If you are a crypto enthusiast who goes to twitter a lot, there is no way you have escaped the Nexo cryptocurrency.
There has been a lot of shilling and FOMO around this new ERC-20 token.
If you are like us, you should have seen this questions floating around.
- What is Nexo?
- What does it do?
- How is it better than existing solutions?
- Can I really earn passive income from Nexo?
These are some great questions and clarity on these topics is essential in knowing about this cryptocurrency.
In this post, we plan to answer these and more questions. We have done some extensive research, and the information below is a result of that. Please note that it is not financial advice of any kind.
Let’s talk about Nexo.
What is Nexo?
This is the first question that pops into everyone’s head.
Nexo is a lending platform that gives instant crypto-based loans.
In the crypto world, you always have an opportunity to go after a good, profitable trade. When you are in need of more money, you can’t always sell your coins. That’s where Nexo comes in.
Not only in the crypto world, but there will also be a sudden need for cash in any place. Nexo offers you a loan so that you don’t have to lose the future profits on your cryptocurrencies.
Once you repay your loans, you can get hold of your cryptocurrencies. This way, you get liquidity without losing ownership.
What Problems does Nexo Solve?
Idle Value of Digital Assets
The value of cryptocurrency market cap is expected to grow to 5 Trillion Dollars by 2025.
People have found that cryptos are great assets. Even if there is a mass day to day adoption of cryptos, the number of people who will use cryptocurrencies will be less, thanks to the lack of regulatory limitations.
This means that we would have a lot of idle digital assets which have value but won’t serve any purpose.
Nexo will give instant loans based on those idle cryptocurrencies. This makes sure that your cryptocurrencies are no longer idle, and can get some local liquid money which you can spend it any way you desire.
Slow Liquidation Process
Liquidating your cryptocurrency into your local fiat currency is a cumbersome process.
There are many exchanges, and all of them have different procedures for withdrawals. Some charge a hefty amount in the name of fees as well. Also, you clearing bank won’t speed up the process in any way.
All of these small delays add up and introduce a notable delay in receiving your local fiat currency.
When you take a loan with Nexo, you receive instant fiat money which can be withdrawn through bank transfers. You can also receive the cash in a credit card which you can use on local outlets.
Nexo makes converting crypto to fiat a bit easier.
Loss of Ownership
If you are not taking a loan, the only way to convert your cryptocurrency into fiat is by selling it.
When you do this, you lose all the cryptos you have gathered over the years. Yes, you get fiat currency without a loan, but you will miss on the future gains from your cryptos for sure.
By taking loans on Nexo, you can preserve the ownership of your cryptocurrencies. Once you pay back the loans with interest, you can withdraw the coins to your personal wallet.
Even if you have a 100x gains on that one super coin, if you convert it to fiat, you will have to pay 15% to 39% tax on the profit depending on the country.
This tax can significantly reduce your profits.
When taking loans, you do pay an interest, but that interest might be low when you are repaying the loans early. It can also be minimal when compared to the taxes we mentioned.
Who’s is behind Nexo?
Most of the attention Nexo received was because of the team behind it.
Nexo is a crypto product from Credissimo, a leading FinTech group.
Credissimo has been serving millions of people in Europe for the last ten years. Credissimo has functioned under heavy regulation and supervision by European banking and financial services regulators.
The team that governs Nexo has abundant experience in FinTech. The Founder of Credissimo has more than ten years of experience while the CTO of Nexo has more than 16 years of experience in FinTech.
This is a strong team, and even though they are a bit late to the lending space in crypto, they have already received applications for $1 Billion in loans which tells about the execution of the team.
Nexo’s Unique Proposition
The NEXO ERC-20 token is the World’s First US SEC-compliant Asset-backed Security Token that is backed by the underlying assets of Nexo’s loan portfolio.
This is not something every blockchain company can say about themselves, and this very fact sets NEXO apart.
Why is this important?
Wall Street is about to enter the crypto space according to the latest news. When they do, they will want to invest in security tokens that are asset-backed and follow regulatory standards.
Nexo will be first among the regulatory tokens to be traded in a regulated exchange. This is huge as it makes investing in Nexo easy for institutional investors.
Another thing that really sets Nexo apart is that it pays 30% of its monthly net profit as dividend. This means you will be getting a monthly passive income straight to your wallet by just holding Nexo. The 30% profit will be divided among the token owners after a snapshot of the wallets are taken every month.
Nexo vs. Competitors
Nexo is not the first lending platform in crypto.
Both the platforms have a good following and have given a lot of loans. SALT has a higher market cap in comparison with ETHLend, but the latter has a vibrant community which keeps getting better by the day.
Both the cryptocurrencies haven’t recovered from the Bitcoin crash that happened in early 2017.
Nexo has several advantages over SALT and ETHLend. Some of them are
- You can get instant loans in Nexo while it can sometimes take a lot of time for matching lenders and borrowers in both the platforms.
- There are no fees in the platform except for the interest you are going to pay. In both SALT and ETHLend, you have a number of fees which make them slightly expensive to use.
- With Nexo, you can repay the loan in US dollars, Euros, Bitcoins, Ethereum, and in Nexo tokens. In SALT, USD is the only repayment option while in ETHLend, you will have to repay the loan in ETH.
- Nexo gives you a monthly dividend if you have the tokens in your wallet. None of the competitors provide any dividends like this. ETHLend, however, has given some incentives for those who use the platform regularly.
- The token is an asset-backed security while we can’t say the same thing about the others.
This gives us an idea of how Nexo can be better than its competitors. Still, it is a bit late to the party, and it will be interesting to see how the competitors react.
How Does Nexo Work?
Nexo works in 4 simple steps.
The user transfers his cryptocurrencies into the Nexo wallet.
Once the platform gets blockchain confirmations for the received cryptocurrencies, the Nexo Oracle calculates the loan limits and creates the loan limit instantly.
The user will now receive the loan in either USD or EUR.
The loan limit is instantly available. You can withdraw it through a bank transfer or through the credit card the platform provides.
The user can use the most convenient methods and withdraw the funds. The loan limit is calculated based on the value of the assets kept in the wallet. If they appreciate over time, the loan limit will also increase. This is taken care of by the Nexo Oracle.
The user repays the loan.
There are multiple payment methods you can use to repay the loan. You can repay the loan using bank transfer, by using fiat currencies or even by using cryptocurrencies.
There is a special discount in interest rate if you choose to pay back the loan with Nexo tokens.
There is also a third option. You can sell a partial amount of assets in the wallet and pay off the loan.
After the user completes the repayment, the Nexo Oracle updates the loan limit accordingly.
If there is no outstanding loan balance, you are free to withdraw your cryptocurrency to your wallet.
What are the fees involved?
There are no fees when you take a loan with Nexo. This is one of the primary motivators for using the platform. The only extra money you will pay is the interest amount and nothing more.
Nexo has a number of exciting partnerships in place.
Partnership with BitGo
This partnership ensures the safety of the users crypto assets in the Nexo wallet.
BitGo’s has an impeccable track record in terms of defenses against security violations. It provides custodial services for other leading blockchain companies like Pantera Capital, Kraken, CME Group, The Royal Mint and UPbit.
BitGo also provides with a multi-sig wallet. This wallet features robust business rules for co-signing like address whitelists, rate limits, webhooks, and others.
Its API allows users to develop Bitcoin applications and thereby retaining complete control over their keys and transactions. This is an excellent enrichment to the user experience of Nexo users.
Partnership with Onfido
Nexo teams up with Onfido to maintain highest compliance standards and automation.
This partnership with Onfido has made the process of getting instant loans more accessible.
Onfido implements automated identity verification solutions for other famous companies like Coinbase, TransferWise, Kraken, Revolut, CME Group and many more.
Onfido helps in maintaining compliance with global Know-your-customer (KYC) and Anti-money Laundering (AML) standards. All of this is done without affecting the user-friendliness of the platform.
These are two of the most important partnerships of Nexo.
The team has also given a hint that there are more partnerships in the pipeline.
Where can I Buy Nexo?
Currently, you can’t buy Nexo with fiat currencies.
You can buy them at decentralized exchanges like IDEX, DDEX, and ForkDelta.
The token is all set to get listed on HitBTC on the 10th of May.
HitBTC is one of the top ten exchanges in terms of daily volumes. Getting listed on such an exchange should either see some positive movement or the dumping of tokens from the early investor.
We will update this section as more exchanges list Nexo.
Best Nexo Wallets
Nexo is an ERC-20 token so you can store in any wallet that supports ERC-20 tokens.
Our choices for Nexo wallets are
- Official Nexo Wallet
- Enjin wallet
- and many more…
Nexo is one of the most promising coins of 2018. It comes with a solid team, and that fact that it is the world’s first US SEC compliant asset-backed security token makes it even attractive.
Definitely, a cryptocurrency to watch in the coming years.
That’s all we’ve got.
Did you find this deep dive useful or did you see any misinformation? We would love to hear anything from you. Do let us know in the comment section below.