Lending is one of the most highly sought banking services of our time. From individuals small businesses to large multinational companies, loan access has been vital in the growth of businesses. However, one problem associated with bank lending is the long processes involved, where long queues, stressful questions, and hail mary approvals sadly suffice.
That’s where the idea of crypto lending platforms came up. Blockchain-based lending networks offer crypto or fiat collateralized loans at friendly interest rates. Nexo is one of the earliest launched crypto lending platforms.
What is Nexo?
Nexo is one of the world’s largest and most trusted digital finance lending institutions. It has been working to bring professional financial services to the world of digital assets since 2018. Being one of the pioneer blockchain-based lending and borrowing platforms, Nexo garnered immense adoption in the years.
It has a native ERC-20 utility token NEXO, which powers the network’s activities. But, what are the main use cases associated with the NEXO token? Keep reading to find out.
Nexo Use Case: Used in Network Governance
The most primary use case of NEXO token within its host platform is governance. The token helps in achieving the various governance tasks of the network. According to Nexo, the token holders can vote on various aspects of the project’s development. It may be about the tokens to add, the interests, and other features and services the community may propose.
The voting power is dependent on the number of tokens held. In simple terms, each token represents one vote. The first step of voting for a proposal involves holding some amount of Nexo in your wallet for the entire voting session. Afterwards, you can support or reject the proposals on the table.
Nexo will set a quorum of votes that can render the entire voting process null and void if not reached. Additionally, for most votes to pass, they must get at least 50% plus one extra vote.
In June 2021, Nexo completed one of its major governance voting processes. The decision was on a proposal to offer daily interest to investors. Over 89% of the voters favoured the proposal, which was adopted a few days later. Hence, NEXO tokens are vital in governance tasks. Once the voting sessions end, you are allowed to use your tokens.
Nexo Use Case: Rewarding Investors and Token Holders
Another NEXO token use case is in rewarding investors. The investors in the Nexo network will earn rewards in various forms.
In the early stages of the Nexo ecosystem, the network used to offer annual dividends to the token holders. The investors shared in the annual growth and profits made by Nexo. However, the network revised its policy in June 2021. They now adopted a daily interest system through the governance vote mentioned above.
The interest earned is distributed based on the daily token holdings of the individuals. According to their website, the interest translates to about 12% annually. Hence, just holding the Nexo token is an investment opportunity. The network uses the NEXO token to reward the community. Thus, you receive your dividends and daily interest in the form of NEXO.
The Nexo loyalty program is another system adopted to reward loyal community members. The program consists of 4 tiers: base, silver, gold, and Platinum, depending on tokens held. The loyalty program allows investors to earn rewards and discounts depending on tokens held.
Nexo Use Case: Collateral When Borrowing and Lending
Being the main asset of the Nexo lending platform, Nexo gains a use case in borrowing and lending. As mentioned earlier, the Nexo network allows you to access fiat and stablecoin loans using crypto as collateral. Well, one of the tokens used as collateral is NEXO.
A NEXO token holder can use their assets to access a loan at fair interests. The most exciting thing is getting loans in over 40 fiat and stablecoins.
Using NEXO as collateral when borrowing makes your time easy. For instance, you can get a higher credit line, discounts and benefits. The loyalty program mentioned earlier only benefits the most loyal community members. Gaining access to higher tiers depends on the tokens you hold, as shown below;
- Silver tier. To qualify for the benefits associated with the silver tier, 1% of your portfolio should be NEXO tokens
- Gold tier. To be eligible for the Gold level, at least 5% of your portfolio should be NEXO tokens
- Platinum. 10% of your portfolio balance should be NEXO to qualify for Platinum.
In all those tiers, you get various discounts on borrowing and lending. Hence, the Nexo token gains a use case as both collateral in lending and also helping to get discounts. As such, holding NEXO streamlines your loan access.
Nexo Use Case: Payments
The Nexo token also gains one primary use case outside its network as a payment asset. Basically, like many other top-performing crypto assets, it’s possible to use the NEXO token in paying for services and goods. But how.
Nexo lists the Nexo card as one of its main products on the official website. The Nexo card has links with over 40 million merchants globally. Therefore, you can use the Nexo card to pay for different services and purchases to the accepting merchants.
The Nexo token is one of the assets supported with the Nexo card. Hence, the token can also pay for purchasing services from the supported merchant stores. You can use the Nexo Card in any merchant store which accepts MasterCard.
Nexo and the Crypto Space
The NEXO token is genuinely a useful asset within and outside the Nexo network. Its use in governance, rewarding, and loans makes it the centre of all activities. Furthermore, its connection to the Nexo Mastercard makes it possible to purchase assets using the Nexo token. But what is the future of NEXO?
There is a lot of hope for NEXO price growth in the coming years. However, while there is a high possibility of growth, the increase in Defi lending platforms is also another factor to consider. The increasing competition could either lead to more growth or death. Its use case as a payment token will be one of the major drivers of NEXO success in the future.