They began operations in 2018 and are regulated as a financial institution in the European Union. Nexo started off as a spin-off of their Fintech app, Credissimo.
Similar to BlockFi, users can store their crypto assets on Nexo and earn interest on them, up to 12% annual interest on stablecoins if paid in Nexo tokens, otherwise 10% on stablecoins.
For non-stablecoins, Nexo offers lending rates of 6% (if earned in Nexo tokens) to 8% (if earned in-kind). Supported assets include BNB, LTC, XLM, BCH, LINK, ETH, EOS, BTC etc.
Nexo lends these crypto assets out to borrowers, typically institutions, who might take a short position on them or use it for other purposes.
To start earning, users can simply deposit their funds into Nexo, which automatically start accruing interest daily, starting from a day after deposit.
The best thing about Nexo is that you can deposit and withdraw without fees, and interest is accrued and paid to you daily, unlike BlockFi which does it on the first of every month.
Why choose Nexo?
Nexo puts your crypto assets to work, similar to how a traditional bank account lends your money out for you, Nexo lends crypto assets out to borrowers who pay interest on them.
The interest charged to borrowers is typically higher than interest charged to lenders, and Nexo earns the spread. Because lending markets in crypto tend to be of higher yields than traditional lending markets, the interest rates tend to also be higher.
Nexo also has one of the highest interest rates in the market, paid daily for a variety of crypto assets, with free deposits and withdrawals and recently even free exchanges between crypto assets.
Nexo Interest Rates
Nexo gives you the opportunity to earn interest on your crypto after a minimum of 24 hours of depositing them. Interest is paid daily automatically to your wallet.
There are 3 main assets you can earn a yield on, namely earn on crypto (e.g. BTC, LTC, ETH, XLM, BNB, PAXG), earn on stablecoins (e.g. USDT, USDC, HUSD, PAX), and earn on fiat (e.g. EUR, USD).
Yield boosting with Nexo’s loyalty program
Users can boost their interest rates by participating in their loyalty program and holding Nexo tokens on the platform.
Nexo Loyalty program is a four-tier system, comprising Base, Silver, Gold, and Platinum levels where depending on the amount of Nexo tokens you hold in your portfolio, you can enjoy tiered interest rewards.
What you can do is potentially boost your returns on your crypto by earning in Nexo tokens, accumulating them, and then use them to boost your reward rates over time.
Alternately, if you believe that the price of Nexo is cheap, you can also buy the tokens outright and sell the earned interest paid in Nexo tokens.
Nexo earning on fiat
Nexo also supports earning on fiat currencies EUR, GBP and USD with up to 12% interest annually (if paid in Nexo), paid daily.
Borrowing from Nexo
Nexo offers instant credit lines, where you can use your crypto assets as collateral, borrow cash or stablecoins from 5.9% APR, without selling your crypto.
When you deposit crypto assets onto Nexo, a credit line becomes instantly available with a credit limit calculated based on the value of your deposits. Some crypto assets offer you a higher credit line than others.
Approval is automatic and there are no credit checks. You can borrow as little as $10 to $2 million with flexible repayments.
Why borrow with Nexo?
Most people borrow with Nexo because they believe in the long-term upside in crypto assets, and they do not want to sell them.
Instead, borrowing with crypto as collateral helps them keep the upside of their crypto assets while funding for a purchase.
Nexo also offers relatively cheap loans compared to banks, without all sorts of additional fees, just one flat interest rate.
It approves your request to borrow on the same day, and you usually get your funds within several minutes.
Security and Custody
Nexo stores idle crypto assets in bank-grade Class III vaults through the SOC 2 Type 1 & Type 2 certified crypto custodian BitGo.
BitGo Custody carries US$100 million in insurance protections via a syndicate of underwriters through Lloyd’s of London.
Furthermore, Nexo claims that it lends crypto assets to institutions on an overcollateralized basis, meaning that there is always collateral to back up the loans in case of default.
Risks with Nexo
While Nexo is a regulated financial institution with more than US$4b assets under management, there are still plenty of inherent risks with the platform.
Funds are not insured if Nexo goes underwater, unlike traditional banks where your deposits may be guaranteed up to a certain threshold.
If Nexo gets hacked, as it is quite common in the digital assets space, your funds can also disappear, and the insurance purchased by Nexo might prove to be insufficient. That’s what happened to the platform Cred which led to its bankruptcy and loss of users’ funds.
There’s also credit risk, where if the counterparty fails to repay the loan, Nexo might not have enough funds to pay its creditors. This risk however, is mitigated by over-collateralised loans, although if the market crashes too rapidly, it might be hard to even recover the loans.
I like Nexo for simple reasons, it pays interest daily, and the free withdrawals without waiting for 24 hours like BlockFi means I can use my idle crypto assets to earn a yield.
Furthermore, you can participate in the upside of Nexo by earning interest on its tokens without paying a fee. It’s simple and effective, and you might get a much higher yield with the token appreciation.
The platform is credible and the team is strong, which gives it more legitimacy compared to other lending platforms. While I’d normally recommend BlockFi, Nexo has some additional perks such as earning in Nexo and very fast and unlimited free withdrawals which BlockFi cannot match.
Once again, higher yields are not without risks. Do your own research and evaluate holistically.