Are you looking for an alternative to traditional banking in the realm of crypto? Do you prefer favorable interest rates and guaranteed loans based on crypto collateral?
Well, Nexo might be the next great opportunity for you. Nexo is a blockchain system that supports crypto borrowing and lending.
This means you can get fiat currency whenever you need it, but also make money off of your idle crypto assets. In this article, we will cover everything you need to know about Nexo, how it works, and what are the pros and cons.
Whenever you’re ready to discover the opportunity to bank on crypto, keep reading.
In essence, Nexo is an overdraft based blockchain system that allows crypto lending and makes it very easy for users to access crypto-backed loans instantly.
The company was launched in 2018, but it has started to gain most of its popularity in recent years. The slogan of the company is “Banking on Crypto.” They try to replace traditional bank services, but with crypto as the asset.
Nexo attempts and continues to promote the model, in which users can lend their crypto, as well as acquire loans for themselves. Users can earn interest on their crypto, and access instant fiat currency without relying on credit scores.
With Nexo, the user has to deposit the supported crypto into their wallet, and then choose how they want to lend it out. In other words, they choose how to make use of the peer-to-peer market.
The entire system is designed to secure liquidity automatically and with greater flexibility than a traditional bank. The network makes it easy for clients to get fiat if they want it, while still retaining ownership of their digital finances.
At this point, Nexo supports 28 cryptocurrencies. They are but are not limited to XRP, Cardano, Bitcoin, Ethereum, and much more. The platform also supports NEXO token payments in EUR, ETH, BTC, and USD.
The technology that backs the Nexo blockchain supports decisive transparency at the heart of the platform. It facilitates a smooth process through the smart-contract system of Ethereum, and stores all relevant tokenized data for transactions.
Not to mention, the fact that the NEXO crypto is ERC-20, supports the idea of interest-covered securities.
1. Deposit Crypto Assets Into Your Nexo Account
To obtain a Nexo loan, the first thing you need to have is a Nexo account. To create your account, sign up. Once you create your account, you’ll have to deposit your crypto assets. The platform keeps on adding popular altcoins to its list.
Some of the major coins that you can readily deposit include BTC, ETH, PAXG, XRP, LTC, XLM, BCH, EOS, LINK, TRX, NEXO, and BNB. However, Nexo does not support wrapped coins that represent coins from another blockchain. Transferring such assets may result in permanent loss.
While depositing crypto assets, you should also remember that taking a fiat loan against stablecoins requires covering at least 50% of the loan with crypto-collaterals such as the BTC or ETH. The requirement is as per the standards mandated in the anti-money laundering statutes.
2. No Credit Checks and an Instantaneous Credit Line
While there are no credit checks to obtain Nexo loans, and the disbursal is instantaneous, it is important to remember that you will have to undergo a basic/advanced verification in the “My Profile” section. You may also be asked to provide supporting documents that stand as testimony to your stated origin of funds.
3. Two Asset Class Finance Options are Provided
Now that you have gone through verification, you will have to go to the “Withdrawal Funds From Credit Line” option. Here, you can see the available loan amount. You will get two asset class finance options. The first option is to take the loan in a fiat currency, which requires your bank account address. The second option is to get the disbursal in USDT (Tether) or USDC (USD Coin), which requires you to provide an address for a loan in stablecoins.
The Nexo wallet app is available on both iOS and Android. If you are looking for access to the instant crypto credits and the high-yield ‘Earn Interest’ account any place, anytime, Nexo wallet is the application for you. You can store all your Nexo-approved digital assets in the wallet. The Nexo wallet also provides Nexo transfer service and the Nexo exchange service. With the Nexo transfer service, users can transfer digital assets from one Nexo account to another. Nexo wallet also facilitates the access of any new incentive programs launched by the platform, such as the Nexo loyalty service.
All cryptocurrencies are stored with Ledger Vault. Private keys entrusted to Ledger Vault are held in bank-grade cold storage, multi-signature storage custody. The Ledger Vault insures assets up to $150 million backed by Arch and Marsh. According to Nexo, their insurance portfolio is now $375 million. They also state that Nexo’s plan is to insure to more than $1 billion in 2021 with a syndicate of insurers. You can read more about their security here. This is arguably the most impressive insurance policy of all crypto lending and borrowing platforms. It’s assuring to see them taking this part of their business so seriously.
Nexo is designed for security and is driven by trust. They strictly comply with global KYC and AML standards and stringent regulations. Nexo gives utmost priority to security. They have also placed a variety of safeguards to make sure that Nexo remains one of the most secured crypto lending companies. It includes Biometric-Based Identity Verification, Extensive Firewall Server Architecture, Segregated Multi-Signature Cold Wallets, and much more. Nexo also stores user funds in bank-grade Class III vaults through Ledger Vault.
Nexo is an EU licensed and regulated financial institution. You can read more about that here.
You can instantly borrow fiat from Nexo by using crypto as collateral. As mentioned earlier, they support over 40+ currencies, and you can spend it how you like with your method of choice or with a Nexo card.
Once again, to borrow, login to your account. Select supported crypto and “Top Up”. Send your crypto to the address and you’re set. It’s the same process as lending crypto.
Behind the deposit, you will see your credit line, which you can use instantly. You can transfer to a bank or use it with your Nexo card. With the Instant Crypto Credit Line, you can make use of a variety of crypto to back your loan. This ensures that you are less vulnerable to crypto volatility
Nexo provides a 50% discount on the final amount. If your outstanding balance is within the loan limit, you don’t need to make monthly payments. Once you fully repay the loan, you can withdraw your assets from the wallet. You can also choose to start a new line of credit with the collateral.
When it comes to loan limits, it’s determined by the market value of your assets used as collateral. If your assets increase in value, the Nexo Oracle (Nexo AI) will increase your loan limit automatically.
you can deposit your digital assets, you have to confirm your personal details. Without verification, you will not be able to borrow or lend fiat or crypto. You will also be able to see the interest rates.
Start by logging in or creating an account on Nexo. After this, choose the crypto that you prefer and “Top Up”. Send your digital assets to the secure address and you’re all set.
Nexo will display your balance and how much you can earn. You have the ability to withdraw whenever you like without fees and penalties. When you deposit your crypto, you will also see your open credit line.
Depositing funds to Nexo is quite simple. Select one of the supported cryptocurrencies and it will generate a private deposit address. Copy it & paste the copied address to the “withdraw address” option of the wallet or exchange that you are using to transfer funds to Nexo and click on the withdraw/send button. That’s it as soon you will receive the funds in your Nexo wallet/account after the number of network confirmations is reached.