Nexo: Crypto-backed Loans and passive Income

Stefan Perlebach
Stefan Perlebach

Nov 14, 2018

Interview with Antoni Trenchev - Co-Founder of Nexo

Which problem is Nexo trying to solve?

The Nexo concept emerged out of the lack of options for people that wanted to borrow against their crypto assets. We, the co-founders, experienced it first hand, so we wanted to provide an efficient solution here.

Nexo solves the predicament of how to keep on HODLing crypto assets when the need to access cash arises. We quickly realized that borrowing rather than selling ones crypto has many advantages. The beauty of it is that you keep the upside potential. “I wish I sold my bitcoin in 2014 - said no one ever” is among my favorite jokes because it is true.

Secondly, our instant crypto loans are very tax efficient. We allow people to utilize what is commonly referred to as the “Zuckerberg Tax”. This is a strategy used by billionaires for decades now. What they do is they just keep on borrowing against their stocks and never pay capital gains tax. Crypto holders can now do the same thanks to Nexo.

Thirdly, we like to think that we help the overall marketplace by easing selling pressure. Last week we became the first lender ever to start accepting XRP as collateral. The community has hugely appreciated this new utility feature of XRP, as they now need not sell it, when they need cash, but can borrow against it.

What was your biggest challenge so far setting up Nexo?

It has been a surprisingly smooth path. The Nexo Team’s background is credit facilitation and automation of processes. This is what we have been doing for the past 10 years with Credissimo, the European FinTech which powered Nexo early on.

In terms of challenges, it took a while until people became aware of the concept of borrowing vs. selling precisely because it is so novel and people did not know that such an option existed.

In just a few short months, however, we have 120,000+ registrations on the platform and this is visible from our rapidly growing loan portfolio.

If I want to take a loan via Nexo, what do I need to know? How does it work?

It is really simple - you sign up on the platform with a few clicks. Then deposit the crypto that you would like to use as collateral. You can choose between BTC, ETH, BNB Coin, XRP and NEXO (10 more collateral options are coming by the end of the year).

Once the deposit is confirmed on the network you get your instant credit line and can withdraw the desired amount to your bank account. The Nexo credit card is coming very soon and has got a lot of people excited.

We currently service 40+ currencies and are fully operational in 200+ jurisdictions which is unprecedented in the blockchain industry.

We wanted to make the Nexo instant loans flexible, so you only pay interest on what you withdraw to the bank or spend via the Nexo Credit Card. Our model of dynamically allocated credit limit is not pending patents.

If I am lending money, what do I get for it?

We listen to our community and their desires closely, so people can earn up to 6.5% per year in interest for their stablecoins with Nexo. We are pioneering the only protection for stablecoins on the market by guaranteeing a 1-to-1 conversion to U.S. Dollars on all stablecoins.

What is the role of Nexo Tokens in your ecosystem?

The NEXO Token is the world’s largest Security Token and so every NEXO Token holder is eligible to receive 30% of Nexo’s profits in the form of dividends. This is passive income at its finest.

The NEXO Tokens have great utility features as well - repaying your loans with NEXO Token reduces the interest rate to only 8% annually. Furthermore, staking them as collateral also results in an APR (annual percentage rate) of just 8%.

What are my rights and risks as an owner of Nexo Tokens?

We already touched upon the rights. With regards to risks - crypto assets are still heavily correlated and volatile so the risk of an overall downturn is of course there.

Having said that Nexo is a profitable company with a live product that is appreciated and used by thousands of people.

This has allowed the NEXO Token to outperforms pretty much all “ICOs” of 2018 and is currently trading at a multiple of its par value. This, unfortunately, is something that barely anyone else can claim.

Who is eligible to purchase Nexo Tokens?

Securities laws are strictest with regards to how securities are offered and subsequently sold to investors. We have been extremely careful here and Nexo, together with its legal counsel put it a lot of work into the legal aspect.

Right now, the Nexo Tokens are traded on various exchanges and the restrictions that apply to purchases of the NEXO Tokens are up to the particular exchanges.

Can I trade Nexo Tokens?

General answer - yes. But certain restrictions might apply, given your particular circumstances.

What was the biggest learning you made during the last year?

My personal one has been something that we are often told as kids but which I now experienced very closely myself - history repeats itself.

We had this huge boom in crypto and ICOs, akin to the dot-com mania which I vaguely remember but read about a lot.

What followed in the past few months now is the inevitable, painful but ultimately very useful crash and cool-off period. We are returning to rationality and out of the ashes of the bust, just like the one of the early 2000s, we will have crypto’s Googles, Amazons and Paypals.

To be a company that provides adequate and efficient solutions for the community is all Nexo aims for and success is a mere by-product of achieving this goal.

Where do you see the biggest challenge for Nexo in the next 5 years?

Five year is quite a stretch - the world will be a very different place and I am not super keen on trying to predict it. Having recently read Yuval Harari’s “Homos Deus” might have enforced this view on the future (laughs).

The biggest challenges are connected with the future of crypto in general. I personally think that there is no way of stopping the innovative power of crypto assets, the tokenization of the world and the technology that underpins it - blockchain. How that will be implemented by large institutions and corporations and be treated by governments and regulatory bodies is important as well. Right now that is the large unknown, so all predictions depend on that. We at Nexo are quite optimistic and are steadily executing on our roadmap, trying to prepare for all eventualities.

It is our firm belief that the outcome of an endeavor such as Nexo is a function of hard work and a clear vision, two features I think Nexo has unequivocally shown to possess.

Thank you for the interview.

You can learn more about Nexo here

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