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Even while this post isn’t meant to be any kind of financial or investment advice, there are some aspects of the platform that are quite appealing:
BitGo offers safe asset storage and $100 million in insurance for custodial assets.
automated, instant approval is guaranteed, and there is no credit check;
only paying interest on what you really use, at the best rates of just 5.9% annually;
no required minimum loan payments;
free same- or next-day withdrawals from local banks;
accessible in more than 200 jurisdictions globally;
available in over 40 fiat currencies, such as the US dollar, euro, yen, and others; and
ZeroFees means there are no origination, liquidation, or FX commissions.
With three dividend payments totaling $6.1M already paid to its devoted consumers, Nexo has emerged as one of the top financial institutions for digital assets in its first two years of operation.
The largest cryptocurrency lender in the world, NEXO, is situated in Switzerland and participates in the centralised financial industry, or CeFi. With its speedy crypto loans, which enable swift, instantaneous access to cash and help for keeping ownership of one’s digital assets without relying on credit score checks, NEXO, which was founded in April 2018, quickly established a strong reputation for itself. CeFi operates independently from the DeFi industry due to its role as a blockchain-to-traditional lending bridge.
Any user can instantly receive their cash-based token by simply depositing one of the supported crypto tokens (Bitcoin, Ethereum, XRP, Cardano, Monero, or Ethereum) into their Nexo wallet.
The Swiss-based enterprise has 800,000 users as of November 2020 and provides access to cryptocurrency through more than 40 fiat currencies. The business has processed over $3 billion in cryptocurrency-based loans over the past two years and has also backed Brock Pierce, a former child actor who is now a cryptocurrency billionaire and a candidate for the 2020 U.S. Presidential Election, with a $1.2 million mortgage for a house in Amsterdam. Because the value of Bitcoin had risen continuously since Pierce had taken out his loan, he was not required to make any payments.
In conclusion, Nexo’s business model employs a “under-leveraging” strategy to safeguard the firm and its clients. The Nexo platform enables users to borrow a predetermined portion of the value of their cryptocurrency, shielding them from daily volatility in cryptocurrency prices and maintaining the loan-to-value ratio. This makes it less probable for the client to lose their cryptocurrency and protects Nexo in the event that a client defaults on their loan.
The real-time tracking offered by Nexo Oracle, which monitors price changes in cryptocurrencies in real-time and gathers information from multiple sources to avoid pricing differences when approving loans to clients, contributes to the model’s performance.
Source: whitepaper from Nexo
To start using the Instant Crypto Credit Lines, a client must first transfer their cryptocurrency assets into their safe Nexo Account.
Once the pertinent blockchain confirmations for the collateral assets are obtained, the Nexo Oracle will automatically determine the available amount for the credit line (based on real-time data on a cryptocurrency’s price) and set up the loan based on that data. Blockchain oracles are third-party services that connect blockchains to the outside world by giving smart contracts access to external data.
Based on the market value of the crypto assets that the client has pledged as collateral, the loan limit is determined. The dynamic character of the credit line is exclusive to NEXO’s platform: the Nexo Oracle raises the loan limit in the event that a client’s assets increase in value. Users can also employ a number of cryptocurrencies to support their loans, making them less susceptible to market volatility and changes.
The Nexo Wallet is subsequently used to hold all custodial assets, which are then kept in cold storage in BitGo’s SOC 2 Type 2 certified Class III bank-grade vaults.
The customer receives their loan immediately after the transaction starts in one of more than 40 fiat currencies by bank transfer or the complimentary NEXO card. Upon receipt, the client has the option to withdraw all or a portion of their loan at any time, either in one large withdrawal or several smaller ones, with interest only being charged on what is actually spent.
As additional options for loan repayment, Nexo provides a bank transfer in fiat money or using bitcoin. Once payment has been received, the Nexo Oracle immediately adjusts the loan limits on the blockchain and records the transaction.
Nexo offers a 50% discount on the entire cost if a customer has enough NEXO Tokens staked in their account to satisfy their incurred loan interest. To be eligible for the full discount, the user must have had those NEXO Tokens staked in their Nexo Account for the whole term of their loan.
As long as the outstanding balance is within the permitted loan limit, Nexo does not demand any monthly repayments, in contrast to conventional lending programmes. The client can then withdraw their cryptocurrency holdings from their Nexo Wallet or open a new credit line using the same collateral once the loan has been fully repaid.