Nexo review: 8% interest on insured, collateralized loans

So many have asked me what I think about Nexo, so here it goes.

When your website combines passive income and cryptocurrencies, you feel a little uneasy. "What is this nonsense? Another way to scam me out of my money?"

Perhaps not.

What is Nexo

In this world where cryptocurrencies start to be a legitimate thing, a need for a service such as Nexo has arisen. Say you are long on cryptocurrencies. Really long. Let's say you have 10,000 € in BTC. Are you just holding on for dear life? What if you'd like to get some liquidity, but don't want to sell your BTC? This is where Nexo comes into play.

If you own cryptocurrencies, you can pawn your crypto assets on Nexo for collateral and get a credit line against them. Nexo takes your cryptos, puts them in cold storage hold and you get a loan.

For us investors, we get to be the ones financing those loans going out, with the cryptocurrencies being the collateral.

Nexo background

Nexo's roots are in Credissimo - a publicly traded consumer financing company that was founded in 2007. Nexo was founded and spun off from Credissimo 10 years after, in 2017. Today it is a separate legal entity. According to Crunchbase, Nexo has raised over 50 million euros.

Just as Credissimo, Nexo is continuously audited by Deloitte. That really means something, that someone credible is actually watching what Nexo does and vouches for their operations.

Start earning interest with Nexo

The following three simple steps are required to start earning interest on Nexo:

Step 1: create an account on Nexo

Head over to nexo.io and create an account.

Step 2: verify your identity

There's two steps to verifying your identity. Basic verification just collects your personal info such as name, address and phone number. However, Advanced verification is required for you to actually do anything useful on Nexo. To complete advanced verification, you can for example upload a picture of your passport.

Step 3: deposit funds to your Nexo account

Finally, once you're verified, you can deposit funds to your Nexo account by starting the process from the main page.


Top up minimum is for now 1,000 € and interestingly the maximum is 2,000,000 € per transfer. There are no additional fees that Nexo charges.

Nexo interest rate

Nexo pays 8% interest on your fiat deposits. You can also deposit so called stablecoins, but what I'm really looking forward to is depositing cryptos and getting a return on those. That should be happening at some point.

While 8% isn't massive, it's better than your bank account. With the Nexo card around the corner, I'm seriously thinking about having my cash on Nexo, instead of my traditional bank account, N26 or Revolut.

Nexo risks

My first thoughts on Nexo were that I am sure they have some major flaw in their business model, and I'm going to find it.

I didn't.

Cryptocurrency value drops

Let's say you lend against bitcoins. What if the value of BTC drops under the loan amount? The borrower no longer has any reason to pay back the loan. Well, Nexo has prepared for this. First, the Loan-to-value on Nexo is 50%, so there's ample room for cryptos to crash before the loan becomes under-collateralized.

Nexo also monitors this and requests the borrower to increase their margin by paying back some of the principal. If they fail to do so, then after three warnings Nexo will go on to sell the coins to prevent loss of capital.

So, unless there's a very sharp decline of more than 50%, Nexo should be able to cover enough to pay back the principal.

Can Nexo get hacked?

The crypto world has come a long way since MtGox got taken down in 2014. Did you know that MtGox.com was named after "Magic: The Gathering Online eXchange"? The website was originally set up for trading Magic cards like stocks. The domain was later used for other purpose, before finally becoming the Bitcoin exchange people remember it from. Against this background, are you surprised about 800,000 BTC was stolen, likely straight out of the hot MtGox wallet?

Nexo uses BitGo as the storage for crypto currencies, which are held in cold wallets. The BitGo platform is SOC 2 Type 2 certified, which means really secure. So, if Nexo gets hacked, they still shouldn't gain access to the crypto assets as that part is handled by BitGo. Also, there's a $100 million insurance policy on Nexo's digital assets held at BitGo, granted by Lloyd's. Check the link for what it covers.

But, Nexo is probably sitting on a shit ton of crypto assets, which makes it a very interesting target for all kinds of hacks. Could it be hacked? I suppose. Will it be? I doubt it. I'm sure there are easier targets.

Platform risk

Nexo is almost criminally profitable and reached profitability in less than a year from launching. The interest towards the service is high and unless something catastrophic happens, it will stay.

So what could that catastrophic event be? A security breach could be one, the crypto bubble could burst or a competitor could steal the market.

The bad

Since I've burnt my fingers with other platforms, I have to also play the cynic. Can you trust Nexo?

I dislike that Nexo boasts the $100 million insurance policy so much, when for all I can figure out myself is that the crypto assets stored on the platform are definitely many times that. Check out nexostatistics.com for yourself.

Also, fiat currency on Nexo is not insured. The BitGo $100 million insurance only covers for crypto assets in case certain specific harm happens to them. So, in case you deposit a large sum of fiat on Nexo and the company goes under, what happens then?

Reading the Nexo's Terms and conditions, it does state that depositing euros to Nexo results in them being converted to EURx - a euro stablecoin, which should put them under the BitGo insurance. Still, that doesn't mean your deposit is insured for anything else except very specific things such as theft.

This means, you need to be very careful. You need to trust Nexo. You getting back your money relies on Nexo being able to pay up. Nexo has a portfolio of overcollateralized loans that you finance, you don't get a legal claim to any collateral. That's important.

Final words

I didn't know it when I started writing this review, but I actually, seriously like Nexo. It's not shady at all, on the contrary. Everything about it looks really serious. The only thing I feel uncomfortable with it is that I wouldn't be completely surprised if one day people realized cryptocurrencies were just a dumb idea and no-one actually wanted to use them. Personally, I like the idea, but there are just so many issues with cryptos that it really can still go any way.

But put that aside, what do I think of 8% asset-backed, insured interest on fiat deposits? I think that's pretty damn sweet. For all the work the team has put into security and the business model, they get an A for effort. But I haven't myself invested in Nexo yet, and quick googling points out some red flags. All things considered, I'll give them a cautious three stars ⭐⭐⭐. I wouldn't mind storing some cash on Nexo connected to an upcoming Nexo card.

An impressive service for being in the crypto field.
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