Nexo is full of red flags and could be the next company to fall!

After BlockFi declared bankruptcy today, it's time to take a closer look at Nexo.

Nexo 10% “Yields“

As you can see Nexo is paying 10% on stablecoins. Where does this yield come from?

If the yield is greater than the “risk free” market rate, they are by definition taking directional risk to chase said “yield“. This is a big red flag!

Nexo makes interest via collateralized borrowing to users, and it’s higher rate than the yield provided. The problem here is that in a system with no lender of last resort, the commercial bank model on crypto rails can blow up, quickly. “Liquidity issues”, and every customer have lost their money.

Nexo also controls over 82% of the total supply of its tokens:

Nexo Token Supply

85% of Nexo’s total assets held on Ethereum are Nexo tokens. This means that the platform’s backing could become compromised if liquidity issues mount.

Nexo's Ethereum Assets

Nexo is full of red flags and could be the next company to fall!