NEXO is a project which has recently garnered quite a bit of interest in the crypto currency community.
Not only is NEXO being developed by a large FinTech company but they are also being backed by some pretty influential names in the crypto currency space. The NEXO token has also been gathering quite a bit of momentum over the past few weeks.
However, what is Nexo exactly, and should you consider it?
In this comprehensive review of NEXO, we will take a deep dive on the project and will look into the technology, use cases, team members and long term coin prospects.
With that being said, let’s start with the basics.
What is NEXO?
NEXO is a project that’s aiming to provide lending services while using crypto currencies as collateral. While there are certainly some issues that will need to be ironed out to make this work successfully, the team seems to be well on its way, and has strong backing. With NEXO crypto currency owners will be able to get fiat currency if needed, but still maintain ownership of their digital assets.
It works by allowing borrowers to lock up crypto currencies as collateral in exchange for fiat currency. The cash is either sent directly to a bank account, or it can be added to a prepaid credit card. In case of market volatility (which is almost a given with crypto currencies) the limit on the credit card will adjust in response to changes in the market value of the underlying crypto currency.
Nexo, the world’s most advanced instant crypto-backed loans provider
NEXO Market Access
While Nexo is based in Switzerland, it makes its loans available worldwide. Anyone who holds crypto currency can take advantage of a their loan. And since the loans are fully collateralized there’s no need for borrowers to worry about credit history or approvals.
Of course the use-cases for Nexo loans will be limited since they’re collateral backed, but the use of crypto currencies as collateral makes for a compelling alternative for those who hold crypto currencies and don’t want to sell yet and give up future gains, but still need fiat currency to access certain opportunities.
Looking at the closest competitor SALT, they are also a collateral based platform, and are based in the U.S. and roughly 30 other countries at the time of this writing. SALT differs from Nexo in its use of a membership structure, where the ownership of more SALT tokens unlocks higher membership tiers. Each higher membership tier unlocks greater borrowing potential, better repayment terms, and additional fiat currencies besides USD. All of this makes SALT somewhat inclusive.
Using the NEXO Token
One incentive for holding the this token is that it pays dividends to holders. Thirty percent of the profits generated from their loans go to a dividend pool that is then distributed to their holders. Currently dividend payments are being made in Ethereum (ETH), but there’s a good chance that this will expand to other crypto currencies in the future.
Besides being a source of dividends, the NEXO tokens can also be used to repay loans, and the incentive for this is a reduction in repayment interest on the loans. This is similar to bank loans that offer lower interest rates or a discount when auto-payment is set-up. Holding more tokens in your wallet will also unlock higher loan limits.
NEXO and Regulation
Nexo has been very clear in stating that the token is a security token, and that it is compliant with the Securities and Exchange Commission Regulation D Rule 506(c). They refer to the token in their documentation as a dividend paying asset which is backed by collateralized assets.
While traditional institutions don’t yet recognize it, there is a difference between fiat as collateral and crypto-assets as collateral in that crypto-assets have additional utility. It seems fortunate that Nexo has been upfront about the status of their crypto-asset, and that they are making every effort to remain compliant with U.S. regulations.
As you might guess with a product like this, it has an aggressive roadmap to keep itself ahead of any potential competition. So far they’ve been doing well, although they missed their July 2018 deadline to introduce the Nexo credit card and are now pushing that back to the fourth quarter of 2018. Also on-tap for the fourth quarter of 2018 is an affiliate/tell-a-friend program, the mobile wallet, and a second Nexo airdrop campaign.
In my mind the first quarter of 2019 is far more interesting and will be more telling for future growth as they plan to finalize the acquisition of an FDIC-insured bank, and introduce deposit accounts.
Further out, the second quarter of 2019 has plans for an enterprise API, installment loans, and a higher cap on loan limits.
If you believe that crypto currencies have real-world utility as a means of payment and transfer of value then you should believe in the Nexo project. A lending platform that allows crypto currency holders to unlock the trillions of dollars of value without having to give up ownership of their crypto currencies is a huge deal.
Besides simply unlocking value, Nexo loans can allow crypto currency holders access to funds without the need to pay taxes on what could be significant profits from their crypto-holdings.
The fact that the team has more than 10 years of experience running an established financial services firm is another positive for Nexo. You can be sure they analyzed the need for crypto currency lending services, and with their experience they are well suited to see this project to success. They also have solid help from advisors such as Michael Arrington, the founder of TechCrunch.
There is a very good possibility that crypto currency lending could become a multi-billion dollar industry, and could potentially see itself as a trillion dollar industry if crypto currencies escalate in value as some financial advisors have suggested they will. With that scale market on the horizon now could be a very good time to get in on Nexo at its infant stages.