CEL Token Flywheel — Concepts, Formulas, and Math Defined

1. Flywheel Mass — Total assets under management. The combined stored financial energy of all assets deposited into the Celsius app.

Example — 2.5B assets under management, flywheel mass equals 2.5B.

2.5B = 2.5B

Flywheel Mass = 2.5B

2. Flywheel Speed — Interest paid out in CEL tokens for that week, divided by the total interest distributed to the Celsius community, in that same week. Percentage of total weekly interest paid in CEL token.

Example — $984k interest paid out in CEL tokens, divided by $2.2M total interest distributed to the Celsius community, in that same week.

$ 984k / $2.2M = 0.4473 | 0.4545 x 100 = 44.73%

Flywheel Speed = 44.73%

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3. Flywheel Force — The total buy pressure from Celsius acquiring CEL tokens on the open market, to fulfill the amount of interest paid out in CEL tokens to the Celsius community, for that week.

Example — $984k worth of interest is paid out in CEL tokens, to the Celsius community, which would equal $984k worth of CEL tokens being purchased on the open market. For that week, the buying pressure, from acquiring CEL tokens on the open market would equal $984k.

$984k = $984k

Flywheel Force = $984k

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4. Siphon Rate — The weighted average Earn-In-CEL rate of all combined assets in the Celsius App. In other words, the conversion rate of stored financial energy from all combined assets in the Celsius App, transferred to the CEL token Market Cap.

Example — The stored financial energy from all combined assets in the Celsius App equals 2B. The flywheel speed equals 50% and the flywheel force equals 1M. Weeks in a year equals 52.18.

2B x 50% = 1B | 1M x 52.18 = 52.18M | 52.18M / 1B = 0.0522

0.0522 x 100 = 5.22% | Annual Percentage Siphoned (APS) = 5.22%

Siphon Rate = 5.22% APS

5. Price-To-Earnings Ratio — The CEL token max supply market cap divided by the CEL token annual earnings. CEL token annual earnings are determined by taking the flywheel force for that week and extrapolating the total force on the CEL token price for a full year.

Example — $2 CEL trading price and the flywheel force equals 1M. Weeks in a year equals 52.18 and max CEL supply is 695,658,161.

$2 x 695,658,161 = $1,593,057,189 MC | 1M x 52.18 = 52.18M

$1,593,057,189 / 52.18M = 30.53

P/E Ratio = 30.53

6.) Flywheel Pressure — The lower the P/E ratio (30 to 10) the higher the flywheel pressure (70% to 90%) is on the CEL token price. The higher the P/E ratio (30 to 50) the lower the flywheel pressure (70% to 50%) is on the CEL token price.

1 Example — CEL token P/E Ratio 32.52

2 Example — CEL token P/E Ratio 18.67

100–32.52 = 67.48% | Flywheel Pressure = 67.48%

100–18.67 = 81.33% | Flywheel Pressure = 81.33%

Another way of looking at it is…

Pressure is defined as the force exerted on a surface divided by the area over which that force acts.

Area = CEL max supply market cap

As the CEL token price increases, so does the CEL token market cap, and therefore, so does the area over which the CEL flywheel force acts. Meaning, unless the flywheel force increases at the same rate, the flywheel pressure on the CEL token price must decrease.

Force = CEL token buybacks / earnings

As the weekly CEL token buybacks increase week over week, so does the flywheel force on the CEL token market cap, “surface area”. Meaning, unless the CEL token price increases, the flywheel pressure on the CEL token price must increase.

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7.) CEL Buyback — A buyback, is when a company buys its own outstanding shares to reduce the number of shares available on the open market. Buybacks are a good indicator of a company’s ability to return value to its shareholders and multiple research studies have demonstrated conclusively that buyback stocks, on average, outperform the broad markets by a large margin.

All CEL tokens that are paid out as interest to Celsius users are bought from exchanges the week prior. As Celsius Network gains popularity, more users will join the network and choose to, “Earn-In- CEL” to earn interest in CEL Token. Inevitably, an increasing amount of USD dollar value will be required to purchase CEL tokens off of the open market by Celsius to pay interest in CEL tokens to these users. The greater the USD dollar value going into weekly buybacks, the higher force generated by the CEL flywheel, on the CEL token price.

Written by

Passionate about identifying, analyzing, and tracking life-changing investments. I use performance metrics, formulas, statistics, and logical reasoning.

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