COINBASE for Crypto has come

[vimothy]

they get paid in dollars, is that what your saying, sometimes?

 

[vimothy]

do you know how many ppl work for them?

 

[Clinamenic]

they get paid in dollars, is that what your saying, sometimes?

Yeah you are able to repay loans in fiat, but I haven't held any fiat on Nexo before.

 

[Clinamenic]

do you know how many ppl work for them?

This site claims 244, but I haven't confirmed elsewhere.

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craft.co

As for their balance sheet, I don't know either.

 

[vimothy]

nexo is cray

 

[vimothy]

This site claims 244, but I haven't confirmed elsewhere.

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craft.co

As for their balance sheet, I don't know either.

not that many, wonder how many are in treasury

 

[Clinamenic]

Yeah I was skeptical at first too, but I found that they had all of these money lending licenses across the US (200 jurisdictions worldwide they claim), and evidence aside, even in principle it seems to be in their interest to comply. They could quite reasonably end up being the biggest crypto-native bank in the world.

 

[vimothy]

but look, if they have dollar liabilities then they're potentially screwed if crypto crashes

 

[vimothy]

who is lending them dollars?

 

[Clinamenic]

who is lending them dollars?

As I understand it, nobody needs to be lending them dollars for their ongoing business model to work.

All of the assets they support are liquid enough to sell for dollars (up to a point obviously, like selling $10,000,000 worth of ETH at once might require some special market order, if it's possible at all).

Between whatever initial funding they got from investors (don't know that list either), which probably took the form of a NEXO token sale, and whatever proceeds they get from loan interests, I see no reason why that wouldn't be enough to maintain liquidity pools between various asset pairs, including some with fiat.

 

[vimothy]

if they have dollars to lend, which you've said they have, then they must have come from somewhere

 

[Clinamenic]

but look, if they have dollar liabilities then they're potentially screwed if crypto crashes

Also here I'm not sure I agree. Sure, if crypto somehow crashes worse than it ever has (which would be saying something), outstanding loans would be liquidated due to depreciating collateral. I'd imagine such worse-case scenarios would effect interest rates paid to depositors, but I don't quite see how it would compromise the actual assets of the depositors, aside from the market-wide depreciation of course.

 

[vimothy]

whether the collateral they hold can be sold for dollars is irrelevant

 

[Clinamenic]

if they have dollars to lend, which you've said they have, then they must have come from somewhere

Yeah and my instinct there is just that they sold some amount of their portfolio to get enough dollars in their liquidity pool system to allow whatever degree of dollar operations their platform experiences. That is, I don't think the dollars they have are necessarily borrowed. It's definitely possible though, although I'd imagine that would be riskier.

 

[vimothy]

Also here I'm not sure I agree. Sure, if crypto somehow crashes worse than it ever has (which would be saying something), outstanding loans would be liquidated due to depreciating collateral. I'd imagine such worse-case scenarios would effect interest rates paid to depositors, but I don't quite see how it would compromise the actual assets of the depositors, aside from the market-wide depreciation of course.

bc if you're liabilities are fixed in dollars and your assets are collapsing in dollar value, that creates a problem

 

[Clinamenic]

bc if you're liabilities are fixed in dollars and your assets are collapsing in dollar value, that creates a problem

I agree, that is a problem. And it's possible. But on the assets side, at least overcollateralized loans are safer than uncollateralized loans in this crash scenario, as far as depositors are concerned, even fiat depositors, if I understand correctly. Even if that just means slightly more of a buffer for depositors.

 

[Clinamenic]

Personally I don't know what it would take for a crash like this though. Crypto has lasted this long, despite several flash crashes, even into this crazy sanctions regime. Of course a bigger crash is always possible.

 

[Clinamenic]

And the Biden crypto EO is ultimately bullish.

 

[vimothy]

Yeah and my instinct there is just that they sold some amount of their portfolio to get enough dollars in their liquidity pool system to allow whatever degree of dollar operations their platform experiences. That is, I don't think the dollars they have are necessarily borrowed. It's definitely possible though, although I'd imagine that would be riskier.

so you think they're selling the loan on to raise dollars?

 

[Clinamenic]

so you think they're selling the loan on to raise dollars?

I'd guess they are selling some of their proceeds from loan interest to raise dollars, to build a dollar liquidity pool, which could be considered overhead.