Nexo is a crypto banking and asset management platform enabling users to earn interest on their crypto holdings and utilize their crypto holdings to receive a loan. Soon Nexo users will also be able to receive the credit line on their Nexo card and generate cash back rewards in the crypto asset of their choosing for every purchase.
Signing Up for a Nexo Account
Signing up for a Nexo account is simple and can be accessed through both desktop or mobile. Obtaining an account just requires users to go through a basic KYC/AML process to increase their limits and enable their Nexo account access to the fullest. Nexo is a global company that provides their services to most countries in the world, but some of their services may not be available to everyone. To see where Nexo services are not available you can review this page.
When you sign up for a Nexo account, there are different verification tiers - starter, basic and advanced verification - allowing you to access different features of the Nexo platform. Starter verification requires just your name and email and lets you deposit crypto, earn interest as well as getting a loan paid out to you in crypto. The Basic verification requires you to provide your address and in return you get higher loan withdrawal limits (up to $2m a day!). The advanced tier requires you to upload a copy of your ID and allows you to deposit and withdraw fiat currency by bank transfer. This means you can get your loan paid out to your bank account and use your credit line for expenses in the real world. The advanced verification will also give you access to the Nexo card which is supposed to launch soon.
Nexo Account
Once you have submitted your basic verification and your account has been approved, you’ll have access to Nexo’s main products:
- Earning interest on holdings
- Crypto Credit Lines
Earning Interest on Nexo
Nexo’s earn interest programs enable users to earn up to 10% interest on their crypto holdings. This interest is paid daily and in the asset you deposit. So, if users deposit Bitcoin they will earn daily interest in Bitcoin. For users to earn the maximum amount of interest on their holdings they will need to buy and stake NEXO tokens.
To generate interest, Nexo lends your assets to retail investors as well as trusted institutional investors who both naturally pay a fee to borrow them. Because the loans are "asset backed", meaning that these borrowers have to deposit a security to get a loan, there is very little credit default risk. There are no official numbers on how much activity they have done in the institutional market, but in aggregate, they mention they have done $3B+ in transactions and have over 800K+ users. This provides comfort to new potential new users as there has been activity on the platform and no negative experiences so far.
To get started with earning interest on your asset holdings, all you have to do is just deposit your crypto assets into the Nexo wallet that is generated for you or top-up fiat (USD/EUR etc.) from your bank account. Each crypto asset has its own specific deposit address, so be sure you’re inputting the correct address if you don’t want to risk losing funds or sending it to the incorrect address. When you deposit from a different service, Nexo will show you the stage at which the deposit is in as it requires at least 6 confirmations for it to be fully verified. There isn’t a feature to know which confirmation stage you are in, like on Binance for example, so if you want to track the status of your deposit you'll have to go to a block explorer.
Just note if you want to top-up your Nexo account with fiat, you will need to go through advanced verification, which means providing further documentation like IDs, passports, etc. Once that is enabled you will be able to earn interest on Euro, GBP, or USD deposits, meaning that if you don't want to, you don't have to touch crypto at all. Also, depending on whether you own the NEXO token or not, the advertised rates will automatically adjust on the platform to show you what rate you will receive.
In the above photo, you’ll notice that the Earn Interest offering is 4% when you do not have the NEXO token versus 5% if you did have it. If you own the NEXO token, it will automatically adjust to 5%.
To withdraw your funds, it is as simple as depositing and just requires you to specify which wallet or bank account you want your funds to go to. There is no lockup period or other constraint hindering you from getting your money out of your Nexo saving account. A value add about Nexo’s service is that you will be able to access your funds the same day or within 24 hours with no withdrawal fees. We practiced a withdrawal with about $100 and we’re able to receive our funds within 6 confirmations and then we withdrew shortly after with no fees and received our funds within an hour. While this is slower than using decentralized services this is on par or faster than the existing services provided by centralized lending platforms such as BlockFi.
Crypto Credit Line
Nexo’s credit line is a product that enables users to take out fiat or stablecoins against their crypto holdings starting with a loan as little as $10. The current coins they offer as collateral for their instant credit lines are below:
- BTC
- ETH
- XRP
- LTC
- XLM
- BCH
- EOS
- LINK
- TRX
- Stablecoins
- PAXG
- NEXO
- BNB
The rates they offer to take a loan against your holdings starts at 5.9% and goes up to 11.9%. To obtain a lower interest on your collateralized loan, you will need to buy and stake NEXO tokens. All of these loans start as a standard 1 year term, but if the loan is not fully repaid within the first year they will be extended for an additional 12 months.
To get a crypto credit line, all you have to do to get started is deposit one or more of the above assets into their designated wallets and you’ll be able to ask for a line of credit in return. When you first deposit it will show you right away how much of a credit line you can receive. This is useful to help you figure out how much of a credit line you can take out without having to do additional calculations or utilizing a separate calculator.
Following getting and approving your rate, you will be able to withdraw those funds directly to stablecoins for instant use or to a bank account, which can be funded within 1 business day. The best part of these loans is that you will not need to submit a credit check or provide any other information given that you will be over collateralizing a loan with your holdings. To get a better understanding of how to calculate how much funds you will receive, the website offers you a basic calculator to see how much funds you will have access to given your holding size. Also, feel free to read this blog article explaining how their LTV calculations work.
How do I repay my Nexo loan?
To gain access to your funds, you will have to repay your loan with some accumulated interest. The loan can be repaid in fiat, crypto or a combination of fiat and crypto. To repay, all you have to do is go to the repay credit line button where you will be prompted to pay in any of the assets you have in your wallet or through a bank transfer.
Nexo Card & Fees
While not live yet, Nexo’s card is slated to be one filled with a lot of amenities. They plan to offer:
- Free card w/flexible credit line limit
- Instant cashback on all purchases
- Multiple repayment options
- Virtual nexo cards to have safe transactions
- Payments in local currencies
- No monthly/annual fees
- No minimum monthly repayment
This card is an evolution in what is typically available in traditional credit cards as most traditional credit cards require credit scoring, minimum monthly payments, only give cashback in native fiat currencies or airline miles, and can only be repaid in the native currency you took your credit line in.
While there hasn’t been too many specifics released around the card, this card seems to be great for crypto native users as you’ll be able to open up a card utilizing your crypto holdings as collateral. This may be a barrier for adoption for those just looking to enter the space and earn crypto for their transactions, as people will need crypto to earn the cash back. Nonetheless, the ability to earn cashback in the crypto asset of your choosing is a great value add as that cashback can be utilized to pay back your crypto loan and earn additional interest.
As more information is released around the card, we will be sure to provide more updates on its offerings.
Nexo Token
Nexo offers a token for crypto holders to buy and utilize to obtain cheaper rates on their credit lines, higher interest rates for their crypto holdings, and to receive dividends paid out by Nexo. This token is most akin to a membership type token. There are two types of dividends available to Nexo token holders:
Base Dividend — paid out to all eligible token holders proportionally to their NEXO Token holdings
Loyalty Dividend — paid out individually for each NEXO Token based on how long it has been in the Nexo Wallet from one ex-dividend date to the next. The share of the Loyalty Dividend will be no less than 1/3 of the total dividend amount to be distributed in any given period.
These dividends are paid out in a mixture of BTC, ETH, NEXO, and stablecoins. They don’t specify when dividends are paid out, but they plan to issue dividends more than once a year to token holders.
While this token can be a great value for users, as it provides preferential rates on loans and interest earning and dividends, the NEXO token can be confusing. Buying this token does expose users to typical asset risk as the price does fluctuate. Also, purchasing this token is not straightforward as it is currently only listed on 3 exchanges, Huobi, Hotbit, and HitBTC. It can also be acquired on the Nexo platform itself through a partnership with Changelly with a credit card but the process is a bit clunky.
So, if potential users of Nexo’s platform don’t have access to these exchanges or can’t utilize Changelly, getting access to this token becomes not a possibility and detracts from some of the attraction of the Nexo platform. Nonetheless, if users are able to get access to the NEXO token there is some value in having the token if you intend to use the Nexo platform regularly. The yearly dividend is also interesting as you participate in the economic success of Nexo, which is a leader in the rapidly growing crypto lending industry.
Is Nexo safe?
Nexo provides a few measures to ensure greater security and trust in their platform. Nexo has obtained several licenses in Europe to provide greater transparency and oversight into their operations as a business. This helps users ensure that their “payouts are guaranteed, protected as entrusted to a company with adequate capital.” To learn more about their licenses, feel free to check their page here.
To ensure the safety of your assets, Nexo utilizes BitGo as their custodian and insures assets up to $100M. This insurance policy helps cover against:
- Third-party hacks, copying, or theft of private keys
- Insider theft or dishonest acts by BitGo employees or executives
- Loss of keys
Nexo chose BitGo as its custodian because BitGo provides 100% cold storage technology in bank-grade Class III vaults and the BitGo platform is SOC 2 Type 2 certified. BitGo is the most popular crypto custody provider and all their measures help ensure the safety of your holdings on the platform.
As an added measure and to prevent someone from accessing your wallet, Nexo has implemented two-factor authentication to protect your account from hacks. You'll be able to enable and choose between Google Authenticator/Authy/LastPass or any other authenticator application (highest level of security) or SMS Authentication (standard level of security). This is in addition to your email and password. On top of that, Face and Touch ID can be implemented for everyday use, to facilitate fast and easy and authentications of transactions.
Overall, Nexo’s platform has enabled many measures to ensure the safety and accessibility of users’ funds.
Nexo Mobile App
The whole Nexo experience is also available on mobile (iOS/Android), allowing you to manage your funds on the go. Unlike the mobile apps from many competitors the Nexo app is completely on par with the Nexo web app feature wise. You can complete any action whether it's repaying a loan or making a Euro bank transfer to earn interest, everything can be done on mobile. The Nexo mobile app will become even more useful once the Nexo card will have launched, as users will use Nexo on a daily basis.
User Experience & Support
As a part of our withdrawal process, we wanted to see how customer support responded to various questions and requests, as well as timeliness of their responses. When first reaching out to the support team, you can get in touch directly on their site through the Nexo Support Bot.
This support bot will try to gauge what question you’re asking and point you to an FAQ article. If not, it will ask to point you to a live representative to help with your request or issue. When we asked for a live representative, we were guided to somebody within a few moments. They were able to answer our question around how long it takes to confirm our deposit onto the Nexo platform and other questions around the account verification process within minutes.
Overall, Nexo’s support was quick and responsive. Having in-app support is a highly useful feature for a crypto lending provider.
Conclusion
If you’re looking for a solution to put your crypto assets to work Nexo is a solid platform for you to utilize, as you gain access to interest on your holdings, can open up a credit line backed by your crypto, earn dividends based on the overall success of the platform, and in the future access cashback rewards for spending through the Nexo card.
While there is the added friction and potential complexity of utilizing the token to gain favorable offerings, the Nexo team has partnered with trusted parties and has built a secure solution which provides token holders greater access to new functions with their assets. To have a rounded out solution, Nexo should add a trading functionality, so users can switch between assets without having to move their funds to different platforms. This could enable a greater user experience and keep users utilizing their platform to the fullest.
