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Nexo Review: Is Nexo Safe? A Review of Risks and Rewards

Crypto Nerd

April 21, 2024

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What is Nexo?

Nexo is a cryptocurrency lending platform that allows users to borrow against their cryptocurrency holdings or earn interest by providing liquidity. Founded in 2018 and based in Switzerland, Nexo aims to provide an open banking experience, facilitating instant crypto credit lines and enabling users to access cash without having to sell their crypto assets.

The platform utilizes an overcollateralized lending model, which means borrowers must pledge more collateral than the amount they borrow. This approach helps mitigate risks for both lenders and borrowers, as the collateral acts as a safeguard against potential market volatility.

Nexo Review: Lending

Lending Nexo offers a range of lending options for users who want to earn interest on their cryptocurrency holdings. The platform supports a variety of popular cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), and various stablecoins.

One of Nexo’s standout features is its high-interest rates, which can reach up to 17% APR (Annual Percentage Rate) for certain assets. These rates are subject to change based on market conditions and the type of cryptocurrency being lent.

Lending on Nexo is straightforward and user-friendly. Users can simply transfer their supported cryptocurrencies to their Nexo wallet and start earning interest almost immediately. Interest is compounded daily and paid out monthly, allowing for compound growth over time.

Nexo Review: Borrowing

In addition to lending, Nexo provides borrowing services that enable users to access instant cash loans without having to sell their cryptocurrency holdings. This feature is particularly attractive for users who want to maintain their exposure to the cryptocurrency market while still having access to liquidity.

Borrowers can obtain loans in various currencies, including fiat currencies like USD, EUR, and GBP, as well as stablecoins like USDC and DAI. The loan amount is determined by the value of the collateral provided, and loans can be obtained instantly, without the need for credit checks or lengthy approval processes.

Nexo’s borrowing rates are competitive, with annual percentage rates (APRs) starting as low as 5.9% for some cryptocurrencies. The platform also offers flexible repayment options, allowing borrowers to repay their loans in installments or all at once.

Nexo Swaps/Exchange

Nexo’s platform also includes a built-in exchange feature, allowing users to swap between various cryptocurrencies. This feature is convenient for users who want to diversify their portfolios or take advantage of market opportunities without having to transfer funds to external exchanges.

The Nexo Exchange supports a wide range of cryptocurrencies, including major assets like Bitcoin, Ethereum, and Litecoin, as well as a selection of popular altcoins and stablecoins. The exchange interface is user-friendly and designed for both experienced traders and newcomers to the cryptocurrency space.

Top Cryptocurrencies on Nexo by Trading Volume

• Bitcoin (BTC)
• Ethereum (ETH)
• Solana (SOL)
• BNB (BNB)
• Ripple (XRP)
• Avalanche (AVAX)
• Arbitrum (ARB)
• Cardano (ADA)
• Dogecoin (DOGE)
• Polygon (MATIC)

Altcoin Selection on Nexo

• Chainlink (LINK)
• Uniswap (UNI)
• THORChain (RUNE)
• Maker (MKR)
• Aave (AAVE)
• Hedera (HBAR)
• Synthetic (SNX)
• Osmosis (OSMO)
• Bonk (BONK)

Nexo Fees

Nexo provides two trading platforms, featuring distinct pricing strategies. On basic swaps, there are no fees, and users can earn up to 0.5% cashback, though costs may rise due to a variable spread. These swaps allow for setting desired prices, facilitating earnings while awaiting target prices, and enabling order stacking for strategic exits or acquisitions.

Dollar-cost averaging simplifies trading, allowing periodic investments or sales to mitigate market timing risks.

Nexo Pro, offering advanced trading, excludes spread costs and showcases competitive fees, positioning itself between Coinbase and lower-fee platforms like Kraken and Binance. Trading costs on Nexo Pro are differentiated based on 30-day trading volumes and are structured around the maker/taker fee model, which varies with market participation roles.

Nexo Pro Trading Fees

Trading Fee on Nexo’s Perpetual Futures

Nexo charges a fixed fee of 0.06% when you open or close a position on their perpetual futures contracts.

In addition to this trading fee, Nexo employs a variable funding fee mechanism, similar to other perpetual futures platforms. This funding fee helps align the contract price with the actual market price of the underlying asset. Depending on market conditions, the funding fee can either increase your overall trading costs or potentially reduce them.

Network Fees (withdrawals)

Withdrawals are free on Polygon, Binance Smart Chain (BEP-20), Arbitrum, and EOS. You may also qualify for free monthly trade allowances (up to 5) based on your loyalty level.

Nexo Card

One of Nexo’s unique offerings is the Nexo Card, a crypto-backed credit card that allows users to spend the value of their cryptocurrency holdings anywhere that MasterCard is accepted. The Nexo Card is available in physical and virtual forms, providing users with flexibility in how they access and use their funds.

I don’t have a Nexo card yet, but in many ways, it seems like a better option than a traditional crypto credit card.

Cards offered through exchanges like Gemini and Crypto.com are true credit cards. This means they come with high-interest rates (often over 20%) and can negatively impact your credit score if you miss payments or apply unsuccessfully.

In contrast, Nexo’s Mastercard lets you borrow against your own crypto held on the Nexo exchange. This means no credit checks and no strict repayment schedules. Just remember: your crypto acts as collateral, so if its value drops significantly, Nexo might sell some to maintain the loan balance.

Here’s a quick overview of the Nexo card:

• Earn up to 2% cashback on purchases (paid in NEXO tokens).
• Order your Nexo card directly through the Nexo mobile app.
• Link it to Google Pay or Apple Pay for easy use.
• Get a physical card if you need one.
• No monthly, annual, or inactivity fees.
• APR varies based on your loyalty tier and LTV (loan-to-value ratio).
• Repay conveniently through the Nexo app or website.

Nexo’s Mobile App

Nexo’s focus on user experience extends to their mobile app (available on Android and iOS). You’ll find the same core features as the web version, presented in a clean and intuitive mobile interface. Security is enhanced with biometric authentication on supported devices.

The mobile app offers a simplified experience compared to the desktop version. Advanced features like Nexo Pro (including futures trading) and the Nexo Web3 Wallet are currently unavailable.

Instead, the mobile app is ideal for managing your lending, borrowing, and Nexo Card activities on the go. You can also perform simple swaps, although this feature may have regional restrictions.

Nexo Exchange Vs. Nexo Pro

So, you need to buy or swap some crypto? Nexo gives you a few options. The first two are Nexo Exchange and Nexo Pro (we’ll get to the DeFi wallet stuff in a minute).

Nexo Exchange (Buy/Convert): This is where those “no-fee” trades happen. You can swap your BTC for ETH without paying direct trading fees. Sounds too good to be true, right? Well, the catch is the “spread”. Think of it as a slightly higher price – it’s how Nexo makes a profit, and it’s pretty standard on exchanges like Coinbase.

Nexo Pro: This is where you get serious. With Nexo Pro, you’re dealing directly with order books, meaning you can set your own prices (limit orders) or buy right away at the current price (with no spread). The downside? There are trading fees, but they’re not horrible. Plus, Nexo’s fees get cheaper the more you trade in a month. The basic level has 0.4% taker and 0.3% maker fees.

If you’re the type who loves charts and technical analysis, Nexo Pro is the way to go. Just remember, you’ll need to move your crypto to your Pro account first. It’s free, but a little less convenient than something like Coinbase where you trade on both basic and advanced platforms using your main balance.

Oh, and one more thing! Nexo Pro has a hidden gem – a screener in the Insights section. I love playing around with it to see what coins are buzzing on X. You can search for specific tokens too, but not everything’s listed.

Nexo Loyalty Levels

Nexo has a special system called Loyalty Tiers that unlocks awesome perks like lower fees and better interest rates. To really get the most out of Nexo, it’s important to understand how these tiers work.

Here’s how the levels break down:

• Base: The starting point. You don’t need any NEXO tokens for this.
• Silver: Step things up by holding at least 1% of your total Nexo balance in NEXO tokens.
• Gold: Get even better perks when you hold between 5-10% of your balance in NEXO.
• Platinum: The top tier! Hold 10% or more of your balance in NEXO tokens and get the absolute best benefits.

The biggest thing your loyalty level affects is your interest rates. The higher your level, the better interest you’ll earn on your crypto!

Nexo Lending Interest Rates by Loyalty Level

NOTE: There are minimum amounts for earning interest on your crypto. For example, you need to deposit at least 0.001 BTC to start earning interest on your Bitcoin.

Here’s a quick breakdown of the minimums:

• BTC: 0.001 BTC
• ETH: 0.01 ETH
• NETH: 0.005 NETH
• NEXO: 1 NEXO
• USDT: 1 USDT
• USDC: 1 BTC

Stablecoins like USDT generally have the easiest minimum deposit requirements and offer the best interest rates on lending platforms.

Nexo Staking

Okay, so Nexo says you can stake “any crypto” with them, but there’s a catch – right now, it’s only Ethereum (ETH).

But hey, at least they do Ethereum staking right! They offer something called “liquid staking”, which is a huge deal if you want to stake your ETH. Normally, staking Ethereum means locking up a whopping 32 ETH – that’s a lot of money! Plus, it makes it tricky to get your ETH back quickly.

Liquid staking solves that. You basically get a special token (like an IOU) that represents your staked ETH and earns those staking rewards. The “liquid” part means you can sell or even use that token as collateral while your real ETH is locked up.

Nexo uses a token called nETH for this. You can expect to earn somewhere between 4-12% a year, paid out in nETH.

It’s similar to tokens like Lido’s stETH or Coinbase’s cbETH. But, there’s one difference – you can always swap your nETH back for regular ETH through Nexo at a 1:1 ratio, with your rewards paid separately.

Nexo calls this “Smart Staking”, and it’s a pretty neat way to get around the usual annoying parts of ETH staking.

Just a heads-up: Smart Staking isn’t available in the US or Canada right now. Bummer!

Customer Support

Nexo’s customer support is available 24/7, which is a major plus. They offer both live chat and email support, giving you options depending on your needs. However, response times can be inconsistent.

While I’ve had some queries answered swiftly, others took significantly longer or required follow-ups. For basic questions, the live chat works well, but for more complex issues, be prepared for potential delays while your case is escalated. Overall, it gets the job done, but some patience might be necessary.

Who’s Nexo great for? Here’s my take:

Nexo’s platform is designed to cater to a diverse range of users with varying needs and experience levels in the cryptocurrency space. Here’s a breakdown of the different types of users who might find Nexo particularly appealing:

• Crypto holders who want to borrow: Nexo makes it easy peasy! Get a traditional crypto loan, use their handy Nexo Card for spending, or even boost your trading with Nexo’s special leverage feature.
• Want your crypto to work for you? Nexo’s got you covered. Earn interest effortlessly by just holding your crypto, or lock it up for a bit to get even better rates. Oh, and if you’ve got Ethereum, their staking option is a nice extra way to earn.
• Crypto beginner? Nexo has some fancy features, but don’t worry! They’ve got lots of guides and videos to help you figure things out, even if you’re totally new to the crypto scene.
• Big on the major players? Nexo offers some cool, less common coins, but you won’t find the massive selection a giant like Coinbase has.

Supported Payment Methods

Here’s a list of the supported payment methods available on Nexo platform:

• Credit cards
• Debit cards
• Apple Pay
• Google Pay
• SEPA – EUR
• Faster Payment Service (FPS) – GBP
• Wire transfer – USD
• Crypto deposits

Nexo has a $10 minimum deposit if you’re adding fiat currency (that’s dollars, pounds, euros, etc.).

Crypto deposits generally don’t have minimums, but there are a few exceptions like:

• Tron (TRX): 0.09 TRX
• Bitcoin Cash (BCH): 0.0005 BCH
• Litecoin (LTC): 0.0005 LTC
• Polkadot (DOT): 1 DOT

Cashing out? If you’re moving crypto to your own wallet, Nexo might have these minimums:

• Bitcoin: 0.001 BTC
• Ethereum: 0.01 ETH
• NEXO token: 1 NEXO
• Tether: 10 USDT

Always double-check Nexo’s help section for the latest minimums on withdrawals – they might change!

Is Nexo Licensed And Regulated Platform?

Nexo takes the whole “being legit” thing seriously. They hold licenses with some important financial watchdogs, though all the rules and regulations mean they’ve had to stop serving certain areas like the US and the UK.

Here’s a quick rundown:

• In the US: Nexo is registered with FinCEN (that’s the agency that tackles financial crime). They also had a BitLicense in New York and a license in California. However, they’re winding down their US operations, so features might already be unavailable where you live.
• The rest of the world: Nexo plays by the rules in other places too. They’re registered in Australia (ASIC), Canada (FINTRAC), and Italy (OAM), and they have a license in the Seychelles.

Nexo Proof of Reserves (PoR)

With platforms like Celsius collapsing last year (they did similar lending stuff), it’s more important than ever that companies like Nexo prove they actually have the funds to back up your deposits.

Nexo actually started providing “proof of reserves” way back in 2021, showing in real-time that they had more assets than they owed. But, finding a decent auditor for crypto stuff has gotten tricky. Nexo switched to a company called TrustReserve (which… doesn’t exist anymore).

Another site, CER (they focus on cybersecurity stuff), mentioned Nexo having proof of reserves. But I couldn’t find a working link, and CER only gives Nexo a “D” rating overall. That seems to suggest there’s missing info.

What does CER check for anyway? Stuff like:

• Secure servers
• Good user security options
• Vulnerability testing
• Insurance for your funds

It gets weirder. In a Reddit post from this year, someone from Nexo said they’ve stopped working with that auditor and are looking for other ways to prove their reserves.

Okay, reserves aside, Nexo does take security seriously. You’ve got two-factor authentication, the option to use biometrics on their app, and something called “whitelisting” to control where you can withdraw your crypto. Plus, their storage partners have some insurance in case things go wrong.

Does Nexo Require KYC Verification?

Yes, Nexo requires KYC (Know Your Customer) verification. This is standard practice for regulated crypto exchanges and helps prevent fraud and money laundering. Here’s why and what it entails:

Why KYC is Necessary:

• Regulations: Nexo operates in over 200 jurisdictions, and financial regulations in most of them require KYC checks.
• Security: Verifying your identity helps Nexo protect their platform and your assets.
• Accessing All Features: You’ll likely need to complete KYC to unlock Nexo’s full range of features, like higher withdrawal limits.

The KYC Process on Nexo:

1. Personal Information: You’ll provide basic details like your name, address, and date of birth.
2. ID Verification: You’ll have to upload a government-issued ID (passport, driver’s license, etc.)
3. Proof of Address: You may need to provide a utility bill or bank statement to confirm your residence.
4. Selfie (Sometimes): Nexo might require a quick selfie for additional verification.

Important: The KYC process on Nexo is usually quick and straightforward.

Frequently Asked Questions