Nexo to Launch Instant Crypto-Backed Loans on Monday
Following weeks of anticipation, almost 52 thousand members of Nexo’s Telegram community sighed a collective sigh of relief and posted celebratory messages, “woos” and “hoorahs” when admin Antoni Trenchev announced that Nexo would start issuing the first instant cryptocurrency-backed loans in the world on Monday, April 30. The announcement came 15 minutes before midnight on Tuesday, April 24. It matters because, even though the ICO is now long finished, this means that the platform is ready to be deployed and that investors will receive their NEXO tokens as soon as the platform launches.
So, what does Nexo do?
Imagine you have a pretty expensive skin in a videogame – or a rare mount. Let’s say that the mount is worth $4,000 at the moment, and you actually need the money, but you really don’t want to sell it. What do you do? You can’t go to a bank; they would laugh at you!
With Nexo, you place your digital asset (any digital asset, including cryptocurrencies or in-game items) in a Nexo wallet, and Nexo gives you a loan – either in fiat currency or a cryptocurrency of your choice. That way, you don’t lose your asset and you can use it in the future. Nexo takes care of its users’ short-term liquidity needs by approving instant loans backed by cryptocurrencies and other digital assets. In case your asset appreciates, you keep all of the profits.
Nexo is a subsidiary of Credissimo, which has been a market leader in online consumer lending since 2007. In 2016, Credissimo was the first company to offer a Bitcoin loan repayment option to its customers. That very same year, the lender launched Chabot, an automated lending system. Nexo is an extension of these efforts, focusing primarily on automation and crypto-backed loans.
You can read more about the company and its mission on Nexo’s official site, but the core idea is: If you have some kind of digital wealth, you can enjoy some of the benefits without selling off your assets. It is Credissimo’s solution to the lack of financing options in a new digital economy. And it’s all made possible by NEXO Tokens.
During the ICO, Nexo raised $52.5 million. This was the planned amount, limited by the hard cap which remained unchanged at $52.5 million, even though the Public Pre-Sale investor interest indicated an 11x oversubscription. The community involvement is owed in part to the fact that 30% of the company’s profits will be paid out to NEXO Token holders as dividends. The NEXO Token is a dividend token, or, in Nexo’s own words, “the world’s first SEC-compliant dividend-paying asset-backed security token.” What does this mean?
At the moment, the three most popular types of tokens are currency tokens (like Bitcoin – for payment and store of value), utility tokens (like Ethereum – for gaining access to certain features, services, and products on a platform, i.e. they have a special function & are not always about profit), and securities tokens (tokens which promise investment returns, like financial assets). Other types include asset tokens (representing assets), equity tokens (representing the issuer’s capital), and reward tokens (i.e. loyalty points).
Dividend tokens, like many other types, represent an investment contract of sorts. Their appeal lies in the promise of a passive income. When the company earns money, the token holders receive a portion of the profits. That is the gist of it. In a sense, dividend tokens are a lot like stocks, except that they do not constitute ownership nor do they carry voting rights.
Even so, dividend income is among the best forms of passive income.
That’s why Nexo’s announcement is a big deal. Investors will have the right to receive 30% dividends from Nexo’s profits. The payments will be made each month. The tokens will also be listed on a number of crypto exchanges.
Meanwhile, Nexo’s customers will be able to unlock the monetary value of their idle digital assets. You know how they say, “You can’t have your cake and eat it, too?” With Nexo’s “new dimension of hodling”, this is as close as you can get.