How does Nexo generate the yield it pays out to clients?
Their main source of yield is interest payments from the Instant Crypto Credit Lines. They also implement low-risk strategies that generate income for their backup reserve. A portion of the NEXO Tokens repurchased through their Buyback programs are also used for the same purpose.
How can a crypto company satisfy clients' demand for yield without risking their funds?
They’ve stayed away from risky lending practices, and never invest clients’ funds into DeFi protocols. Instead, they’re focused on building their corporate treasury while managing it with a deliberate focus on the client.
What if many borrowers can’t meet their obligations towards Nexo?
Two core principles come into play to ensure their business runs smoothly – overcollaterization and automation. By issuing only fully backed loans and automating the cases of default, they ensure funds are always available and safely stored.