Nexo

What is Nexo?

Nexo is a centralized crypto finance (CeFi) platform that offers services such as crypto-backed loans, interest-bearing accounts, exchange, and crypto cards. Users’ digital assets are custodied on the platform, which provides lending and yield features according to its risk management rules.

CeFi refers to platforms operated by companies that custody user assets and manage risk and compliance, unlike decentralized finance (DeFi), where users self-custody assets and smart contracts automate transactions. Among CeFi platforms, Nexo specializes in enabling users to unlock liquidity by collateralizing their crypto assets while retaining market exposure.

How Does Nexo Generate Interest and Issue Loans?

Nexo earns interest by deploying users’ deposited assets into compliant yield strategies and by lending to borrowers. Borrowers pay interest, a portion of which is distributed to depositors based on platform rules. Loans are typically overcollateralized, meaning borrowers deposit crypto as collateral to access stablecoin or fiat credit lines.

Nexo can be understood as a “collateral vault”: you deposit assets like Bitcoin, and the platform offers you a borrowing limit with an associated interest rate. Interest is usually accrued daily and settled periodically. Both rates and supported assets vary according to market conditions and platform policies (different assets and terms yield different rates and limits).

For example, a user can collateralize BTC to borrow stablecoins for spending or reinvestment. The BTC remains under Nexo’s custody and may earn interest (if deposited in an interest account). However, if the asset price drops and the Loan-to-Value (LTV) ratio exceeds the threshold, additional collateral must be added or liquidation may occur.

How to Open an Account and Use Nexo?

The process is straightforward, focusing on three main steps: account creation, asset transfer, and product selection.

Step 1: Register a Nexo account and complete KYC (Know Your Customer) verification. KYC is required for anti-money laundering compliance.

Step 2: Purchase the crypto you intend to use for collateral or earning interest (such as BTC, ETH, or stablecoins) on Gate. Select the appropriate blockchain network and prepare to withdraw your assets to Nexo.

Step 3: Withdraw assets from Gate to your Nexo deposit address. Always double-check the network and address, using only one network per transaction to prevent asset loss due to mismatches.

Step 4: On Nexo, choose between an “Interest Account” to earn yield or “Collateralized Loan” for accessing stablecoin or fiat liquidity.

Step 5: Set up notifications and risk controls. Enable price alerts and LTV notifications, and keep reserve funds available for market fluctuations.

Step 6: Regularly review your portfolio. Monitor changes in rates, terms, or regional policies and adjust your positions and product choices as needed.

How Do Nexo’s Collateralization and Liquidation Mechanisms Work?

The core metric is LTV (Loan-to-Value): the ratio of loan amount to the market value of collateral. Each asset type has an LTV ceiling and liquidation threshold set by the platform. As prices fluctuate, LTV changes dynamically.

When LTV approaches the threshold, the platform typically sends a margin call notification; you must add collateral or make partial repayment to reduce the ratio. If LTV surpasses the liquidation level, the platform will automatically sell a portion of your collateral to cover the debt and restore a safe balance.

Example: Collateralize 1 BTC to borrow stablecoins worth a portion of its value. If BTC’s price drops, LTV rises; if it crosses the threshold without additional collateral, the system will sell part of your BTC to repay the loan. This mechanism protects both the platform and users from bad debt but results in loss of exposure for the liquidated portion.

How Does Nexo Differ from DeFi Lending Platforms?

The fundamental differences lie in custody, transparency, and accessibility:

• Custody Model: Nexo is custodial—assets are held by the platform; DeFi is non-custodial—you interact directly with smart contracts via wallets.
• Risk Management & Rules: Nexo’s policies and risk controls are set and enforced by the company; DeFi operates through transparent on-chain contract parameters.
• User Experience: Nexo offers a streamlined “account + app” approach; DeFi requires familiarity with wallets, gas fees, and on-chain interactions.
• Yield Sources: Nexo’s yields come from its lending strategies and borrower interest; DeFi yields are primarily driven by protocol lending rates and incentives.

For beginners seeking a hassle-free account-based experience, Nexo is more user-friendly. Those who prioritize self-custody and transparency may prefer DeFi.

How Secure and Compliant Is Nexo?

On security, Nexo uses custody solutions with multi-signature management, conducting audits or publishing proof-of-reserves (details may vary with service providers). The platform typically claims custody insurance coverage through partners, but users should verify coverage scope and triggers independently.

On compliance, Nexo offers region-specific products and access. As publicly disclosed, in January 2023 Nexo reached a settlement with US regulators, paying about $45 million and ceasing some “interest products” in the US. Such events highlight that local regulations can impact product availability and terms.

As of 2025, regulatory oversight across the industry continues to evolve; platforms adjust offerings accordingly. Always check available services and latest terms for your jurisdiction before onboarding.

What Is the Utility of the NEXO Token?

NEXO is a utility token within the platform, commonly used for boosting account tiers, earning higher interest rates or fee discounts, and participating in exclusive platform events. Specific benefits and rates are subject to change based on policy or market conditions.

It’s important to note that NEXO is a crypto asset subject to price volatility. While holding it may enhance your rates or reduce fees, it also exposes you to additional market risk—allocation should align with your risk tolerance.

How Can Gate Work with Nexo?

Many users combine “purchasing on an exchange + using Nexo” for capital management and liquidity needs.

Step 1: Buy your desired asset on Gate (such as stablecoins or major cryptocurrencies). When selecting a network (e.g., ERC-20, TRON, or USDT), confirm that Nexo supports deposits from that chain.

Step 2: Withdraw from Gate to Nexo. Copy your Nexo deposit address, ensure network compatibility, and consider a small test transaction to minimize errors.

Step 3: On Nexo, choose between earning interest or using collateralized loans. For short-term liquidity needs, use loans to access stablecoins or fiat; for long-term holding, deposit into interest accounts for passive income.

Step 4: Managing returns or repayments: When repaying loans or redeeming assets, transfer stablecoins or crypto back from Nexo to Gate for trading, converting, or fiat withdrawal (subject to local compliance channels).

What Are Common Risks and Precautionary Tips with Nexo?

• Custody & Counterparty Risk: CeFi platforms hold your assets—platform management issues or compliance failures can impact fund availability. Diversifying platforms and asset types is recommended.
• Market Volatility Risk: Declining collateral values increase LTV and trigger liquidations. Avoid high-LTV borrowing, set price alerts, and keep reserve funds for margin calls.
• Regulatory & Regional Policy Changes: Rates, product access, and terms may change due to evolving regulations. Review announcements and terms regularly to prevent misunderstandings or non-compliant use.
• Rate & Terms Changes: The platform may adjust yields, rewards, or fees. Monitor notifications or emails about updates to avoid unexpected declines in returns or increased costs.
• Token Exposure Risk: Holding NEXO for benefits introduces price risk. Set allocation limits according to your personal risk tolerance.

Is Nexo Right for You? How Should You Decide?

Nexo may be suitable if you want to convert crypto assets into short- or medium-term liquidity, are comfortable with custodial models and platform risk controls, and prefer an account-based interface for earning interest or accessing credit lines. If you value self-custody, on-chain transparency, and composability more highly, DeFi might better suit your preferences.

Before deciding, consider three factors: whether you understand—and can accept—custodial and liquidation risks; whether local regulations allow access to desired products; whether rates, fees, and benefits (including NEXO) fit your financial plans. Start with small amounts, maintain reserves, and diversify across platforms/assets for a safer entry strategy.

FAQ

Is Nexo Safe and Reliable?

Nexo is a licensed crypto lending platform with multiple international financial licenses. It stores user funds in cold wallets with insurance coverage. The platform undergoes regular security audits; however, all centralized platforms carry operational risks. It’s advised not to deposit more than you can afford to lose and to monitor account activity regularly.

Do I Earn Interest by Depositing Crypto on Nexo?

Yes. Nexo lends out users’ deposited crypto to institutions and traders, sharing interest earnings with depositors. The annual percentage yield varies by token type and account tier—typically between 2%–8% APY. Earnings are settled daily; you can choose to reinvest them or withdraw at any time.

How Do I Use Nexo’s Lending Features?

You can use your crypto holdings as collateral to borrow stablecoins or fiat currencies—simply lock your assets on the platform as security to receive instant loans at annual rates typically ranging from 5%–12%. If collateral value falls below risk thresholds, liquidation may occur—always monitor your LTV ratio closely.

What Are the Practical Uses of the NEXO Token?

NEXO serves as both a governance and incentive token for the platform. Holding it can unlock higher interest rates (for example from 5% up to 8%), lower borrowing costs, as well as voting rights in platform governance decisions. NEXO can also be traded on exchanges such as Gate for market participation.

What’s the Fundamental Difference Between Nexo and DeFi Lending Platforms?

Nexo is a centralized (CeFi) service managed by a company team—offering enhanced user experience and customer support but carrying platform risk. DeFi lending relies entirely on smart contracts for automated execution—it’s more transparent and decentralized but requires greater technical knowledge and self-management of risks. Both models have advantages; beginners often find it easier to start with Nexo.