Nexo: Collateralized by Crypto
Cryptocurrencies have been around for more than a decade, and we are yet to see the real use case of them. We often see people trading crypto to cash in the profits and hodling in hopes for a rise in the value. Most of the hodlers lean towards selling off their assets when in need of extra cash. However, it does have drawbacks like expensive exchange fees and completely losing the ownership of cryptocurrencies whose price may rise in the future. Nexo resolves this by providing fiat loans to the user with cryptocurrency as collateral. In this short post, ChangeHero will give you a quick outline of Nexo.
A pioneer in Fintech
Nexo is powered by Credissmo — a FinTech Group which has been providing instant loans for over 10 years. The trio of Antoni Trenchev, Georgi Shulev, and Kosta Kantchev launched Nexo in the year 2017. The team also makes a bold claim that Nexo is the World’s First Instant Crypto-backed Loan provider. The crypto-banking firm provides loans in 45+ fiat currencies and accepts a dozen of cryptocurrencies as a collateral. Moreover, there is also an option to deposit your assets and earn interest on them, more about all of these features will be detailed below. Before jumping into it, it would be ideal to have a look at the problems the current loaning system has and how Nexo is tackling it.
No more hustles and bustles!
We all must’ve had a headache with the amount of paperwork required to be done to acquire a loan from a traditional bank. Nexo aims to put an end to this and provide instant loans to the users in a breeze. Brick and mortar banks carry out credit checks for every individual during the processing of a loan. Whereas Nexo doesn’t perform any checks as the collateral is crypto and the value attached to those assets. Ownership is another important factor which plays a crucial role in cryptocurrencies. In Nexo, only clients have ownership of the assets and they can claim and withdraw from the contract anytime. In contrast to the high exchange fees and slow withdrawal procedures, Nexo offers instant delivery of the cash to the clients without any withdrawal fees or taxes. On top of all this, loan data and the contracts are highly transparent and immutable, thanks to the blockchain technology.
Sats to Bills
Nexo platform is widely popular for crypto-backed loans and they are indeed good at what they are doing. One can acquire a loan on the platform in a few clicks on this platform. An illustration in their Whitepaper describes the complete process better than anyone. It consists of four simple steps and begins with the user depositing of the crypto assets into the Nexo account. Next, the client receives an instant loan in the preferred fiat currency. The user can get hold of the cash either through a bank account or with the Nexo card. Users can repay the loan through bank transfer or also with crypto. Finally, when the whole amount is cleared, users can withdraw their crypto from the Nexo Account.
It does sound simple, but there is a lot of stuff going behind the curtains, especially integrating the business operations with the loan contracts on the blockchain poses a challenge. As we’ve discussed in the previous article, Oracles come to rescue in this case and Nexo Oracle bridges the off-chain activities with the blockchain. Whenever a user requests for the loan, Nexo Oracle automatically develops the loan contracts and distributes the cash. It also aggregates the value of the assets in real-time with the data from multiple exchanges and recalculates the loan limits. Furthermore, Nexo Oracle keeps track of the cash inflow and outflows, repayments and updates them to the ledger and also sends push notifications to the clients.
The project also offers Nexo Mastercard Card which can be used to spend the loan amount at merchants without withdrawing from the wallet. Impressively, there will zero fees on all the transactions which include surcharges, maintenance, foreign exchange and also offers cashback. Also, users can earn interest by depositing either fiat or stable coins into the platform. In terms of security, the firm claims to provide military-grade security for the platform and partners with BitGo for the custodian services along with a $100M insurance policy for the cryptocurrency it holds.
NEXO is the native ERC-20 token of the platform. These tokens can be used as collateral and the users avail discounts when NEXO is used to repay the loan. Similar to the other cryptocurrencies, NEXO can be stored and traded on various exchanges. As of writing, NEXO is being traded at a price of $0.195 with a market cap of over 100 Million Dollars according to CoinMarketCap.
Banking on the Blockchain
Nexo made it possible for the HODLERS to get some extra cash without losing the ownership of their crypto assets. In a nutshell, it is a unique project which delivers the best of both worlds. The project not only made it easier and faster to get a loan but also brought banking to the blockchain. ChangeHero believes that Nexo has great potential and can change the course of banking in the near future.