Disclaimer: This project is currently part of my portfolio.
Nexo has been one of my favorite coins during this bear market. Nexo is the world’s first SEC compliant crypto lending platform. With the SEC coming after EtherDelta and several exchanges, it will become imperative to be SEC compliant to continue doing business. People are also shifting from ICO’s to STO’s. Regulatory compliance will become a big issue.
The concept is to utilize your crypto holdings as collateral and receive a loan back for it. The loan limit is a % of the market value of the crypto you deposited. The interest rate on getting a loan is over a year could get as low as 8% or a daily interest of ~0.007%. The interest gets added to your total outstanding loan on a daily basis and depending on your interest amount. When your collateral drops below certain market value, Nexo will then start the liquidation process of selling some of your collateral to cover for your outstanding loan and protect itself. Not fancy getting a loan? No problem, lend out your crypto to Nexo by depositing it in their crypto savings account and earn interest over them!
1. Deposit BTC, ETH, NEXO, BNB, XRP or TUSD as collateral.
2. Receive loan in a bank transfer in 40+ fiat currencies or TUSD within 2 days.
3. Spend that money
4. Repay loan and interest to reclaim collateral
The biggest advantage that Nexo provides is that instead of just holding your cryptocurrency, you can spend a part of the value of your crypto without actually selling it. This is valuable because this way, you can keep holding your crypto for the potential rise in value and at the same time utilize a part of that value somewhere else. One big issue for crypto adoption is the lack of possibilities of spending it. Nexo offers a way to solve that problem by enabling you to hold and spend. They currently support loans starting from $1000 and are aiming to bring that down to $100.
Further advantages are for example that by getting a loan instead of selling your crypto, you do not incur a taxable event. This saves for potential gains getting unrealized due to the high taxation %. Since the loans are backed by collateral, no credit checks are required. By only full filling the KYC makes you eligible for loans. There are no liquidity problems since order books and volume do not matter, Nexo will supply with the necessary fiat funds or TUSD from its banking relations.
Aside from granting loans for crypto collateral, Nexo also offers what you can compare to savings accounts. Liquidity providers as they are called provide $100,000 or more to Nexo, in stablecoins (USDT, TUSD, GUSD, USDC, DAI or PAX). Over the deposit of the stablecoins, the liquidity providers earn a yearly 6.5% interest. Think about that for a second, most savings account only to return around 3% or less. Nexo already beats that and they will, instead of traditional bankings, pay out the 6.5% on a daily bases instead of yearly.
It is backed by a leading FinTech group called Credissimo that follows the highest regulatory requirements that are supervised by multiple European Banking and Financial Regulators since 2007. Audited by Deloitte and having more than 10 years of experience, the team behind Nexo are solid.
The Nexo token is an ERC-20 token on the Ethereum network. The Nexo token provides two main uses besides registering collateral deposits, interest over time and loan payment on the blockchain. The first and probably the most interesting aspect that the Nexo token offers is that it makes the holders eligible to 30% of the companies profits. Every month/quarter (still not finalized), eligible Nexo token holders are awarded 30% of the companies profits in the asset(BTC, NEXO, TUSD etc.) deemed most profitable to the holders by Nexo. The second aspect is that utilizing the Nexo tokens as repayment for your loans reduces the interest rates by 50%. That turns your interest rates from the base of 16% to a low of 8% making it more attractive to get a loan and repay it using NEXO tokens.
These two aspects generate incentives to buy and hold/use Nexo tokens. This drives up the demand and increases token prices which in turn makes utilizing Nexo and it services even more attractive.
Depending on your rising interest over your outstanding loan, your future loan limit will also decrease slowly. This is to a degree prevents excessive lending without repaying the interest and outstanding loan. If the market value of the collateral drops to a certain value, Nexo will liquidate parts of the collateral to keep itself solvent from handing out the loans and preventing a situation in which the company cannot pay back the loans it issued and goes bankrupt.
Regarding the safety of the liquidity providers, stablecoins and the entire concept themselves promise a guaranteed return of a certain value, for example, $1 for 1 USDT. Nexo on top of that puts another guarantee, that any stablecoin deposited has the equivalent value guaranteed in USD. That is right, Nexo promises to reimburse $1 for every $1 in stable coins in the event the stablecoins themselves cannot, a double guarantee.
The ensure no loss of cryptocurrency that Nexo receives as collateral, Nexo partnered with BitGo. Bitgo is an SEC-approved custodian for cryptocurrencies that is also utilized by Kraken, Upbit and several investments funds.
Before handing out loans and dividends, Nexo requires the user to undergo a one time KYC powered by Onfido. Onfido is a widely used identity verification that complies with the strictest KYC and AML. Enterprises around the world such as Coinbase, Revolt, HSBC, and Transferwise use their services.
Nexo has produced some high-quality progress the last couple months. The most prominent one is the dividend payout. The company of just 7 months old was able to produce a stunning ~$3,000,000 in profits. Comparing that to existing financial companies certainly gives some insight.
Of the $3.000.000, 70% gets reinvested in the company and 30% of that goes directly to eligible NEXO token holders.
“As of dividend record date (December 5, 2018 — 15:00 UTC), there are 309,658,705 eligible tokens which shows that the annualized dividend yield of NEXO is 4.80% and beats all dividend stocks in Buffet’s portfolio: Apple 1.4%, JPMorgan 3%, Wells Fargo 3.3%, Goldman Sachs 1.6%.
The second measure for performance is the token value. How did NEXO fair in terms of price action compared to the market? An overview provided by Nexo clearly visualizes it:
It is clear from the graph that not only did Nexo outperform the rest of the market in the short-term (1 month), but that it generally outperformed the market. Nexo dropped the least in the mid-term besides BTC and recovered the most in the long-term. Only Nexo is currently in the profits of all the compared crypto and I think that we could say that over most of the other coins too.
The third big achievement, in my opinion, is the marketing of Nexo. On prime example is the #NexoEvery campaign on Twitter. Ever since a couple of months, Nexo has been actively and successfully getting itself more and more exposure by listing on all big crypto outlets. The most impressive ones to me are Etherscan, Coinmarketcap, and Blockfolio, there are two dozen other websites that now feature a button which says “Get a loan” and directs to Nexo. This gives Nexo an insane amount of exposure and traffic which in the long run is only going to be a good thing.
The closest competitor that I could think of is SALT and EHTLend. Salt lending previously had serious funding problems and threatened to go bankrupt. To preserve the reputation of the crypto lending ecosystem, Nexo offered to buy up the remaining assets of SALT and the outstanding loans to save it from disaster. They did not take up that offer. ETHLend seemed to have dimmed down to a couple hundred users based on the statistics from their website while Nexo has over 100,000. Both their token prices also have dropped +80% while Nexo is +4%. Nexo stands on top of the lending ecosystem with head and shoulders.
The Nexo community currently consists of +45k members in their Telegram and +38k Twitter followers. Besides the main channels, there are numbers of Telegram channels dedicated to specific languages:
– World: @nexofinance
– Spanish: @Nexo_Spanish
– China: @Nexo_cn
– Czech_Slovakia: @Nexo_czsk
– Nederland/Belguim: @Nexo_nl
– India: @Nexo_in
– Croatia: @Nexo_hr_rs_si_ba
And a couple prominent Twitter personalities that are heavy Nexo fans that are doing giveaways and helping people out:
– Nexo Website: https://nexo.io/
– Nexo Twitter: https://twitter.com/NexoFinance
– Nexo Medium: https://medium.com/nexo
– Nexo Interim Report: https://drive.google.com/file/d/1COWvaCtUrHKx94-9EM3qvDm3jouJbnfx/view