This article was originally published on 2017-03-02.
Updates on 2018-03-06: In response to the cancellation of Dutch auction and revised total token supply (additional 250 million NEXO tokens to be allocated as Overdraft Funding Reserves), we have revised our long-term view from "neutral" to "positive".
- Project name: Nexo
- Token symbol: NEXO
- Website: https://nexo.io/
- White paper: https://nexo.io/assets/downloads/Nexo-Whitepaper.pdf
- Hard cap: $52.5 million (ICO participants receive 52.5% of total token supply)
- Conversion rate: 1 NEXO = $.10
- Maximum market cap at ICO on a fully diluted basis: $100 million
- Bonus structure: 15% for public presale, undisclosed for private presale
- Presale or white list: Public presale whitelist closed on February 28, 2018, waiting list open, register here: https://nexo.io/
- ERC20 token: Yes
- Countries excluded: China, must be accredited investor for USA
- Timeline: Public presale begins March 6, 2018, with public sale planned for April 2018 (please refer to Nexo’s website for the most up-to-date information)
- Token distribution date: Shortly after conclusion of token sale
Video summary (video is 8:17 long):
What does the company/project do?
Nexo seeks to provide instant loans to anybody via collateralization of digital assets. Users in need of a loan would lock up their cryptocurrency and immediately receive fiat money to spend in their Nexo Credit Card or in their own bank accounts via same/next-day bank transfer.
The Nexo credit card is free for Nexo users and charges no extra fees. The credit limit is tied to the market value of the digital assets within the user’s wallet, and the user may pay off their outstanding balance with fiat, a percentage sale of the digital assets in their wallet, or NEXO tokens.
Repayments using NEXO tokens offer the user a discount off the interest. The Nexo credit card also requires no minimum monthly payment as long as the outstanding balance is within the credit limit.
Nexo’s platform is powered by their Nexo Oracle system, which will be responsible for every aspect of the platform.
Nexo Oracle is an automated system that utilizes big data analysis, self-regulating algorithms, and prediction models in order to regulate the Nexo environment as well as providing analytics. It will be handling wallet maintenance, data analytics, automated notifications, real-time asset monitoring, funds distribution and repayment analytics for its users.
The diagram below explains Nexo’s business model in a nutshell.
How advanced is the project?
Nexo is backed by Credissimo, a Bulgarian FinTech company that specializes in instant loans, e-commerce financing, and bill payment services. Credissimo was founded in 2007 has operations in online consumer lending in several European countries.
Nexo’s platform has not launched to the public yet, but they will be launching their primary product (BTC/ETH Overdrafts) one month after their public presale according to their roadmap.
Here is a summary of their roadmap:
- Launch instant crypto overdrafts in USD secured by BTC and ETH
- Start M&A process of acquiring a FDIC-insured banking institution
- EUR currency support
- Launch Nexo credit card
- Additional altcoins/tokenized assets support
- JPY support
- KYC/AML automation
- Launch Nexo mobile wallet
- Increase maximum overdraft limits
- Second Nexo airdrop campaign
- Finalize acquisition of FDIC-insured banking institution
- Launch deposit accounts
- Installment loans
- Increase maximum overdraft limits
What are the tokens used for and how can token value appreciate?
Nexo is clear from the start that the NEXO token will be a security token.
They categorize their token as a US SEC-compliant divided-paying asset-backed security token with utility features.
30% of the Nexo’s profits will be shared with NEXO token holders in the form of dividends, payable monthly in ETH. NEXO tokens are backed by the underlying assets of Nexo’s overdraft portfolio.
The NEXO token is compliant to the US Securities Act Regulation D Rule 506(c), and token holders will receive 30% dividends from Nexo’s profits, payable monthly in ETH and distributed proportionately to all NEXO token holders. As in a security, NEXO tokens are backed by the underlying assets of Nexo’s overdraft portfolio.
In terms of utility, NEXO tokens will offer holders of the token to receive a discount on repaying the interest on their overdrafts when they pay using NEXO tokens. The magnitude of discount is not specified. Eventually, users will also be able to collateralize NEXO tokens for overdraft financing on the platform.
The core Nexo team consists of 14 members, with most team members holding equally high positions at Credissimo. The bios of key team members are listed below:
Kosta Kantchev, Managing Partner and Co-Founder – Co-Founder of Cresdissimo, as well as a Founding Investor and Board Member in two other start-ups.
Georgi Shulev, Managing Partner and Co-Founder – 6+ years of experience in investment banking, Co-Founder of Consestimate, an open financial estimates platform.
Antoni Trenchev, Managing Partner and Co-Founder – 7+ years of experience in E-Commerce Strategy and Development and Automoation of E-Commerce Processes. Previous Member of Parliament at the National Assembly of the Republic of Bulgaria.
Vasil Petrov, Co-Founder – 16 years of experience in system administration, back-end development and architecture of high-load and full-cycle projects. Previously co-founded and served as CTO of a video and internet service provider with over 150,000 customers.
Nexo’s advisors include Michael Arrington, Founder of TechCrunch and Arrington XRP Capital, Trevor Koverko, Founder and CEO of Polymath, and Ugo Bechis, 40+ years of experience in finance and lead SEPA compliance in three other companies.
- Nexo is a public company that has a 10-year history, has operations in several countries, is growing and profitable. Very few ICO projects is backed by a company as established as Credissimo. This demonstrates the capability of the team.
- Nexo is also advised by reputable entrepreneurs in the tech and blockchain space, who can open doors for the company to seek partnerships.
- Credissimo has created an option to use Bitcoin to repay loans in 2016. The users who have been using this feature would have a much easier time integrating with Nexo’s platform because they are already familiar with cryptocurrency.
- Using cryptocurrency as a collateral for lending has substantial potential as it would allow users to generate liquidity without selling the underlying cryptocurrency and triggering a tax event.
- NEXO token is classified as a security token because of its dividend paying nature, so none of the current high-volume exchanges are able to list it. It is uncertain when exchanges supporting security tokens will operate and generate sufficient trading volume.
- There are a number of operating blockchain projects focusing on using cryptocurrency to obtain loans, such as Salt Lending and ETHLend. Nexo will be competing with them in one way or another, although the entire space is huge and is big enough for multiple winners.
Overall, we are neutral about the short-term potential of this ICO and like its long-term potential. Our thoughts of the tokens for short term and long term are as follows:
For short-term holding
Neutral. The hard cap, although rather high, is likely to be filled with some unmet demand given the established nature of Credissimo and market awareness. However, since NEXO token is a security token and there is currently no exchanges supporting security token with high volume, it is uncertain when NEXO token will generate sufficient trading volume.
For long-term holding
Good. We like lending projects (Salt Lending, Ripio Credit Network, Ethlend) in general and Nexo is no different. Nexo has indicated that they have received early requests and applications for the Nexo Instant Crypto Overdrafts exceeding $500 million. This makes us optimistic that Nexo can be successful in the long-term.
For more information about the ICO, please visit the following links:
* The information contained in this article is for education purpose only and not financial advice. Do your own research before making any investment decisions.
This article is contributed by Victor Lai with the help of our intern Richard Wang.