CeFI Diaries #1- Why I Decided to Try out Nexo!

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Written by

Crypto Enthusiast

3 years ago

In community: Crypto Mindset(9c1c)

You would have noticed that over the last month crypto lending platforms have getting a lot of attention and many new projects are getting launched and some existing platforms are growing at incredible rates. Crypto lending applications have in fact been around for many years but recently everyone seems to be focusing on them. One reason could be that earlier people got involved with crypto with the sole purpose of getting 100X return and watching their favorite coins reach the moon. With the crypto market being range bound this year and showing the usual volatility it is known for, people have started to experiment with different options to make use of their idle crypto sitting in their wallets.

How to Earn money from your Crypto- Staking, DeFI and CeFI

In my view the best way to earn rewards from the crypto you are holding is staking and I have already written several posts about how to stake using Atomic wallet. One limitation with staking is that currently very few coins have a good staking process in place with Tezos being the most popular one. Several new coins are working on Proof of Stake protocol but most of them still seem to be in beta phase and the staking process is not very straightforward and easy to follow. For any application to achieve critical adoption level it needs to have a clear process in place and be free from bugs.

Besides staking another way to earn money from the crypto you hold it is by lending it out. For crypto lending there are 2 kinds of platform – DeFI and CeFI.

DeFI stands for Decentralized finance and as the name suggests it is not owned or controlled by any central body and in most cases they are non-custodial so you maintain control of your crypto and risk of losing your coins is very low. There are several popular platforms in this space like Compound, Aave and Synthetix but I would do a detailed review on them later as currently the crazy ETH processing fees make it impossible for retail users to get real benefits from these platforms. One area that DeFI needs to consider is moving out of ETH dependency. Currently 99% of DeFI projects are totally ETH/ ERC20 based and heavy traffic on ETH impacts the fees negatively.

CeFI is an alternate and stands for Centralized Finance and as the name suggests in these platforms you will need to hand over control of your coins to these platforms and trust them that they will not scam you. Amongst Staking, DeFI and CeFI technically speaking it is obvious that CeFI is the worst choice as it has the highest risk of getting scammed or hacked. This is the main reason why I had been avoiding CeFi platforms for a long time. However due to the limited options in staking and the exorbitant ETH fees in DeFI I decided to give it a try.

Crypto.com, Celsius or Nexo?

There are many projects in CeFI space but Crypto.com, Celsius and Nexo are the most popular. Crypto.com is attracting a large number of people with the $50 referral bonus, attractive metallic credit cards and special discount offers on buying crypto.

Celsius also has a large userbase as it offers a fiat (USD) loan against crypto collateral. It is also one of the oldest player in the CeFi area.

Nexo is another top contender in the space and it’s key differentiating feature is offering insurance against your crypto getting hacked.

Why Did I pick Nexo?

Frankly speaking my original idea was to try out all these 3 platforms and do a comparative analysis. I found one limitation in Crypto.com and Celsius which stopped me from trying them out at least for now. I personally think that any reputable crypto platform should have interfaces that can be used on a computer/laptop as well as on a mobile device. This is something I really appreciate in Coinbase, Atomic Wallet and Binance as they have very good mobile app as well as web interface. As expected the web interface has more functionalities compared to mobile app.

I usually do small transactions or tests by the mobile app and for any serious investment or trade I always prefer using the web interface on my laptop. Maybe I am old-school but this is the option which I find more convenient and secure. Another reason I don’t like platforms which are mobile app only is that I will always have the fear at the back of my head about what will happen if my mobile gets stolen or I misplace it or leave it somewhere. Will it get hacked? Will I be able to restore my account? I get worried by these thoughts.

This was the reason I was really disappointed when I found that Crypto.com and Celsius don’t have web interface and can only be used on a mobile device. I find it ironical that crypto.com has “.com” in it’s brand name and doesn’t offer a web portal to use it.

Nexo offered a web interface and a mobile app so I decided to try it out. I must admit that I did not have high hopes from Nexo as I was biased against CeFi but it was a pleasant surprise I found the interface very simple and easy to use and so far I have liked the platform and it’s features.

If I had to pick the main reasons why I plan to continue using Nexo, the top on the list will be the following:

· Crypto Security- Nexo uses a BitGo for custodial services of it’s crypto so even if Nexo get’s hacked your coins will be safe.

· Crypto Insurance- Nexo has $100M insurance of it’s crypto. It gives some confidence that there is coverage but this may prove to be insufficient once the platform grows really big.

· Ease of Use- The interface is very simple to follow and on the main dashboard you can see how to deposit or withdraw crypto. You can see what is the interest you have earned till date.

· Attractive Rates- Nexo offers a flat interest rate of 4% for crypto and 8% for stablecoins. This increases to 5% on crypto and 10% on stablecoins if you hold NEXO tokens worth 10% of your investments.

· Daily Compounding- You start earning interest from the first day and can see the interest being added end of each day.

If you want to have a look at how the interface looks I am adding a short video below.

In case there is any other CeFI platform which you think is worth checking out do let me know in the comments.

Watch the video: