My approach to crypto started to change when I found out about Nexo, this is why I need to include it as the first step in my road to passive income in the crypto world.
Until that moment I had made all my purchases through Coinbase and I basically thought that buying and selling were all there was.
I was curious so I registered and downloaded the app.
The exchange didn’t exist yet so, even if I was free to take out my coins anytime I wanted, impulse-selling them was at least inconvenient. This is probably what convinced me to try it out.
Of course, the interest rate was also a crucial factor.
So, what is Nexo? - a.k.a. “The boring stuff”
Nexo is a Bulgarian lending company born in 2018.
Just to make this clear from the beginning, if you’re looking for decentralized and community-driven projects, this is not one of those.
Do you remember when banks used to give you interest for your deposits? You would leave your funds there, so they could have them available to lend to other people. To thank you for your service, you would receive back an interest.
This is basically what platforms like Nexo are trying to put back on the table, but with a decent interest rate!
Basically, Nexo lets people use their crypto as collateral for borrowing fiat or stable coins, which they will then return with an interest. Part of this interest is what Nexo will pay to you for your funds.
I’d like to keep this short on the lending part because it’s not our purpose here. If you’re interested in borrowing, you will find many on the official website.
The NEXO Token
As you may expect, NEXO created its own ERC-20 utility token (on the Ethereum blockchain) with various benefits for its holders within the platform:
- You can earn more interest on your assets
- If you borrow, you will have to pay lower interests
- Receive a portion of company profit as dividends, as you would by holding their stocks (at unknown periodicity - I didn’t receive anything yet)
- Vote in pools
How can you get it?
The easiest way today is probably to move your assets on the platform and then directly swapping part of your them on the Nexo exchange.
If you want to get it somewhere else, you can find it on Houbi and Hotbit or get it from Uniswap.
My advice? Make the platform give some to you as interest!
You have the option to have your interest paid out in the same currency or in NEXO tokens. If you choose this last option, not only you will receive your tokens for free, but the interest rate will be 2% higher.
This is particularly useful when the prices of your coins are growing faster than the NEXO token price. The interest will be calculated based on the USD value of both tokens, so you will get a better deal overall.
Find info on the token here and here. Its price has grown quite a bit in the last few months, so it wasn't a bad investment after all!
How interest rate changes
Nexo has 4 Loyalty Levels, based on the number of NEXO Tokens you own.
Based on your loyalty level and the type of deposit you choose, you can earn from 4 to 6% on your crypto assets and from 7 to 10% on your stablecoins and fiat (yes, you can directly deposit fiat by bank transfer).
So, as you may have noticed, you will get the best performance by owning at least 10% of your funds in NEXO tokens (based on current prices in USD).
This was enough until about a month ago. Recently they introduced a new distinction: you can keep your funds in Flex or Fixed Terms. In the Flex plan, you can withdraw your funds at any time. In the Fixed one, your funds will be locked for one month (3 months for stablecoins).
This also causes a slight change in the interest payout: in the Flex plan, your interest in paid daily directly on your wallet; in the Fixed plan, your interest will be credited all at once at the end of the lock-in period. Notice that you can apply different terms to part of your assets, so if you don't want to don't need to commit all of them for a long time, but you can keep some in the Fixed plan.
What’s the best strategy?
If you're looking to maximize your interest, this would be my strategy:
- transfer the assets you're not actively trading
- swap a small amount of them for NEXO tokens
- choose the Fixed Terms for at least part of your assets
Whether you prefer to gain interest in the same crypto or in NEXO is up to you.
My strategy is to alternate between the two, so I keep my NEXO amount up but I also see my assets grow.
Yes, but, is it safe?
Is anything in the world really safe?
Like any company you ever heard of, they sure had their issues and you can read them all on their TrustPilot page.
Speaking of my personal experience, I’ve been using their service since last year. I withdraw funds without any problems and without having to pay fees, and I never experienced any kind of problem. Please note that I always transferred only crypto bought elsewhere and I never borrowed anything, so I cannot speak for those services.
So, please read the good and the bad and decide if this is a good fit for you.
Referral anyone?
Unfortunately, Nexo doesn’t seem to have a proper referral program yet. I imagine they will implement it at some point, but right now it just isn’t there. You can get a referral link [here’s one for you!] but… it just doesn’t seem to do anything :D
Well, room for improvement.