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Interview with the Nexo Team.
What is NEXO in a nutshell?
Nexo offers instant asset-backed loans that allow you to spend cash whenever you need it without having to sell you crypto.
Here is an example:
You simply transfer, let’s say $10,000 worth of BTC or ETH to your designated Wallet and get an instant loan (=credit line) of i.e. $5,000 which you can immediately access using the free Nexo Credit Card or by withdrawing USD or EUR to your personal/business bank account.
What are the business use cases of NEXO?
NEXO Tokens are the world’s first SEC-compliant dividend-paying asset-backed security token with utility features. NEXO Tokens are backed by the assets in the loan portfolio and you receive dividends from. NEXO profits while you are hodl-ing NEXO tokens. The NEXO token also has great utility features:
– you can use NEXO tokens to make loan repayments at discount on the interest;
– you can use NEXO tokens in your loan Wallet to increase your limit, again on better terms.
What are the mechanics of NEXO?
You place your crypto in your designated Wallet on the blockchain and without any credit checks, you get instant cash from Nexo.
No exchange fees, No hidden fees, No taxes. And best of all – you retain all the profit from your crypto. With the flexibility that Nexo brings, you get cash to spend whenever you need it while keeping your crypto.
Nexo’s interest rate will be less than average standard credit card rates. You can make loan repayments using both crypto (BTC, ETH, NEXO and more to come) and fiat currencies (USD, EUR).
What happens if the collateral of the loan in cryptocurrency falls below the value of the loan?
The Loan-to-Value (i.e. ~50% for BTC and ETH) is dynamically determined by the Nexo Oracle algorithms, depending on the current and historical volatility and market liquidity of the asset. If the assets decrease dramatically in value and you do not contribute additional assets to your Wallet, after receiving a warning from the Nexo Oracle, we may be forced to initiate small liquidations to restore the LTV ratio. So we always encourage our clients not to overleverage themselves and conduct proper risk management.
How will the interest rate for each Crypto-backed loan be determined?
The average interest rate will be around 16%. We will reveal more details very soon.
Who are the parties that will fund the Crypto-backed loans?
Almost all funds from the Token Sale will be used to fund clients’ loan requests. We are not one of those companies which pretend they will spend $20M on IT with a roadmap for launching in 2020.
Our IT has been funded on our own and we are launching a live product towards the end of April 2018. Nexo’s primary mission is to enable the community to enjoy its crypto-wealth without selling it. The team firmly believes that the vast majority of the raised funds need to find their way back to the people. There already is a huge line up from potential clients, resulting in requests for loans in excess of $500 million.
How will the risks shared between the participating parties?
The only risk is that if the assets decrease significantly in value and you do not contribute additional assets to your Wallet after receiving a warning from the Nexo Oracle, we may initiate small liquidations to restore the LTV ratio.
Will Nexo itself be the custodian of the collateral crypto or will a third party be used?
We adhere to high-security standards, as we have always done for the past 10 years and in the case of a custodian, we will contract the most reputable third parties.
What are the similarities and differences between Nexo, Salt and ETH Lend?
SALT is a P2P platform, which means that each loan is a custom transaction and it may take days/weeks for your loan to be matched for every borrower and lender. Getting funded happens manually on SALT’s end right now. On top of that comes the preparation of the loan documentation, which reduces efficiency further. The Nexo Loans are instant and automatic because we know that speed is essential when you need liquidity. And the loan terms at NEXO are standardised for everyone, so there are no back and forth negotiations between borrower and lender.
SALT offers installment loans with monthly repayment schedule and your crypto stays locked/blocked until you repay the last $1 of your loan even if your crypto’s value has increased 100x in the meantime. NEXO is very flexible with regards to the crypto that you keep in your designated Wallet. We will be revealing more details soon.
At SALT you can only use fiat to repay your loans NEXO offers a variety of options: besides fiat, you can also use crypto at market prices (even the crypto kept in your designated Wallet) to make instant repayments.
SALT is available in the US, while NEXO is a Swiss-based company and offers its loans worldwide.
Regarding Nexo vs ETHLend (aka LEND token): We aren’t really competitors, because they are building a decentralized app that only works with ECR20 tokens, no fiat, no BTC. For example, a user pledges ETH to get a loan in EOS tokens or vice versa. They *may* fix the loan amount in USD (i.e. $20,000 worth of ETH to be repaid at maturity vs 20 ETH to be repaid at maturity), but there isn’t any actual USD currency involved in the transaction. Whereas with Nexo, you get the best of both the crypto and the fiat worlds – you keep your crypto, while using cash for your personal/business expenditures, fund leverage, etc. Moreover, they are P2P, thus each loan has a different interest rate, collateral %, etc and it makes take days until your loan request is funded, while your crypto stays locked in the smart contract. Plus you have to pay platform fees on top of everything. Nexo’s Loans have fixed interest rates and the same Loan-to-Value for everyone and availability is instant and automatic. ETHLend takes % commission on the interest of each loan. Nexo’s income is the interest rate of the loan, just like a bank. It’s more centralized for now, but way more profitable, which is good if you have a dividend-paying security token.
When will the first Nexo loans be issued?
The Nexo Platform will be live in April, ahead of the NEXO token hitting exchanges.
Do you have any specifics on exchange listings for Nexo tokens?
We are already in negotiations with several notable exchanges, including one which will be the first US-regulated exchange for security tokens. There are already several Non-US exchanges which are trading security tokens even today.
For more information please visit : https://nexo.io
We thank for the Nexo team for the interview