Full review on Nexo: A good plan for earning interest?

Nexus is a serious project which is increasingly being talked about in the growing sector that is decentralized finance (DeFi).  To quickly explain DeFi, let's say that it is the new trend in finance which seeks to reproduce and replace a whole range of financial services previously offered by classic institutions of traditional finance.

Thus, Nexo then allows users on the one hand to borrow FIAT money (euros, dollars, etc.) and on the other hand, to generate interest on the deposit of its cryptocurrencies.

The great advantage of Nexo is that it is possible for anyone to borrow funds in a few minutes without having to complete administrative files as is the case with a traditional bank.

So let's see here the Nexo review, let's see how the platform works.

1/ History and management team Nexus

The good news and this is relatively rare for crypto projects, the company Nexo is based in Zug, Switzerland. That said, we do not have very precise information on the exact location of its headquarters. The jurisdiction, however, is that of Switzerland, which is not without reassuring users, accustomed to headquarters in tax havens.

The Nexo Group has legal entities in various locations around the world and the company was founded in 2017 by Kosta Kantchev, Georgi Shulev and Antoni Trenchev.

The trio successfully launched an initial coin offering (ICO) which concluded in April 2018. The company raised just over $52 million in financing. We can cite Michael Arrington's Arrington XRP Capital who was an important contributor, and this at an early stage of the creation of the company.

The Nexo management team

Here again, unlike other platforms, Nexo has a well-known team present on social networks. Likewise, the majority shareholders (who are the founders) of Nexo are the majority shareholders and founders of Credissimo, one of the main European financial technology groups founded in 2007. This company collaborates in France, for example, with large banking groups such as Société Générale, Crédit Agricole and BNP Paribas, to name but a few.

If we specify that they created Credissimo, it is no coincidence. It is a recognized company in traditional finance that provides instant online consumer loans, financing and bill payment services.

The founders therefore have real expertise in this area. They didn't come out of nowhere, we want to say.

Nexo operates as a legally compliant entity, with the team declaring itself SEC compliant and the team also works in compliance with all applicable regulations of the jurisdictions in which it operates.

Nexo complies with all relevant KYC/AML regulations and also holds all client funds in cold storage in conjunction with third-party custodian BitGo which is SOC 2 Type 2 certified.

 😎 Another good point for Nexo: BitGo Custody also holds $100 million in insurance protections with Lloyd's of London, meaning customer funds are insured in the event of a worst-case scenario.

As a result, Nexo is able to operate as an instant cryptocurrency lending company available in over 200 jurisdictions, allowing people to put up collateral in around XNUMX digital assets and benefit from a instant access to loans in 45 fiat currencies.

What services does Nexo provide?

Nexo offers two basic services based on depositing and lending funds, as you already understood.

1/ Generate interest (Up to 10% on EUR)

Nexo primarily allows its users to deposit funds in order to receive interest on their holdings, and interest is paid on fiat currencies such as USD, EUR and GBP as well as “stablecoins” such as USDT, TUSD, USDC, PAX, and SAI.

Users receive an interest rate of 8% pa on stablecoins and can add and withdraw funds at any time.

Nexo also applies compound interest, which means users can receive larger amounts in their accounts daily, and this service is also free and commission-free.

In this example, we see that if we deposit 10,000 euros, we earn 1124 dollars per year. It's certainly not huge, but it remains one of the highest rates on the market.

Likewise, it is typically passive income and that is why so many people choose Nexo for this service.

2/Borrow money using your cryptos.

You should also know that you can borrow money in different national currencies, such as euros, dollars, Moroccan dirhams, Hong Kong dollars, etc. (Yes, the company operates with more than 200 jurisdictions, which gives it the possibility of having a large number of currencies).

To borrow, you must post collateral.

Users of the platform can deposit over 10 popular cryptocurrencies including Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Binance Coin (BNB) in order to receive a loan in over 40 fiat currencies such as the US dollar (USD), the Euro (EUR), the Canadian dollar (CAD), the Japanese yen (JPY) and the British pound (GBP).

🙂 Besides, you can know exactly how much you will repay with the calculator integrated on the site which is very practical.

It is possible to lend an amount of more than 80% (around 50% for BTC/ETH) of the deposited asset and there are two possible interest rates of 5,9% APR and 11,9% APR depending on how which you choose to repay your loan from.

Who can take out a loan on Nexo?

The platform is open to users around the world and to get a loan, simply register a Nexo account on platform.nexo.io and deposit collateral into the account.

Additionally, there is no credit check; However, when you take out a fiat currency loan, you need to pass the basic and due diligence checks and you will need to enter your KYC/AML information. This is quite understandable.

The Nexo loan process is one of the fastest in the world.

Nexo loans are based solely on the size of your security deposit, and there are no credit checks and nothing is reported to credit agencies.

Therefore, you are not asked to provide information regarding your personal finances or other documentation.

Currently, the minimum loan amount you can have is $500 while the maximum is $2. Also, crypto-backed loans are instant, processing may take up to 000 business day depending on your KYC/AML security checks.

The KYC process is fully automated and typically takes less than two minutes.

You will need to upload a high-quality photo of a government-issued ID, such as a passport or driver's license, and the name you provide on the verification form must match the name on your card identity.

Even though these loans are instant and guaranteed, be aware that users should receive their funds the same or next day, alongside the reference “Your Nexo Loan”.

To be more specific, the company states processing time is as follows:

• Local transfers: 1 business day
• International transfer: 3 to 5 business days
• USDT (Tether): usually takes around 30 minutes

If you fall behind on your repayments and the cryptocurrency you are using as collateral depreciates in value, the Nexo team will sell part of your deposit to cover the shortfall, however, you will receive a warning before this happens and it forces you to miss payments while your security deposit declines in value on the open market.

As expected, the best solution is to make your repayments well. However, if you do not make any repayments and your security deposit increases in value, you should have nothing to worry about. That's the very good thing to know! 

Note: Even if this is very practical and extremely quick, you should know that the loan is relatively expensive. Do not go into debt and choose the loan only in case of urgent need. It’s an opinion 😉

3/ A NEXO bank card with 5% cashback

Note: the map is not yet available.

The platform also integrates the MasterCard-backed Nexo credit card which can be used to make purchases in brick-and-mortar stores and online, or to withdraw money from an ATM.

The card also offers 5% cashback on every purchase which is added to your Nexo wallet when a transaction is settled.

Your card's credit limit depends on the credit line you have with Nexo, and the card also comes with its own mobile app and is free when it comes to account/inactivity fees or currency purchases .

Note: Here again, you have to be careful, because the money you spend is actually the money in your line of credit. So, even if the 5% cashback is interesting, it will be an expense on your credit line.

How does loan repayment work on Nexo?

As much when you want to earn interest, it is one of the services that offers the highest percentage (especially on USD), as much for borrowers, it is very expensive.

To determine the maximum amount users can borrow, Nexo like other platforms uses a loan-to-value (LTV) system.  It is the LTV that establishes lines of credit based on the amount of funds placed as a security deposit.

Essentially, LTV refers to the ratio of a loan to collateral value and measures the loan balance against the value of the backing collateral asset.

Good to know: The LTV is actually calculated with the loan amount in USD (the amount requested) divided by the value of the guarantee in USD, expressed as a percentage.

For example:

Loan amount: USD 300;
Guarantee value: USD 500;
Loan Value/LTV = ($300 / $000) * 500% = 000%

Detailed explanation of LTV: 

I want to explain more because LTV is a calculation tool used in all lending platforms. It's also important to remember that your LTV ratio can fluctuate. More specifically, as the value of your collateral decreases, the LTV increases.

This simply means that if the value of BTC, ETH, LTC, (in crypto therefore) to guarantee your loan in FIAT is falling on the open market, the LTV will increase.

So if the price of the crypto asset falls, the LTV continues to increase and the Nexo Oracle has a threshold in place where the collateralized asset will start to be sold to repay part of the loan to rebalance the LTV.

This threshold is set at 83,3% and when the LTV reaches 83,3%, Nexo Oracle will begin to initiate partial automatic loan repayments, however, you will be notified via SMS and email before this happens.

For example:

Loan amount: 5000 USD;
Value of guarantees: USD 6;
Loan value = ($5000 / $6000) * 100% = 83,3%

With Nexo, there is always the option to transfer more collateral at any time, and the specific LTV ratio attached. Let us also add that your loan also depends on the type of cryptocurrency you deposit.

Here are the LTV ratios currently used by Nexo:

Bitcoin (BTC) and Ethereum (ETH): 50%
Stablecoins: 90%
Ripple (XRP): 40%
Binance Coin (BNB), Bitcoin Cash (BCH) and EOS: 30%
Stellar Lumens (XLM): 17%
NEXO: 15%

How to start reimbursements on Nexo: 

When using the platform, you can start the repayment process by logging into your Nexo account and clicking on the “Repay Loan” button.

You are free to choose to repay your loan in crypto, fiat, or a combination of both, and no minimum repayment is required. You can also repay part or all of your loan at any time and you only pay the interest for the days you borrow.

Interest is charged daily at 00:00 CET on the outstanding balance and is debited from your available loan limit, meaning interest is added daily to your outstanding balance.

  The standard maturity period of a loan is one year by default, but this can be renewed on request without any repayment, and the period begins once you make your first loan withdrawal.

Any new loan withdrawal changes the start date to the date of the last loan withdrawal and you only pay interest on the funds you withdraw.

You can also make a refund by placing an order with Nexo Oracle to sell a portion of the crypto assets held in your account to repay the outstanding balance in part or in full.

This is convenient if your asset has an appreciable value, and it's worth noting that if you repay a loan within 30 days of the last withdrawal, you will still be charged interest for the entire 30-day period.

You can make loan payments at any time and using any amount of fiat or crypto.

What is the advantage of having Nexo tokens?

In fact, there are two advantages to having Nexo tokens. The first is to earn commissions and the other is to reduce the fees on these loans.

The platform integrates its NEXO token (SEC approved) is a native token that can be used to effectively get a discount on the annual interest rate of your crypto-backed loan.

Indeed, it is practical for those who request a loan. The standard annual percentage rate (APR) on the platform is 11,9%, which can drop to 5,9% (a 50% discount) when using NEXO tokens as collateral or when making reimbursements using NEXO.

Similarly, anyone who keeps NEXO tokens in their Nexo wallet for only part of their loan term will receive an interest discount on the credit line proportional to the number of days in the entire period for which they had a number enough NEXO tokens to cover the interest.

All interest accrued on the platform is calculated by Nexo Oracle which determines the respective interest and discounts for each client's portfolio on a daily basis.

For example:

If you plan to withdraw a loan of $1 for a period of one year, then in one year your loan would accrue outstanding interest in the amount of ±000 (119,00 x 1% = 000 ).

Here, to ensure that you qualify for the 50% discount on interest income, you must then keep at least ±119,00 USD worth of NEXO tokens throughout the year.

If at any point your outstanding interest exceeds the value of your NEXO tokens, your daily interest would be adjusted accordingly from that point on.

Using the example above, if the value of your NEXO tokens drops to ±60 USD, the daily interest would be around 9% (50% at 11,9% and 50% at 5,9%).

How to buy Nexo tokens and receive dividends?

For example, I chose to use the Nexo platform not so much to generate interest as to invest in the Nexo token. They pay us dividends and that's a very good thing.

Few companies do this and I admit that Nexo did very well to do it.

So, to buy NEXO, know that it is not a token available everywhere. That said, on the platform HOTBIT or HUOBI , you can buy them for BTC, EUR or ETH.

Once you have purchased Nexo, all you have to do is transfer them to your Wallet on Nexo. As simple as that.

Dividends are paid once a year. In 2018, it was in December, in 2019, it was in August and this year, it will apparently be June 30.

How are dividends calculated?

70% of the company's profits will be reinvested in the company. But 30% of Net profits will be returned to holders of Nexo tokens in proportion to what they own.

Security on Nexo is a priority

Accounts are secured by a combination of password and two-factor authentication (2FA), and you can choose to receive an SMS message or use an app like Authy to complete your logins.

Nexo also complies with all relevant laws regarding anti-money laundering and counter-terrorism financing, meaning all users are required to verify their identity, and Nexo uses Onfido as a trusted third party to complete the KYC process.

Most importantly, customer funds are held in individually assigned multi-signature wallets in cold storage, held by BitGo, which is a fully audited, SOC 2 Type 2 certified, third-party custodian.

As a result, funds held with BitGo are insured up to a value of $100 million, as the company is in turn insured by Lloyd's of London. This custodian agreement applies if the platform is hacked, loses its private keys, or funds are stolen by an employee.

Overall, Nexo is suitable for people with some crypto or investment experience who have crypto holdings that they would like to put to use.

Although Nexo is one of the simplest lending platforms to use, you will still need to familiarize yourself with using Nexo Oracle and starking NEXO tokens, and it is wise to familiarize yourself with the LTV ratio and exactly what how it may affect your situation before taking out a loan.

What are the disadvantages of Nexo?

This wouldn't be a truly honest review if we didn't talk about the downsides.

For me - that's just me - the biggest disadvantage because I only see one, is that we are automatically given a line of credit even if we don't want to borrow.

So yes, of course, you are not obliged to draw on your credit line but you can be tempted. However, the difference between the collateral deposited and the credit received is enormous because there are the interest costs of the loan.

So, for example, a person who deposits collateral to earn interest (like me, for example), may be tempted to spend it...And thus lose a good part of their capital.

So, for example, the Nexo card is not recommended at all because the money on it is not your deposit but your credit line.

Do you see the problem?

  This is indeed very vicious in my opinion. To use Nexo properly, you must have this information in mind because otherwise you will (almost) touch your credit line in spite of yourself.

This is why I still recommend BlockFi or Youhodler to generate interest because there is a real distinction between generating interest and taking out a loan.

Why borrow on Nexo if you already have collateral?

Yes, I would like to ask the question because a person who does not know the world of cryptocurrencies would be somewhat surprised at how DeFi works on this point.

Why borrow if you have sufficient collateral and could simply sell it or exchange it on a platform?

Yes, I'm ahead of the questions and this is actually why so many crypto holders use DeFi borrowing services.

The lending service is intended for people who own crypto assets who do not wish to trade them. For what? This gives them the ability to hold their assets and have fiat currency without the need to sell their crypto assets, especially when the market value of their funds is below their target price.

For example, a person who needs money but does not want to sell their bitcoins immediately because they are convinced that bitcoin will increase, will then want to borrow from it rather than selling them directly.

You can make repayments at any time, loan repayment is flexible:
• No minimum loan repayment is required, as interest is automatically added to your outstanding balance;
• You can make refunds at any time. You can repay all or part of your loan at any time (like you do with your credit cards) and you could save on interest – because you only pay the interest for the days you borrow;
• There are no hidden fees (compared to application, administration, membership, late payment penalty, gas, legal fees, etc. of other lending platforms);
• You can make repayments in USD, EUR, GBP, AUD, NZD or crypto, including collateral in your Nexo wallet (e.g. pay with part of your assets as collateral and get the rest back / retain ownership of the rest );
• If you consider that your crypto asset has reached its price target, you can place an order with the Nexo Oracle to sell a fraction of the crypto assets stored in your wallet to repay your outstanding balance in whole or in part;
• After each loan repayment, the Nexo Oracle runs automatically and the loan limits are automatically increased;
• Loans repaid in less than 30 days after the last withdrawal will bear interest for the full 30 days.

Conclusion and final opinion on Nexo:

To summarize, here, this Nexo review: Users can deposit their favorite fiat currency or stablecoin in order to earn interest on the platform, or deposit a range of cryptocurrencies as collateral for a fiat currency loan.

The interest service pays an interest rate of 8% pa (which accrues daily) while the crypto lending service sees users pay an interest rate of 5,9% APR or 11,9% APR depending on whether they choose to use the platform's NEXO token to repay their loan.

Nexo therefore remains a very easy-to-use and very secure platform for instant crypto loans that allows people in over 200 countries to use their crypto assets to receive loans in around 45 fiat currencies.

The platform is well designed and the process of creating an account, depositing funds in crypto or FIAT and lending is very simple, with the dashboard being easy to understand and in word: intuitive.

The company is also proving very popular and gaining traction with a significant portion of the crypto community, with partners like Deloitte auditing its teams. We are in a serious company and Nexo wants to let us know that.

The ability to earn interest on deposited funds is another attractive feature of Nexo, which puts it on par with the blockf ou Celsius for example.

The project allows people to put their digital assets to work and gain instant access to money while retaining ownership of their assets.

Additionally, the system is very tax efficient, as you never withdraw money, meaning you are not required to pay additional charges and fees in most countries.

Important: Remember that as with any crypto lending platform, it takes some getting used to and if you do not make any repayments while your security deposit depreciates in value, a portion of your security deposit will be sold automatically in order to cover possible price drops. Therefore, it is best to stay on top of the LTV ratio.

Additionally, although Nexo is fully compliant in all jurisdictions it operates in, it is still waiting to be regulated by a well-known authority and the crypto industry is known for its volatility and sudden changes. As you know, any investment involves risk, especially in the field of cryptocurrencies.

That being said, Nexus is a good solid choice for anyone looking to obtain capital by pledging their crypto holdings as collateral.

➡ You also have to be careful with Nexo because as soon as you deposit an amount, you have the equivalent of your credit line. This means that a loan is immediately given to you. So, be careful not to spend in the form of the line of credit so as not to lose your capital.

👋 This is why personally, I always recommend number 1 in my eyes which is Youhodler.

Likewise, it is entirely possible, even recommended, to use different platforms so as not to put your eggs in one basket.

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To buy cryptocurrencies (simple way):

• Public chat Coinbase (Earn €10 by buying 100 euros of cryptos)
• Public chat Binance (Complete crypto trading platform)

Generate interest on your cryptocurrencies:

• Public chat Youhodler (Earn up to 8% interest)

To secure your cryptocurrencies:

• On the wallet Ledger 
• On the wallet safepal

To have fun and play 

• The best for Esport and sports betting: CloudBet

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