CelsiusX Review – Supported Coins, APY, Security & Risks
Have you ever wondered what could happen if CeFi and DeFi were to merge? Indeed, it will bring about the birth of a hybrid finance blockchain that could be the future in cryptocurrency and the world at large.
You could think, can it ever be possible? Celsiusx is all about this. How do they plan to do it? Come with me as I take you through it step by step!
WHAT IS CELSIUSX?
It is a DeFi section of the Celsius network aimed at building infrastructure to link DeFi to CeFi. Nonetheless, why should they be linked? To answer this question, let’s define DeFi
DeFi (decentralized finance) is a financial world that uses smart contracts to initiate transactions between two parties, and anyone in the world has access to lend, borrow, trade, and make payments as long as they have a good internet connection. In contrast, CeFi is a centralized exchange with third-party involvement in transactions which results in not having total control over deposited funds.
With this brief explanation of DeFi and CeFi, you will agree that DeFi is a major technological feat in financial infrastructure; despite this, it has a challenge in adoption.
Celsius, an institution based on DeFi/CeFi hybrid merge, helps users benefit from DeFi synchronization with CeFi.
HOW DOES IT WORK?
To begin, CelsiusX transfers assets to a transparent and trusted vault on the native blockchain. A token will be deposited into an enzyme box, and this token can be from any blockchain. To illustrate, let’s use the ERC-20 token from the Ethereum blockchain.
A decentralized oracle network (Chainlink proof of reserve) will ensure complete transparency and stability of the bridge using web2.0. This oracle signals the board and sends the data received to a Proof of Reserve that will, in turn, draft an intelligent contract on the targeted blockchain. The evidence of the intelligent reserve contract provides on-chain data needed to order collateralization of wrapped tokens.
👉 The minting contract is then used to create new wrapped tokens on the targeted chain once the assets have been locked and proof of reserve broadcasts.
Once executed, the contract checks the Chainlink proof of reserve to confirm if there are enough assets in the reserve vault, and once approved, it creates new wrapped tokens.
Next, the minted tokens are deployed for either the DeFi development project or transferred between user accounts like every other token on the target blockchain.
All that is needed now is to incubate the wrapped tokens, and presently, Celsiusx is partnering with several DeFi platforms to commit deep liquidity into the newly minted tokens ecosystem.
WHAT IS CROSS-CHAIN LIQUIDITY?
By using this bridge, an equal amount of wrapped tokens can be created on one blockchain and locked on another. With this bridge, wrapped tokens can be redeemed with their underlying assets anytime.
WHAT ARE WRAPPED TOKENS?
These are tokens minted through a cross-chain liquidity bridge on Celsiusx and can be used for DeFi development projects or transferred among user accounts as other tokens on its blockchain.
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