Bull Market or Bear Market, the goal is the same. Invest, earn, increase our position and possibly have a shot at an earlier retirement. Traditional financial services (TradFi), can get us there but they are slow and fixed into monetary systems that are losing ground to the digital age. Along with innovation you often have the two sides, those that see potential and build their businesses in a forward thinking way, and those that see a threat and start to batten down the hatches for the incoming storm. Nexo is definitely of the former leaning, with one foot in the TradFi world and another in the Crypto-space (CryptoFi, perhaps?).
A lot of folks would say 'what is the point of crypto if you're going hand it over to custodial services?' (like those offered by Nexo). Well my answer to this is 'what is the point of cutting your nose off to spite your face?'. You see, in my mind, it shouldn't be a case of 'either/or', instead it is more a case of choosing the right tools/products for the job. Decentralized Finance (DeFi), for example carries its own risks and as such has, often, bigger rewards up for grabs. There are bonuses like self-custody but risks around contract exploits/unknown developers and inconsistent returns. CryptoFi, on the other hand comes with a different set of expectations, think of it like banking, we expect more trust, more regulation, more security and contingency plans in case of issues. We lose self-custody but gain more consistent returns.
When we use all of the different products available to us we're able to spread out risk, which means (should the worst happen) the impact on our long term goals isn't as drastic as if we take a purest approach to product selection. So, to that end, we're going to take a look at the different products on offer from Nexo and why I personally use this CryptoFi provider alongside other centralized and decentralized options to maintain forward momentum in my portfolio, whatever market we're in.
A quick reminder this is not financial advice, please take a good look into any financial product and see if it is right for you before making any decisions.
Products
Leaning heavily on traditional financial products Nexo operate (from my opinion) just like a bank, except it is built for, and on, crypto. Like any bank they predominantly operate on the the big two products: Saving and Borrowing. Savers support lending with liquidity, borrowers pay interest which in turn pays the savers. On top of these Nexo also offers exchange functionality for cryptocurrencies as well a new cashback credit-card service.
Lending
The main thing I use Nexo for, and by far one of the strongest weapons in the hodler arsenal is saving. Adding funds to an account to earn passive income, as the proverb (that no-one really said) tells us:
A coin in the hand is worth two, before you know it, with daily compounding interest...
Boasting some of the highest rates available in the CryptoFi sector Nexo offer interest on most stablecoins, some of the most popular cryptocurrencies on the market (inc. BTC and ETH) and fiat (USD, EUR and GBP).
- Stablecoin rates start at 8% going to 12%
- Cryptocurrency rate start at 4% going to 8% (excl. Nexo Token)
- Fiat rate start at 4% going to 8% (excl. Nexo Token)
- No minimal holding amount
- No required lock in (though fixed terms available to boost rates)
- Up to 5 Free withdrawals per month (unlimited for fiat)
- Rates compound daily (4% APR ? 4.08% APY)
- Top rates unlocked based on Nexo token holding (more later) and choice of earnings
- Recently added NEXO token rates (7%, 9% or 12% based on lock in)
Borrowing
Invariably linked to the earning portion of the platform the borrowing section allows us to unlock value from underlying assets without needing to sell. Again this is a great option to have as a crypto hodler. You may find you need access to funds quickly but you don't want to lose your position. Borrowing with Nexo allows us to do this easily.
- Interest rates start at 13.9% going down to 6.9%
- Loans taken in Stablecoins or Fiat
- No minimum repayment while available credit limit
- Repayments can be made in a range of crypto/stable/fiat currencies
Exchange
As with any crypto-platform Nexo offer the one-stop shop solution for buying, selling and swapping currencies without needing to transfer away. The swap function in some respects is very similar to that offered by Coinbase, but with more interest earning products available it means cross-currency trading can always benefit from passive earning.
Credit Card (waitlist)
Finally, a relatively new product offered by Nexo is their CreditCard, definitely something I hope to take advantage of as soon as I'm far enough along the waitlist. The card offers the following benefits:
- Instant 2% Cashback on All Transactions (paid in BTC or in Nexo, adjustable by transaction)
- Virtual card creation for online safety
- In-App card management (PIN, Freeze/UnFreeze, Transactions)
- 24/7/365 fraud protection (plus as a credit card you get payment protection)
- No subscription or transaction fees
- Credit availability based on Nexo account credit line (the more crypto/fiat you hodl with them the more credit you have access to)
Join the Waiting List Here: https://nexo.io/nexo-card?referral=KUkl2LQ&refSource=copy
Loyalty Program / Tokenomics
Arguably the linchpin of the whole Nexo platform, the loyalty program (based on NEXO token holding) dictates what access we have to different rates and benefits. NEXO are also used for shaping decision making on a platform level, much in the same way cooperative based organization allow customers/members to shape their future.
The NEXO Tokens
- Are held as a proportion of the portfolio balance as follows:
- Base: <1%
- Silver: 1%-5%
- Gold: 5%-10%
- Platinum: >=10%
- Add either 0.25%, 0.5% or 1% to crypto earning rates (0.25%, 1% or 2% for stablecoins/fiat).
- Reduce interest rates for credit lines to 12.9%, 8.9% or 6.9%, respectively
- Are available in ERC20 or BEP20 form (I personally bough a bunch of BEP20 via the BINANCE DEX to save on gas fees)
- Increase monthly free crypto-withdrawals to 2, 3 or 5, respectively
- Operate as votes for the purposes of NEXO governance decisions (see below)
Buyback
Back in December Nexo also launched a buyback program, where it was proposed that they would use profits from the business to buy back $12M of NEXO tokens from the open market and provided the following rationale for tis decision:
Although, as demonstrated by the recent price surge, the market is finally acknowledging our native token’s potential, the Nexo Team believes that NEXO is still heavily undervalued and trading at a discount. Our $12-million buyback program seeks to rectify this as part of Nexonomics – a comprehensive series of new features and upgrades designed to drive the NEXO Token’s tokenomics, reinforce its utility, and boost its value in the digital economy.
These tokens can be found here: https://etherscan.io/address/0x1C433CBF4777e1f0dCe0374d79aaa8ecDC76B497#tokentxns
Although unlike the common buy-back & burn mechanism seen with DeFi products like PancakeSwap Nexo reported that these funs could well return to the market (albeit slowly in 12months time). I have a feeling this will definitely be put up for a governance vote before it happens.
Each buyback will vest for a minimum of 12 months after the repurchase. Once vested, repurchased tokens may be re-locked or withdrawn and used for interest and cashback payments, liquidity provision on decentralized exchanges, and dividend distributions.
Additional budgets may be allocated for future repurchases in accordance with company growth and market conditions.
Governance
Finally, as mentioned the NEXO token also has governance properties allowing holders to vote on proposed changes to the business. In this first proposal (from 07-08th Jun). Users were asked if they wanted to retain the previous 30% dividend model for providing profit to NEXO token holders, or if they would prefer to move to a daily interest model. As you can see below, I was able to take part in the voting process.
The results were much as folks would expect, moving from an annual dividend model to a daily interest model seem to most to be the most flexible course of action.
Security and Legal
Moving away from the customer products on offer this section is dedicated to, what I've come to believe is, the key selling point of any CryptoFi platform. Remember the offerings of CryptoFi need to, and should be, different from DeFi and should better reflect where these institutions will sit in the public mind (specifically long the lines of regulation an security). To that effect Nexo make a great point of highlighting these value added platform benefits to customers and they are well worth mentioning here.
Licenses & Registrations
In order to ensure the provision of their portfolio of services in full compliance with all applicable global and local regulations and standards, the Nexo companies hold all required licenses and registrations in numerous jurisdictions worldwide, and are constantly bringing their operations in line with newly adopted legislative changes.
Security
Given that asset custody is being handed over to Nexo the security and protection of such products is critical to the end users. As such the operate the following:
- Mixture of Hot and Cold wallets spread out over multiple geographic locations to reduce access risk
- BitGo
- Ledger Vault
- Other industry leading custodians
- Fireblocks - Overview of all of their assets/holding in one location
- $375 million Insurance Policy through BitGo, LEDGER Vault and other custodians whose facilities are insured via Lloyd’s of London and Marsh and Arch. Nexo aims to up its insurance to $1 billion by the end of 2021.
Proof-of-Reserve
Similar to security of funds we expect, in this day and age, a level of increase transparency from larger companies such as Nexo. This is why they have recently released information that they will initiate an audit of Nexo's holdings by an external accounting/business firm (Armanino) to offer customers/investors and regulators an increased level of trust.
Nexo’s Proof of Reserves attestation provides:
An independent, third-party confirmation expressed in US dollars that our company’s assets exceed liabilities at all times.
A public-facing cryptographic proof to clients earning high-yield passive income that their assets are safe, in complement to Nexo’s $375M insurance portfolio through BITGO and Ledger.
Another compliance milestone in addition to the financial audit under PCAOB audit standards that we are currently undergoing.
Final Thoughts
Perhaps we're a little spoilt or maybe it is just that we can see when there is a better way to do things. The result is the same though, our expectations are raised. Quite often though, we apply 'value' just to the bottom line, the rate we're getting, which is far too narrow a view in my mind. When assessing a platform like Nexo my goal is to establish the benefits offered this includes obvious things like rates as well as less obvious, like insurance, business model, transparency. Then these can be compared against the perceive risks (lets face it everything in life has risk, even doing nothing is a risk) and a more well-rounded decision made.
It would be mad to discount something off-hand based on a simple bias (like say 'it is centralized') without considering the merits of it first. We're all trying to carve out our own way in the world and our own piece of financial freedom, it makes more sense to give ourselves all the carving tools needed for the job to get it right.
If you plan on checking out Nexo please feel free to use my referral code. There is no bonus to either myself or you, but I think it is right to share it anyway (because sometimes it isn't always about the money): https://nexo.io/?u=5f0350ecb2dfaf6b852616ee
Thank you for reading the article, hope you learned a little about Nexo and how it can help us hodl our way to the future, good luck y'all!
Reference:
- https://nexo.io/nexo-card
- https://nexo.io/blog/loyalty-comes-in-silver-gold-and-platinum-with-nexonomics
- https://nexo.io/blog/what-are-buyback-programs-and-why-does-nexo-have-one
- https://nexo.io/blog/nexo-launches-12-million-dollar-buyback-program
- https://nexo.io/licenses-and-registrations?j=155248&sfmc_sub=27983104&l=26_HTML&u=2711388&mid=500009431&jb=26013
- https://nexo.io/blog/nexo-s-custody-and-insurance-in-depth-and-at-length
