The freeze on withdrawals from Celsius was another blow for DeFi this 2022.

In May, the Terra Luna network and its Anchor Protocol with 19% APY on stablecoin deposits collapsed almost entirely. The headline on the Celsius website still today reads you can be earning '18.63% APY in minutes'.

Except that you can't. Because since Monday, June 13th, Celsius has frozen all withdrawals.

Why did Celsius collapse?

Celsius offered investors a range of attractive yields. These included 7% APY on stablecoins USDC and Tether, 7.25% for Polygon, 6% for Ethereum, and 6.25% for Bitcoin.

Celsius generated these returns by lending assets out to other DeFi institutions to earn a yield. 

The network also offered overcollaterised lending and rewarded stakers and depositors with repayments – or collateral from defaulted loans – to users. 

The problem is that Celsius used an intermediary called Lido to take ETH invested by customers and stake it on the ETH2 network. The ETH and ETH2 networks are supposed to merge at some point over the summer this 2022, but in the meantime, ETH2 can still earn rewards that will become usable after the network update.

Lido gave users a new token called stETH (staked ETH) to represent their ETH2 holdings. During the crypto crash, stETH lost its peg to ETH and the Celsius network foresaw a liquidity crisis should users wish to withdraw their initial investments. 

On Monday 13th June, Celsius halted all withdrawals on the network due to 'extreme market conditions'. 

The Celsius native token, CEL, plummeted 70% in a single hour.

A new way to make crypto passive income – EverGrow Coin 

The Celsius network has not collapsed like the Terra Luna network back in May.

But both relied on DeFi mechanisms like lending, borrowing, staking and yield generation – and neither are good news for increasing faith in DeFi as a financial mechanism to generate passive income.

Throughout the crypto crash in 2022, EverGrow Coin has been an unlikely success with prices growing and investors pouring into the platform.

EverGrow Coin promises crypto passive income – but through a mechanism that works regardless of extreme market conditions. This is the result of a 14% transaction tax from which 8% is distributed instantly as reward to all investors. You're buying EverGrow Coin? Existing investors take a cut. You're selling EverGrow Coin? Same story.

EverGrow Coin has emerged as the leading reflection token for one more reason.

That is, it rewards investors in Binance-Pegged USD – not the native token. This increases both the utility and usefulness of passive income from EverGrow Coin. BUSD rewards are the primary focus of the project as it launches a new NFT marketplace designed to distribute any profits back among its existing investors.

Reflection tokens like EverGrow Coin should not face any liquidity crises. Neither should withdrawals be an issue – the BUSD enters your crypto wallet daily, and EverGrow Coin can be traded on many centralised and decentralised exchanges.

With DeFi in freefall in June 2022, it could be left to reflection tokens like EverGrow Coin to restore faith in a new way to make crypto passive income.