NEXO is a platform that, like SALT and BlockFi, aims to provide loans to holders of cryptocurrencies so they can spend in fiat without having to first sell their crypto. Unlike SALT, NEXO provides the lending side of their platform on their own, and while they have a NEXO token linked to their platform, it is not required to have NEXO tokens to use their platform.

Value Proposition

The value proposition here is almost exactly the same as the borrower’s value proposition in the SALT Overview posted earlier. To summarize: holders of cryptocurrency who need to perform transactions in fiat or take out a loan currently have to sell their positions in a given cryptocurrency in order to do so. This means the investor has to pay out capital gains tax and is exposed to volatility of the fiat-cryptocurrency pair while performing the transaction.

By taking out a loan in fiat and putting up the cryptocurrency as collateral, the investor avoids a sale, which is a taxable event, and keeps the cryptocurrency. This means any appreciation of the token is kept while allowing the investor to transact in fiat.

NEXO differs from SALT in that there is no lender side of the platform. In SALT, external lenders would be brought on and matched with borrowers with similar requirements. In the case of NEXO, the loans are handled by the the NEXO team themselves.

Type of Coin

It should be noted that implementation of the above value proposition does not necessitate the creation of a token. As mentioned in the SALT article, an existing company called BlockFi performs the same service without the need for a token at all. NEXO’s token offers some utility perks such as decreased interest rates for lenders using the NEXO token, but these perks alone seem insufficient to turn users of the service into NEXO token holders as well.

Unlike SALT, in which the SALT token acts as a type of utility coin for the lenders on the platform, NEXO provides no real utility to the holders of its coin. It instead acts as more of a security coin — holders of NEXO will receive dividends, a percentage of monthly profits from the coin. It appears that NEXO is hoping that this, along with perks of lower lending rates for those using the coin, will entice users to utilize the token on its platform. NEXO claims to have instant approval on its platform as well, whereas loans on SALT can take time to get matched and approved. (BlockFi also offers fast turnaround of roughly 24 hours.)

NEXO is, for all intents and purposes, an investor’s coin. The main draw of holding tokens is the dividends received from holding, provided in the form of 30% from the company’s profits, distributed monthly to NEXO token holders.

Current Status

NEXO is backed by Credissimo, an EU company that started in 2012 and went public in 2014 that handles loans. As with SALT, there seems to be interest in the value proposition that NEXO provides — there was demand for roughly $350MM in overdraft requests as of February 15, 2018. The company backing NEXO, Credissimo, also has a history of handling loans, with EUR 28.8MM worth of loans granted in 2017, and EUR 37.5MM cash collected in the same year. The rough year-over-year growth of the amount of loans Credissimo has granted is around 20%, and the year-over-year growth of cash collected is roughly the same. Since inception Credissimo has granted EUR 109MM worth of loans and collected EUR 140MM in cash. Despite the large loan demand that NEXO has, it would be more prudent to expect them to initially be capable of servicing a smaller percentage of the current amount of loans they are handling as Credissimo. NEXO’s token sale raised $52.5M.

The NEXO team is derived, for the most part, from the executives at Credissimo. The managing-level members of NEXO are:

Kosta Kantchev, Co-Founder of Credissimo

Georgi Shulev, Member of Credissimo’s advisory board

Antoni Trenchev, Chief Innovations Officer at Credissimo

NEXO’s advisors are:

Michael Arrington, founder of TechCrunch

Trevor Koverko, founder of Polymath

Paolo Tasca, executive director of UCL Centre for Blockchain Technologies

Ugo Bechis, payments and SEPA expert

Kenneth A. Goodwin Jr., US White House Business Council/Business Forward Member

NEXO posts regularly on Medium and has a fairly dedicated marketing strategy and presence. They have a large and growing Twitter following and Telegram group as well. With more information about the dividend payout being released, there should be more growth of interest.

However, their marketing language and facts that they use as benefits are suspect. NEXO’s claim of SEC compliance refers to the fact that they will follow Reg D of Section 506(c), which means the ICO will only accept accredited investors from the US. This is nothing new, and many coins in the past have conducted ICOs in accordance with regulation. That NEXO is claiming to be the first such token is suspect at best.

The second potential concern is Credissimo, the parent company. NEXO marketing touts the fact that Credissimo IPO’d in 2014, but fails to mention that Credissimo was delisted from the BSE (Bulgarian Stock Exchange) in 2016. A delisting is not necessarily negative in and of itself, and details of the rules can be found here. Credissimo was delisted in accordance with Art. 30 (1), item 3 of the FSC Act from the BSE, which states that the BSE will keep public registers of public companies and other issuers of securities.

Outlook

Ultimately the adoption of the NEXO token should come mainly from its dividend-like behavior. Therefore, the price movement should behave much as a stock — if the company does well, expect investors to buy into the token to receive profits in the form of dividends, and if it does not, expect the opposite should occur. I would not expect much adoption of the NEXO token due to additional utility features, especially for long-term cryptocurrency investors. For example, if you were long a coin CYT, and you wanted to convert to fiat, not only would converting to NEXO expose you to volatility from the CYT-NEXO pair, but also, US users would be subject to taxes on the exchange. It seems unlikely that the additional utility is worth taking on this additional cost, especially for the long-term investor.

The main advantages NEXO currently has are a clearer reason to hold its token (it’s a dividend-producing investment), compared to SALT, whose membership token holds no true utility for borrowers, and whose arbitrage situation should close if the token approaches market value. It also seems to have a much stronger marketing presence than SALT does, which bodes well for its ability to attract borrowers to its platform. There are, however, concerns with the company backing the platform, spurred by its misleading marketing language and failure to mention its delisting from the stock exchange it went public on.