COINBASE for Crypto has come
Clinamenic
Binary & Tweed
But seeing as BTC only has a 40% loan to value rate, the value of BTC would need to fall drastically (like 60%) for any kind of margin call-like situation
Clinamenic
Binary & Tweed
I'm getting BTC, ETH, LINK, NEXO, BNB, and FTM, and the actual funds are coming from the interest paid by borrowers, after Nexo takes their cut.
Clinamenic
Binary & Tweed
Right, not impossible.
Clinamenic
Binary & Tweed
And they offer like 40 different assets, with variable rates.
vimothy
yurp
so like parallel loans from other borrowers?
vimothy
yurp
remember 2008. the crash that couldn't happen. when everything is "risk free" on paper it becomes systemic in practice. now, suppose that this model became (as in the imagined crypto end state) the "whole market"...
Clinamenic
Binary & Tweed
I don't understand parallel loans enough to definitively say, but that doesn't seem like the model Nexo is using. A borrower deposits collateral and pays the loan off over time, and the interest above the principal goes to Nexo and then gets passed along to depositors.
Clinamenic
Binary & Tweed
Yeah I agree in that its best not to sleep on the unknown unknown. Even if risk seems minimal.
vimothy
yurp
yes but your loan takes what form? stable coins which nexo have borrowed? and your repayments take what form? stable coins which nexo use to pay back their loans?
vimothy
yurp
its the risk which seems minimal which kills you
Clinamenic
Binary & Tweed
The thing is, all of these assets are very liquid and can be exchanged for one another almost instantly. The loan is initially issued in stablecoins (although apparently they are now qualified to give loans in the form of certain fiat currencies, which I haven't tried), and the outstanding loan can be repaid in a variety of assets: BTC, stablecoins, fiat, etc.
Clinamenic
Binary & Tweed
Yeah, cause it tempts you to sleep on it, to take it for granted that everything is fine.
Clinamenic
Binary & Tweed
They are issued stablecoins from some of the big stablecoin issuers. And there, the only one that concerns me is Tether. The other big stablecoins seem more compliant.
But even beyond that, they are the custodian of the depositors' assets, which seem to be handled like how I understand normal retail banks handle them: as liabilities that are used to issue loans.
But no, Nexo cannot issue stablecoins. It has issued its own governance token, NEXO, but it isn't a stablecoin.
Clinamenic
Binary & Tweed
Not sure if I already shared this with you, but this is some good on-chain forensic accounting regarding the issuance and distribution of Tether, and Nexo is mentioned as one of the big recipients.
protos.com
Tether Papers: This is exactly who acquired 70% of all USDT ever issued
We catalogued every USDT distributed by Tether in the past seven years to present the most transparent research on the stablecoin to date.
protos.com