Pretty good discussion on their business model. They will be bankrupt in a year, mark my word:
Dirt-Purple
We arent sure, infact thats the "business model" of these scams - get people to put in their actual cash (big bad fiat) into these shady exchanges/lending platforms, and then they lend it out to entities that are way below sub-prime
The average crypto bro doesnt understand any of this, they see 12% interest on stables, they jump in. The companies like NEXO lend it out to fraudsters, criminals who cant get a regular loan from a bank.
When banks are giving out loans to businesses for 5-6% rates, why would anyone borrow from NEXO or Celsius or Voyager or BlockFi for 15%, so that these lenders can keep 5% and give creditors 10%? Only those who cant get a loan from a bank i.e. those with piss poor credit profiles
The crypto lending model exists to obfuscate the fact that people's money is being siphoned off to shady entities via loans. If an average creditor knows their money is being used to fund a $1.5m loan to buy a stupid age JPEG, they would run away. So the lender takes their money and siphons it away while being opaque about it.
Its really not surprising that this business model fell apart at the first sign of tightening macro - celsius, blockfi, voyager all got rekt, and NEXO does too except its registered in a shady EU country and can lie about it unlike Celsius and Voyager which are US entities
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Nexo takes money from its depositors (Creditors) and then lends it out to third party borrowers , who then buy such shitty NFTs "ART"
Here, Nexo plays an intermediary that just issues loans to buy extremely risky assets without any credit checks. Nexo (as well as any other crypto lender like celsius/blockfi) operate illegal security schemes - thats why they are already banned across most of US, and many regulators are suing them. They dont let users know the risks these platforms take to generate the returns.
The article says "Crypto lender Nexo provided the ETH at an annualized interest rate of 18%." This means Nexo is counting on the company that borrowed from them to pay 18% on the borrowed about. If someone takes a business loan (such as a loan to fund say a new car dealership), the lender (bank) can expect operational income from the business to fund the interest and servicing costs. In an NFT loan, how exactly is the NFT gonna generate 18%?
Its just vapour
