Centralized finance company Nexo (NEXO) gained in the past week while much of the market fell. Offering a variety of interest-bearing options and potential crypto credit lines, Nexo is one of several blockchain companies vying to provide more traditional banking services within the sector. Users responded favorably, with Nexo’s value steadily rising – indicating that some cryptocurrency users are satisfied with safer, steadier gains when compared against the usual severe fluctuations in the market.
Offering between 6% and 12% annual interest on stored cryptocurrencies, Nexo competes directly with legacy bank savings accounts – which average out to an abysmal 0.06% in 2021. Traditional “responsible” advice suggests that users store cash away in a savings account – but with rates that low, it’s no surprise that newer generations have turned to cryptocurrency. Companies like Nexo and Celsius (CEL) are building the next iteration of personal finance, and proving a public appetite for the same.
Nexo: Seeking to be Viable Alternative to Traditional Banking
Nexo’s considerable interest rates depend on stored assets, with stablecoins boasting the highest overall rates. The interest is paid out daily and easily compounded, making it one of the better options for passive income within the cryptocurrency space. This storage also allows users to open a credit line in cash or crypto, further competing with more traditional banking systems.
The main hurdle for centralized finance in the crypto-space lay in patchwork regulations across the globe. Nexo experienced this first hand in mid-October as the New York Attorney General issued a cease-and-desist letter for their operations in New York. While Nexo insists that they do not operate their “Earn” product in the state, it shows a desire by vested interests to prevent industry disruption.
Less Glamorous, More Useful
Cryptocurrency is a highly volatile asset class with a steep learning curve, and those facts make it difficult for the average investor. Individual risk tolerance levels prevent a vast swath of new users from engaging with the market. Offerings like Nexo and the recent Bitcoin future ETF open safer, more “boring” options for risk-averse investors.
They also help to stabilize the market, something desperately needed as cryptocurrency moves more mainstream. Younger generations show a much more positive view towards cryptocurrency, and having traditional savings and credit available within the space will open new avenues for public adoption – which in turn will bolster the more bold investors in the space.