What is Nexo (NEXO)?
The Nexo platform is a centralized financial service for users who want to unlock cash from their crypto holdings without selling them, or earn regular yield on their assets. Its NEXO token serves as a tool to reduce service costs and set loyalty levels within this ecosystem.
How NEXO token reduces costs on the platform
NEXO acts as a key to tiered benefits. The percentage of NEXO in a user's total portfolio determines their loyalty tier, from Base to Platinum. As this tier rises, interest rates on loans decrease and yields on deposited assets increase. This mechanism is the main driver of demand for the token: users buy and hold NEXO to lower their cost of borrowing.
NEXO can also be posted as collateral when taking out a loan. The platform offers a higher loan-to-value ratio for NEXO collateral compared to some other major assets. This means the token functions not just as a loyalty marker, but also as a tool to expand one's borrowing capacity.
How Nexo manages assets and the risks involved
The platform operates on a model similar to a bank's secured lending. A user deposits crypto assets and borrows fiat or stablecoins against them. Since the original assets are not sold, the user keeps exposure to any potential price gains. Loans are always overcollateralized, meaning the collateral value exceeds the loan amount. If the collateral's market value falls below a set threshold, an automatic liquidation process kicks in.
The defining difference between Nexo and decentralized lending protocols is that assets sit in corporate custody, not in smart contracts. Yield payments are funded by the platform's lending revenues, not protocol inflation. This design simplifies the user experience but introduces counterparty risk: any issue with the company's financial health or operational continuity can directly affect deposited assets. The composition of the loan book and the quality of its collateral are not verifiable on-chain; users must rely on company disclosures and audit reports.
NEXO has a fixed total supply of 1 billion tokens, all minted at its inception. There is no ongoing minting and no continuous unlock schedule for team or investor allocations. The company states it uses a portion of its profits for open-market buybacks and distributions of NEXO. This model tightly links the token's market presence to the company's operational performance.
