase. If CEL goes down, your ROI will decrease.

Deep Dive #3:
In-Kind vs In-CEL (leaving as CEL) vs in-CEL (converting to stablecoin) over 3 Years for Platinum Users

In-KindIn-CEL
(leave as CEL)
In-CEL
(convert to stable)
Year 1 (ROI)8.88%10.90%11.11%
Year 1 (Comparison)22.72%25.12%
Year 2 (ROI)18.55%22.32%23.21%
Year 2 (Comparison)20.36%25.12%
Year 3 (ROI)29.08%34.31%36.38%
Year 3 (Comparison)17.99%25.12%

In this deep dive, we compare earning in-CEL (keeping rewards in CEL) versus earning in-CEL (converting CEL rewards to a stablecoin) over a 3 year period. As we already know, the CEL reward rate is 4.86% APY whilst the stablecoin reward rate is 8.88% APY. Therefore, after 1 year, converting your CEL rewards to a stablecoin results in a higher ROI.

What’s interesting is that this 25.12% ROI remains consistent through all 3 years. However, this is not so with leaving your CEL rewards as CEL. Each year, your ROI (compared to in-kind ROI) will decrease by leaving your rewards as CEL. After the first year, you get 22.72% higher ROI compared to the in-kind ROI. But after the second year, it drops to 20.36% and then to 17.99% after the third year.

This is because the rewards are compounding at a lower APY every week.

As mentioned in The Assumptions, we are assuming that CEL token price does not change. If CEL goes up, your ROI will increase. If CEL goes down, your ROI will decrease.

In Conclusion

Here are our conclusions from this deep dive. We hope you enjoyed it and found it helpful in determining what investment strategy is right for you.

  1. Choosing to earn in-kind will give you a steady and consistent stream of rewards. Since CEL token price fluctuates, your ROI will vary depending on the market price of CEL.
  2. Choosing to earn in-CEL when you have Loyalty Status will give you ‘bonus’ rewards paid in-CEL. However, if you keep your rewards in CEL, your ‘bonus’ reward rates are actually lower then what is advertised. This is because the APY advertised is based on weekly compounding of the principal (USDC in our example) which has a higher APY then the CEL APY (8.88% vs 4.86%).
  3. In addition, if you keep your CEL rewards as CEL over several years, your ‘bonus’ ROI actually declines each year compared to just earning in-kind. This is because the weekly compounding of your rewards are based on a lower APY.
  4. Choosing to earn in-CEL and converting your CEL rewards to a stablecoin will keep your ROI consistent over time. Not only that, but your ROI will reflect the actual ‘bonus’ rewards advertised. For example, Platinum Level will consistently return 25% more per year compared to in-kind. Gold Level will consistently return 15% more per year compared to in-kind etc.

Deep Dive #1 Spreadsheets & Numbers

Deep Dive #2 Spreadsheets & Numbers

Deep Dive #3 Spreadsheets & Numbers