[cdiddy2]

Its completely centralized. They take user funds and put them in defi products, but the funds are completely under Celsius control not the users control. Thats how they were able to turn off withdrawals. Its like if JPMorgan were putting client funds in AAVE, that doesn't suddenly make JPMorgan defi.

[airza]

That makes sense... Is the alternative individual users using some type of smart contract to borrowers directly? It seems like in that case there would indeed be more transparency, but also that the end state of many, many leveraged positions being liquidated would be pretty similar, right?

[cdiddy2]

Well in the case of Celsius they are putting use funds into things that the user might not know about. Such as stETH which provides yield but can't be withdrawn back to eth until months down the road so if stETH starts trading at a discount like it did recently then you can't actually get all the money out for redemptions. I believe they also put funds into Terra which they lost as well. So basically Celsius advertises a certain yield but is a black box after a user deposits funds and they might put the funds in things a normal user would never agree to if they were aware of it.