James Atkins
Editor
Editor
The press release from Cake DeFi was fascinating to read the other day, and it made me think. The crypto-lending platform that has halted payments and may or may not be completely bankrupt was unveiled.
In the aftermath of the Celsius collapse, which occurred as a result of a short but telling tweet from Celsius.
The “What Differentiates Us From Our Competitors” section of Cake DeFi’s post explains that the Celsius spiral will not harm Cake.
It also distinguishes between the two models. It’s a wonderful idea by Cake, and I believe a lot of businesses should follow suit.
The Celsius catastrophe might spread. And this will send jitters through any crypto investor, regardless of what protocol or coins they are dealing with.
Celsius had over $12 billion in customer funds. And is presently hanging on to a stake in MakerDAO with half a billion dollars worth of Bitcoin.
As of press time, a 25% dip in Bitcoin’s price would result in an entire liquidation of the position. With all that Bitcoin flooding the market, only adding to the epidemic.
Of course, the Bitcoin price has plummeted from around $30,000 to $22,300 as a result of this problem.
The UST spiral last month was linked to Celsius’s investment in the Anchor Protocol via the now-collapsed UST. Which resulted in contagion effects across other cryptocurrencies.
Cake DeFi has released a statement saying that “first and foremost, we want to reassure our customers that the present market conditions have little or no impact on Cake’s daily business.” As usual, we are processing 99 percent of all withdrawals within 24 hours.
This will reassure customers that Cake is not affected by the industry’s rising epidemic and allow them to keep their money in the network without worrying.
The message was both comforting and clarifying. It proved that the company’s approach is entirely distinct from Celsius.’
“As a Singapore-based fintech firm, we must ensure clear asset segregation by keeping customers’ assets distinct from the company’s operational accounts. Simply put, our users have complete control, ownership, and authority over their money.”
Celsius is, in contrast, a far cry from this. The model was based on the centralized company’s ability to invest assets at will in the market. Which worked well in 2020 and 2021 as the bull market soared.
However, it has come crashing down since then. Celsius is in a bind because its liquid assets aren’t matching its liabilities, and with withdrawals increasing, the firm is running short on cash.
When it comes to cake DeFi, things are rather different. Users get a “safe passage” or access to decentralized finance services through Cake DeFi.
These services are all on the blockchain and are available to anyone. They are also transparent, meaning you can see what is happening with them.
Some customers may want to use the blockchain themselves to make transactions. Cake DeFi is a one-stop shop that allows users to use all of these services at once with customer and community support.
Cake hammers the distinction home by noting that centralized platforms like Celsius have “limited transparency and/or control.”
“In addition, purchasers would not have clarity or information on where the yields are coming from or – much worse – if their funds are being mixed with operational money.”
In conclusion, it is a release that emphasizes two points: first, transparency, and second, communication – factors which Celsius customers will now appreciate are crucial.
You need to understand what you are investing in. A lot of people think Celsius is a good investment because it was impossible to know what Celsius was doing with the customers’ money.
Celsius had a problem because when the market turned, everyone wanted to leave at the same time. This has been exposed, and Cake DeFi is saying that they are different from this model.
Other businesses unaffected by the crisis should follow this example. Hopefully, in the future, customers will be more focused on transparency.
I have been writing copy for blockchain-related projects since 2017. I understand the importance of being able to communicate clearly and effectively with both technical and non-technical audiences. By leveraging my understanding of the crypto industry trends, I can help increase adoption in this rapidly evolving landscape.
