what was the the business model of these platforms? did they lend out the staked money, or how did they generate these yields?
Step 2: give away money
Step 3: somehow start making money
Like most companies you'll see on HN, they are currently on step 2.
The discerning reader may note that this sounds like a terrible use for $860 million - and if that's the case, how much of the other $642 billion last year was properly allocated?
Of course, that sounds stupid as hell and you'd certainly hope that someone thought of something better, but this is exactly what happened with Terra/LUNA, except with more financial engineering to obfuscate the "if it goes down 25% we're fucked".
What's a 3x?
In the context of "using leverage to provide better than expected returns in a Bull market", someone can buy TQQQ, securitize/create derivative (this is exclusively what crypto does) that returns 1.5 times the NASDAQ, sell you that derivative, and if the NASDAQ goes up 5% (TQQQ 15%) you get 7.5% and they get 7.5% (and your money).
If it goes down, you lose everything and they keep the money you gave them.
The loans were overcollateralised with the users Bitcoin.
The problem is Celsius wasn’t content with just earning interest from loaning money so they invested their users Bitcoin in crypto projects that ended up going pear shaped.