Nexo - "Earn 8% dividend a year with no risks"

[aesma]

Yeah these comments aren't really a problem for me, I don't care for nexo coins (although I own some of them). More info on their lending activities and the return they get, allowing them to pay nice BTC/fiat dividends, is what I'd like to see.

[1714021563]

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[1714021563]

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[uneng]

It's not an anonymous site like usual ponzi sites on the internet. The team behind NEXO is publicly informed. They have licenses and have to follow EU regulations.
In case something bad happens I have seen investors would lose their investments, as the insurance doesn't cover any considerable amount of money. But, couldn't investors fill a lawsuit against NEXO in this case? Wouldn't NEXO be forced to pay investors back in the court?

A similar investment platform which turned into scam was CRED (declared bankruptcy), but investors are still sueing the business and trying to recover their losses or part of it.

[buwaytress]

So last year, I wrote that I decided to test NEXO services with USDT. Can't believe it's been 15 months since that experiment.

Thought it could be interesting to update a number of things about this service, for those keen to learn or find out more. This is not a recommendation in any way, I'm still highly suspicious of them and you should understand from past discussions that your funds are not as protected as it appears.

Updates since the last post in July 2020:

1. Insured amount has gone up from $100M to $350M. However, this represents roughly 1% of all assets under management. In other words, if they lose everything, every customer gets about 1% back as insurance. Extremely unlikely to happen, but hey.
2. They now have real-time audit checks with a US firm so anyone can prove they are over 100% collateralized. Essentially, this just means they have more than 1:1 funds held in their accounts and on user account balances. Note, it doesn't say how much exactly this over-collateralisation is, and what happens if BTC or ETH were to drop 50% (as I suspect they would then be in trouble with those holding fiat balances.
3. Percentages have drastically reduced to roughly half of OP's title. You also get less and less from next month the more you have.
- 4% if you own less than 50k
- 3% for something like 500k
- 1% for anything above 10M
(numbers not confirmed and you get increments based on NEXO holdings as a percentage of portfolio as well)

You earn more if you choose to receive interest in their tokens. So definitely pushing more people to put in more tokens, and taking away the sting of high interest on huge savings.

What's interesting for me, though, isn't that they've:
- reduced interest on Bitcoin and ETH for whales to 1%

but that they've retained 4% for fiat. And retained 8% for Stablecoins. This doesn't make sense to me at all. It's almost as if they see stablecoins as the... safest bet for them?

[stompix]

Well, the good news is that they haven't gone bankrupt... yet

What's interesting for me, though, isn't that they've:
- reduced interest on Bitcoin and ETH for whales to 1%

but that they've retained 4% for fiat. And retained 8% for Stablecoins. This doesn't make sense to me at all. It's almost as if they see stablecoins as the... safest bet for them?

Oversimplifying this, to me, it looks like they are offering a lot on stable coins to grab more fiat for which they would definitely only pay 8% in $ terms rather than trying to acquire BTC for which in $ they might have to pay double the sum. It might of course be caused by the fact that borrowers might have switched from getting loans with BTC as collateral and more with stable coins, which does make a lot of sense since a flash crash will not trigger a liquidation.

Even 4% still beast this new offer from AMRO but the risk would not make it worthwhile.

You earn more if you choose to receive interest in their tokens. So definitely pushing more people to put in more tokens, and taking away the sting of high interest on huge savings.

Not surprisingly, the company owns a lot of those, the sudden jump in March earned them probably a hundred times in token value compared to what they are getting from crypto loans.

[DarkStar_]

What's interesting for me, though, isn't that they've:
- reduced interest on Bitcoin and ETH for whales to 1%

but that they've retained 4% for fiat. And retained 8% for Stablecoins. This doesn't make sense to me at all. It's almost as if they see stablecoins as the... safest bet for them?

The increase (or lack of reduction) in stablecoin interest rates is in line with a ton of other CeFi platforms. BlockFi, Ledn and Celsius have both kept stablecoin rates at around the same values they were offering before while decreasing the interest paid on non-stablecoins. I believe this is a result of large volumes of lending to institutions - many companies might want to short BTC, especially as the price of BTC keeps rising, so demand for stablecoins (and thus interest) goes up.

[buwaytress]

My next experiment would be to move out these from NEXO now and onto these non-custodials (where the interest is higher anyway). Not that it's any safer, but I estimate the risk of these "Dex" collapsing is at least marginally better than a centralised lender MtGox-ing.

What do you guys think?

Well, the good news is that they haven't gone bankrupt... yet

I imagine a sudden dip in crypto prices -- and the ensuing bank run from users -- would take them close to the brink, when their crypto collateral no longer covers the total values. Their own token is worth about $3 now, from less than a cent at issuing, so I suppose they'll have built up a tidy sum in fiat and stablecoins

Oversimplifying this, to me, it looks like they are offering a lot on stable coins to grab more fiat for which they would definitely only pay 8% in $ terms rather than trying to acquire BTC for which in $ they might have to pay double the sum. It might of course be caused by the fact that borrowers might have switched from getting loans with BTC as collateral and more with stable coins, which does make a lot of sense since a flash crash will not trigger a liquidation.

Even 4% still beast this new offer from AMRO but the risk would not make it worthwhile.

Yeah, that makes the most sense. USDT was, after all, my choice of currency to risk with them (due to the high interest) and if NEXO works like the exchanges do, I'm sure they could also have standing deals with Tether and other issuers or even exchanges themselves OTC to perhaps supply them should the need arise.

The increase (or lack of reduction) in stablecoin interest rates is in line with a ton of other CeFi platforms. BlockFi, Ledn and Celsius have both kept stablecoin rates at around the same values they were offering before while decreasing the interest paid on non-stablecoins. I believe this is a result of large volumes of lending to institutions - many companies might want to short BTC, especially as the price of BTC keeps rising, so demand for stablecoins (and thus interest) goes up.

Didn't know this, but yeah it makes sense to me now.

It's the opposite for those non-custodial lending platforms (or defi should I say?). I do peek at stablecoin staking pools on some "defi" platforms and those tend to be the lowest yields. For instance, on BSC, the Busd/Tusd pairs are about half the interest of Busd/BTC.

[DarkStar_]

My next experiment would be to move out these from NEXO now and onto these non-custodials (where the interest is higher anyway). Not that it's any safer, but I estimate the risk of these "Dex" collapsing is at least marginally better than a centralised lender MtGox-ing.

What do you guys think?

I think DeFi will definitely be something worth trying out. The nice thing with DeFi is that you at least know where your money is going and where the profit is coming from, which feels better to me than a black box CeFi company.

The increase (or lack of reduction) in stablecoin interest rates is in line with a ton of other CeFi platforms. BlockFi, Ledn and Celsius have both kept stablecoin rates at around the same values they were offering before while decreasing the interest paid on non-stablecoins. I believe this is a result of large volumes of lending to institutions - many companies might want to short BTC, especially as the price of BTC keeps rising, so demand for stablecoins (and thus interest) goes up.

Didn't know this, but yeah it makes sense to me now.

It's the opposite for those non-custodial lending platforms (or defi should I say?). I do peek at stablecoin staking pools on some "defi" platforms and those tend to be the lowest yields. For instance, on BSC, the Busd/Tusd pairs are about half the interest of Busd/BTC.

It depends on what specifically you're looking for. Stablecoin pairs definitely pay less than non-stablecoin pairs, because impermanent loss isn't a risk with stablecoin pools making it comparatively safer. If you look at single token pools (such as belt.fi, also on BSC), you'll see yields for USDT at 11.29% compared to 3.68% for BTC.

[buwaytress]

I think DeFi will definitely be something worth trying out. The nice thing with DeFi is that you at least know where your money is going and where the profit is coming from, which feels better to me than a black box CeFi company.

Definitely the plus points for me here compared to a NEXO-type company:
- non-custodial
- like you say, you can see where your assets are, and even see the activity in the liquidity. I really like this.
- if you can read code, even understand what the smart contracts say and do -- here is where I feel most vulnerable as I wouldn't be able to tell if there were a loophole or backdoor in a contract, so I have to trust
- the insurance schemes (Shield is popular it seems) for some pools are even better than NEXO's, assuming the contracts work out as they should
- you don't have to keep wondering what terms will change or get amended. NEXO keeps changing the (withdrawal) fee structure, how membership levels advance, so you never really know where you'll be in a few weeks.

It depends on what specifically you're looking for. Stablecoin pairs definitely pay less than non-stablecoin pairs, because impermanent loss isn't a risk with stablecoin pools making it comparatively safer. If you look at single token pools (such as belt.fi, also on BSC), you'll see yields for USDT at 11.29% compared to 3.68% for BTC.

This is where I really need to read up and understand before I get in with my NEXO "winnings" -- probably December.

Contributing liquidity to swapping pools has never looked more mature now; last year was messy, first half of this year still unconvincing but some have proven stable and serious, so for me, there's a lot more assurance now than before.

Still not going to put my Bitcoin into some wrapped version, I don't think there'll ever be a day when I trust another network as much as I do Bitcoin's, but happy to do something with my handful of stablecoins and alts.

Maybe my next update will be to compare NEXO and a liquidity pool.

[DarkStar_]

It depends on what specifically you're looking for. Stablecoin pairs definitely pay less than non-stablecoin pairs, because impermanent loss isn't a risk with stablecoin pools making it comparatively safer. If you look at single token pools (such as belt.fi, also on BSC), you'll see yields for USDT at 11.29% compared to 3.68% for BTC.

This is where I really need to read up and understand before I get in with my NEXO "winnings" -- probably December.
Contributing liquidity to swapping pools has never looked more mature now; last year was messy, first half of this year still unconvincing but some have proven stable and serious, so for me, there's a lot more assurance now than before.
Still not going to put my Bitcoin into some wrapped version, I don't think there'll ever be a day when I trust another network as much as I do Bitcoin's, but happy to do something with my handful of stablecoins and alts.
Maybe my next update will be to compare NEXO and a liquidity pool.

The main difference is that with a pool where impermanent loss isn't a thing (or a single token pool) is that you're basically guaranteed the best outcome, being an obvious gain on the stablecoins/tokens that you put in. If the APR is 10% and remains at 10% throughout a year, your profit will be 10%. Single token pools can come with different risks though, and especially if it's a pool from a yield aggregator that uses other platforms to try to get a profit on whatever token you gave it. For example, on BSC, Belt uses Fortube (lending), Venus (lending), Alpaca (lending) and Ellipsis (stablecoin swap) to get yields. This diversifies where you get yields from, but also increases the chance that a platform ends up getting hacked/having a bug causing you to lose some/all of your stake.

For non-stablecoin pools (ex: USDT-BTC), and ignoring trading fees, if the price of one side doubles relative to the other side, the total value of your stake would be worth 5.7% less than if you had just held onto the 2 tokens instead of putting them into a liquidity pool.

[buwaytress]

Somehow missed your last response here @DarkStar_

New Year has arrived but I've to wait still until end of January for all of my NEXO amounts to unlock (I thought I switched off auto-renew on the FIXED terms which give a small bump in interest rates). Your explanation actually helps. And that's really what I don't want to do, if I get into these liquidity pools, I'll risk my coins against the other pair if they go up rapidly, which I don't want. And if I put it in a single coin pool, then I lose part of it to whichever pool happens to get hacked.

So I'm still uncertain if I'll go down that road, but if I do, I'll probably end up converting everything to stablecoin (which is what the majority of what I'm testing out on NEXO is anyway) and save myself the headache of wondering.  

Anyway, January update for NEXO:
- they decided to retain old interest rates for ETH and others, so only BTC has the reduced interest rates effective last month (as updated in 2nd Nov '21 post above). Probably saw an outflow of users after this and/or expect staking on ETH 2 to prop them up.
- nothing else has changed.

[buwaytress]

An annual (summary) update for NEXO, and to keep abreast of events.

I decided to end my NEXO adventure this week, based partially on recent events, but also as I tire of their Proof of Assets and other verification requirements they ask for annually, and well, I just want to pull back all of my assets, no matter how small. Was an interesting ride for my stablecoins and NEXO, interest earned over lifetime was not bad. Converted everything to BTC and have the coins on my wallet now.

2022/23 summary:

• Interest surprisingly did not change at all the whole year, despite the market falling badly. Their 2022 adjustments were well read.
• They ran into trouble in the US despite buying a controlling stake in a bank there. By September, at least 8 US state regulators had sued NEXO and by December, they pulled out of US.
• Last week, their HQs in Sofia were raided by Bulgarian police. LinkedIn messages from staff say everything is ok but of course they would. Mini bank run also happened right after that, but they appear to have weathered the storm (so far). The charges are worrying though, so I'd say time to unburden some risk if you're using NEXO.

I guess I won't be updating this thread next year. Let's see =)

[aesma]

I still have some nexo coins, keep or sell ?