With the very first Governance Vote announcement hot off the press yesterday, Nexo’s community took to the monthly AMA to ask Antoni about the new Daily Interest on NEXO Tokens proposal and what that means for Nexo, dividends, Nexonomics, and more. Check out the May 2021 edition of our Ask-Antoni-Anything or read a recap of the session below:
The Governance Vote has had “soon” on it now for months. Do you have a date for it?
We’ve just sent out all the details we have. The most important thing to note is that this is a proposal. We’re putting Daily Interest on NEXO Tokens to a vote with up to 12% a year. This comes due to very popular demand from the community. Since Daily Interest on NEXO contradicts our Dividends program, we’ve left it to our users to choose between the two. As with anything in life, there are pros and cons and there’s already a very lively discussion going on on social media. So with that, I’d urge everyone to check out the proposal and save the date because the vote will take place on June 7.
Personally, I think it’s better to receive daily payouts because they’re more regular, and NEXO Tokens staked as collateral will also be able to receive interest.
Why are the audit reports on regulatory licenses not out for the public yet?
We are working to put all the licenses on the website. I know in crypto everything over a couple of hours is “ages” but this is something serious and it does take some time. And in terms of the audit, believe me, nobody wants audited financials more than I do, because it’s important, but these are ultimately things that depend on third parties and external auditors which precludes me from giving you an exact ETA.
When is the Nexo VISA coming out in Europe?
For Europe, it’s the Nexo MasterCard. We shipped the first batch towards the end of December or January. We’re releasing it to everybody any minute now.
Does the Nexo Exchange have hidden fees and very high spreads? Nexo’s exchange rates are the worst across all exchanges – up to 3% extra each way. It’s a well known fact across the community and we’re not happy about it. Nexo needs to fix this.
Well, first of all we definitely do not have the worst exchange rates in the industry. Quite the opposite, we have a very efficient system, it’s called the Smart Routing System and it rounds up the best rates across exchanges and trading desks and gives you the best one. It’s much better than trading on a single exchange.
Now I presume what you’re referring to is last week's liquidity crunch which happened on Wednesday and lasted until Sunday. This is not something that comes from us, it comes from the reality of the markets and with downturns liquidity is always very thin, which makes prices spike. With extreme market volatility spreads tend to widen. And I can tell you it was much worse for larger block trades than what the retail saw on the Nexo Exchange. Up to this point I think we are on par with the most efficient pricing mechanisms.
I read about a Nexo user who was completely liquidated due to a technical discrepancy on your part. How do you protect clients against such issues and do you pay back their assets?
Nexo is one of the few companies that issues price-based margin calls and one of the few lenders in the space that actually has a working liquidation mechanism. As I’ve explained time and again, our liquidations protect both the people borrowing on the platform and those earning interest. In order not to take directional bets on crypto and Bitcoin we have to have this mechanism in place. Luckily, liquidations are becoming rarer as crypto matures and Bitcoin’s volatility is on a downward trend.
We don’t like liquidations because they temporarily shrink the Nexo loan book. We do not take anyone’s collateral and hold it on our own balance sheet, we actually sell it to ensure we still hold stable liquidity that covers our interest-earning clients’ assets. This is how we protect their funds.
Now if someone is liquidated for any reason other than the fact that their loan-to-value ratio falls below a certain threshold which poses a risk to Nexo, and the fault is on our end — for example, they made a transfer and all the confirmations came through, but it wasn’t reflected in our system — they should reach out to support and we will sort it out. We have done this in the past. After all, even the most sophisticated of softwares can make mistakes and we’re here to make things right when they do.
What about the possibility of doing an internship at Nexo? You asked me to ask this question again next time. Looking forward to shaping the future of Nexo with you guys.
Frankly, I don’t have an answer for you right now, so please shoot me an email directly. My email is [email protected].
Nexonomics was super exciting for the community and something we looked forward to, but it seems to have died down a lot. Do you have any plans for Nexonomics 3.0?
Great question. Well, we’ve just released the Governance Vote as a part of Nexonomics so rest assured we are not done with the initiative. After all, Nexonomics took us from $0.15-$0.20 to $4. Naturally, there are cycles of activity because it does take time to develop and implement new features. So it’s cycles of behind-the-scenes work and announcements. When we’re ready to announce something, we won’t hesitate to do so.
Will it be possible to pay with the Nexo Card using the balance in the Nexo account without using our credit line? If not, when will you add this?
Yes, this will be possible, but it will come slightly later, after the card launch. We are going to be adding this feature as soon as we can, it’s a part of our plan to provide you with a 360-degree solution.
Any progress on the banking licenses since the last update?
Short and honest answer: No, I don’t really have anything to update you with.
Could you give us year-over-year growth percentage numbers for Nexo’s AUM after normalizing for changes in price for underlying coins?
Our assets under management are always tied to the underlying value of the assets you’ve entrusted us with. As you know, before last week’s crash our AUM was around $15 billion. Obviously, this number went down with the correction and now it’s gone up again. But I don’t have an exact number for how things stand today. I remember that during last year’s crash we were at $1 billion, so that’s a x15 increase year-over-year.
How many users with balances higher than $1000 are there on Nexo?
I would have to check since our registered users are above 1.5 million. But we have a substantial number of clients with balances over $1000 because our competition leaned towards institutional clients and big whales at the start, leaving the retail for us, so we definitely have many clients in this range.
What’s the volume of processed loans at Nexo?
It’s in the double-digit billions. Again, this statistic tends to vary from day to day and week to week.
How will Nexo afford the new 12% interest on NEXO Tokens? Will you generate this yield elsewhere or will you eat the cost?
Nexo is profitable and we have different revenue streams which work well. This is why we feel confident in our proposal of 12% interest on NEXO Tokens. It is no different from taking 30% of our profits and distributing them to token holders. But overall, we think that the Daily Interest on NEXO Tokens proposal is more inclusive and it offers greater transparency and predictability for earnings. This is simply a different model of giving back to our community which was something we were doing already through dividends.
If Daily Interest replaces Dividends as the result of the Governance Vote, does this mean that NEXO is no longer a security token and can be listed on more exchanges?
Contrary to popular belief assets that are classified as securities and utilities don’t necessarily stay so forever. We are working with the law firms that advise us on assessing the status of the NEXO Token. We’re hoping that they come to the conclusion that our token is not a security so that we can see even greater liquidity and ubiquity of the NEXO Token across different platforms.
What happens to the NEXO Tokens we hold if the company gets acquired or goes public?
We are not in the process of being acquired and I don’t see this happening in the foreseeable future. We have a sustainable and profitable business model that we like very much. What I can promise you is that the NEXO Token holders will always be taken care of whether it’s through dividends or daily interest payouts. We will always try to have your best interest at heart — it’s in our business’ best interest to take care of our token holders and investors.
What are the new coins you’ll be adding to Nexo?
I don’t know what the team is planning regarding the addition of new assets to the platform. But we are constantly working in this direction, so we’ll make an announcement as soon as we’re ready.
In the Governance Vote email, you mention a final dividend of over $20 million. On the different platforms, the community calculated a higher yield per token. Can you please explain this number?
I don’t know how other platforms could have known Nexo’s exact financials to be able to produce their numbers. We calculate the dividend аccording to the accounting standards we adhere to. It’s great that our community is optimistic about our earnings, but ultimately all the numbers on other platforms and websites are merely projections.
If the NEXO Governance Vote is passed and interest is paid out instead of dividends, will customers from the US be able to buy NEXO Tokens directly and receive their interest payouts in NEXO?
That’s the plan! The State of New York may be an exception because of the BitLicense system and the way things stand there. What services we’re able to offer in the US depends on what our law firms advise us is legal and possible. We have to be patient and make sure that everything checks out in terms of compliance, but the aim is to enable US citizens to buy our native token directly and receive their payouts in NEXO.
In the event daily interest replaces dividends, wouldn't your token holders lose out on future potential growth of Nexo’s profits? What are your thoughts on this?
No, token holders wouldn’t be missing out because despite Nexo being a profitable growth company, part of this growth phase also means serious expenses on improving our product, marketing our services widely, growing our team and so on. So growing revenue and a growing company don’t necessarily mean profitability grows every year. Nexo has been profitable and we have been sharing our success with token holders, but we cannot guarantee how much we’ll be able to share in the future. So my personal preference — not that I’m voting, that would be a conflict of interest — is that you’d be better off with the Daily Interest on NEXO Tokens.
We have tried to take very good care of the NEXO Token holders, including those from our ICO. The token sale took place at around $0.10 and we’re currently trading at $2.50, so we’ve had some spectacular returns. So if you think these changes will affect you negatively, you are in a great position to part with your NEXO Tokens. This is the worst possible scenario, and you’d still be making a handsome profit.
During the last AMA you said that ADA implementation was really close, do you have any news about it?
I don’t, unfortunately. I will have to speak to the team, but we’re probably closer to it than we were last time.
Any plans to increase the LTV for Nexo Tokens back to 25% in the near future?
We are always looking to increase the LTVs for the assets we accept as collateral on the platform and that’s also true for the NEXO Token. We want volatility to go down a little more before we raise LTVs again. We had a very volatile week which is why we brought down the loan-to-value ratios in the first place. We were seeing a lot of irrational exuberance so we preemptively lowered our LTVs to protect clients from liquidations. As soon as we feel that liquidity is back to normal, we’ll bump up the LTV again.
Will the daily interest payouts of 12% on NEXO Tokens be bought from the open market?
Liquidity for these payouts will come from a variety of sources which will be carefully evaluated according to our corporate treasury management strategy and market conditions. While I can’t give you an exact formula for how we’ll be sourcing these tokens, I can guarantee that we’ll be doing it in a way that benefits token holders.
Some of the Nexo holders feel like the upcoming vote is an attempt at a hostile takeover. Can you give us reassurance that this is not the case, please?
It’s ultimately up to the token holders to decide whether they want Daily Interest payouts or they want to stick with the current model, that’s all it is. Daily Interest on NEXO Tokens has been suggested by our community numerous times, so there’s no other company or individuals trying to take over Nexo. Additionally, while there is a financial incentive to the NEXO Token and its price does depend on the performance of the company, it does not involve the equity of the firm, so there’s really no hostile takeover going on.
What can you share exclusively in terms of Nexo’s road map? Are there plans to use the platform to share unique insights such as performance statistics, loan data, and key company milestones and updates?
I think we covered most of this earlier in the AMA sessions. We usually share our milestones with you through our email, social media and blog. The performance statistics were also addressed earlier in this AMA.
Will there ever be a metal card that people can apply for (not just the generic plastic one?)
The metal cards are great but with different types of wallet solutions, I think physical cards are going to become obsolete. There’s very little added value to metal cards. Even so, it’s a cool thing to have and I think we will have it.
With ERC-20 costing a pretty penny, will Nexo use different networks through which to send tokens to the Nexo account such as TRC20 or EOS to minimize fees?
Well, ERC-20 has been the standard for quite some time now and I’m pretty bullish on Ethereum. Obviously, it is pretty expensive and we have been experimenting with other chains but safety always comes first at Nexo. Ultimately, we prefer to have more expensive but secure transactions for our clients.
Did you manage to get any sleep last week? I imagine it was quite difficult with your baby girl around and the crazy market.
Actually, the crazy market had more contribution to my sleeplessness than my baby girl. I have this amazing stress therapy – I have the little one on my screen and she gives me motivation every day.