Nexo Review: The Good, Bad and Whether it's Safe | Bitcompare (2024)

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 systemthat supports crypto borrowing, lending and more recently, staking. As of December 7, users can receive 4 to 12% APY for staking Ethereum, no matter your Loyalty tier or the staked amount.

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.

What is Nexo?

Nexo describes itself as the world's leading and most trusted crypto lending institution. Its mission is to harness blockchain technology to solve inefficiencies in the financial markets.

Nexo was cofounded in 2017 by Antoni Trenchev. Since its inception, Nexo has processed over $130B in transactions, and over 5 million users trust the platform.

What does Nexo offer?

Nexo allows users to access crypto-backed loans instantly. Unlike traditional institutions, users can get crypto loans that are not dependent on credit scores.

With Nexo, users can also earn interest by lending their crypto. Other products Nexo offers are the Nexo Wallet, Nexo Card, and Booster.

Let’s take a deep dive into its main offering.

Instant Loans

Nexo offers instant crypto credit lines where you can borrow cash with your crypto as collateral. This means you have instant access to funds without selling your crypto.

A benefit of Nexo loans is the ease of getting them compared to traditional loans. There are no credit checks performed and paperwork to fill out.

Standard rates for loans are at 13.9% APR. You can opt-in for premium tiers, where rates can drop as low as 0%.

Loans are available from $50 up to $2M. You can borrow depending on the amount of crypto deposited as collateral. For example, your credit amount will be 50% of the deposit with Bitcoin and Ether deposits. For other cryptos, the credit amount might be more or less.

When the value of your deposits drops, you will be required to maintain your collateral by topping it up. This is to prevent Nexo from selling your collateral to repay your loan.

How to Borrow Cash With Nexo

1. .
2. Pass required verifications (KYC and AML).
3. Deposit crypto assets into your Nexo account. Nexo currently supports more than 60 collateral options. You can choose any of these as collateral.
4. Your credit line is instantly available. You can access this in over 40 currencies.
5. Withdraw and start spending.

Note: You avoid a taxable event when you spend the borrowed amount. This is because you didn’t sell your crypto. You can learn more about how crypto taxes work.

Earning Interest

With Nexo, you can earn interest on your idle crypto assets. This interest is compounded and paid daily. The Interest you earn varies with your assets and the amount of NEXO Tokens you hold in your wallet.

The base interest rates for Bitcoin and Ether currently stand at 4% and 5% APR respectively. Being in the platinum tier–more than 10% of your portfolio is in NEXO–increases your rate to around 7% and 8% for Bitcoin and Ether. Other crypto assets can even give you much higher rates.

Earning interest on your crypto assets with Nexo can be a passive income. Your crypto works for you while holding it until the price goes up.

Furthermore, Nexo offers you flexibility in terms of earnings and withdrawals. You can withdraw at any time without losing any interest accrued. Moreover, you don’t incur any fees for deposits and withdrawals.

How to Start Earning Interest With Nexo

1. .
2. Pass required verifications (KYC and AML).
3. Deposit crypto assets into your Nexo account.
4. Start earning.

Note: Nexo has paused the Earn Interest product for U.S. customers. This is due to a cease and desist order issued to them by various states in the U.S.

Ethereum Staking Rewards

With the launch of "Smart Staking," Nexo users can help validate and secure the Ethereum network by swapping ETH for Nexo Staked ETH (NETH) and receive staking rewards of between 4% and 12% APY.

There are no balance limits so you can stake as much, or as little as $10, as you want and earn the same APY. There are also no gas fees as the validation is done on user's behalf.

Another great feature of Smart Staking, is the ability to borrow cash (or stabelcoins) against NETH and earn interest on your collateral. NETH can be used at collateral with LTV of 30%, while you continue to earn interest.

How to Stake ETH With Nexo

1. .
2. Pass required verifications (KYC and AML).
3. Open the Nexo Exchange.
4. Swap ETH for NETH.
5. Start earning rewards.

Nexo Card

The Nexo card, which is accepted by over 90 million merchants across the globe, allows you to spend without selling your crypto. This is possible because it extends Nexo’s Instant Crypto Credit Lines.

Whenever you use the card, Nexo gives you fiat to spend in exchange for using your crypto as security for repayment. Interest rates for repayment range from 0% to 13.9% APR. You can make purchases with the “0% APR” option by enabling it in the Card settings menu inside the Card tab.

Nexo offers instant rewards whenever you purchase with the card. This reward is paid out in Bitcoin or Nexo Tokens. You can get up to 0.5% on every purchase in Bitcoin or up to 2% with Nexo Tokens.

The Nexo card is available virtually and physically. The Virtual card can be activated instantly and integrated with Google Pay and Apple Pay.

How to Activate your Virtual Nexo Card

Activating your virtual Nexo Card is almost instantaneous:

1. Open the Nexo app and tap on the 'Card' section.
2. Tap the 'Activate Nexo Card' button to issue your virtual card.
3. Add the card to Apple Pay or Google Pay.
4. You're now ready to make your first transaction!

Is Nexo Safe to Use?

Nexo claims to be a very secure platform. Although it is not FDIC insured, nor is it regulated in the U.S, Nexo has built a robust business model that ensures the safety of your funds.

Overcollateralization, real-time auditing, risk management, insurance, and global licensing are mechanisms Nexo has implemented to secure your funds.

Security Features

Nexo has placed a variety of safeguards to keep security tight.

Your assets are kept with renowned blockchain custodians like BitGo and Ledger. These assets are stored in class III vaults with these custodians.

The Nexo platform is secured with 2FA Authentication and biometric identification on the user end. This ensures you remain in control of your account. Other security features ensure privacy and the protection of your data.

To achieve all these robust security features, Nexo works with leading authorities in custody and compliance. Intense effort is also put into developing this robust platform security.

Nexo Insurance

Nexo custodial assets are insured to the tune of $775 million via its custodial partners. Although this cannot be compared with FDIC insurance, it's much better than nothing.

Nexo Regulation

Nexo is an EU-licensed and regulated financial institution. Furthermore, Nexo holds more than 40 licenses and registrations in various jurisdictions worldwide. They are constantly bringing their operations in line with newly adopted legislative changes.

Nexo Proof-of-Reserves

Nexo has provided real-time attestations of its custodial holdings. Currently, Nexo's assets total over 100% of ₿167,558 customer liabilities. It is working with Armanino LLP to provide this transparent audit.

The attestation provides reassurance to users in a year when various crypto-lending platforms went bankrupt.

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The Future of Nexo

The growth of Nexo since its inception is something that has caught everyone’s attention. With more than 5 billion dollars in assets under management and more than 5 million users, it has proved its merit as an excellent platform for borrowing and earning on savings.

With the Nexo card, Nexo has expanded its practical value as a medium of exchange and payment. The sharing of dividends with the users has strengthened the community and incentivized long-term participation.

With its services expanding in terms of the number of offerings and the level of convenience, Nexo can be expected to emerge as a in the crypto space that makes the most of traditional finance and blockchain technology.