What Nexo Offers: Products and Yield Structure

What is Nexo? Nexo is a centralized crypto financial platform that offers interest-earning accounts, collateralized loans, an exchange, and a crypto-backed debit card—all built around a loyalty tier system based on NEXO token holdings.

The platform bundles four core products into one interface. Users deposit crypto into Nexo's custody, and the platform deploys those assets to generate yield through institutional lending and other strategies. Understanding each product—and how the tiered interest model works—helps you decide whether Nexo fits your goals.

Earn Interest: Savings Accounts for Crypto

Nexo's Earn product functions like a high-yield savings account. You deposit BTC, ETH, stablecoins, or other supported assets, and Nexo pays daily compounding interest.

Yields vary by asset and loyalty tier. As of March 2024, typical APY ranges include:

• BTC: 4–8% APY depending on tier and whether you earn in-kind or in NEXO tokens
• ETH: 4–8% APY under the same conditions
• USDC / USDT: 8–12% APY for top-tier users; lower tiers earn 4–8%

Important: These rates are not guaranteed. Nexo adjusts APY based on market conditions and platform utilization. Always verify current rates on Nexo's website before depositing.

If you're comparing stablecoin strategies or exploring Bitcoin yield, note that Nexo uses a centralized custody model. Your assets leave your wallet and enter Nexo's omnibus accounts, which introduces counterparty risk.

Instant Crypto Credit Lines: Borrow Against Your Holdings

Nexo offers collateralized loans in fiat or stablecoins, backed by your crypto. You deposit BTC, ETH, or other assets as collateral, and Nexo issues a credit line instantly—no credit check, no fixed repayment schedule.

Loan-to-value (LTV) ratios range from 20% to 50%, depending on the asset and your loyalty tier. Interest rates start around 6.9% APR for top-tier users and rise for lower tiers. You pay interest only on the amount borrowed; principal can be repaid anytime.

This product appeals to long-term holders who need liquidity without triggering taxable events. However, if collateral value drops sharply, Nexo may liquidate your assets to protect the loan. The platform provides margin-call alerts, but volatility risk remains real.

Exchange and Card: Trading and Spending Tools

Nexo's built-in exchange lets you swap between supported assets. The platform claims zero fees for top-tier users and low spreads, though actual execution prices vary by market conditions and order size.

The Nexo Card is a Mastercard debit card backed by your crypto collateral. You spend fiat, and Nexo draws against your credit line—no need to sell crypto. Cashback ranges from 0.5% to 2% in NEXO tokens, again depending on loyalty tier.

Both features add convenience, but neither is Nexo's core differentiator. The real value lies in the yield-and-credit loop: earn interest on idle assets, borrow against them if needed, and manage everything in one place.

The Tiered Interest System: How Loyalty Levels Work

Nexo calculates your loyalty tier based on the percentage of your portfolio held in NEXO tokens. The platform defines four tiers:

Key insight: Higher tiers unlock better APY, lower loan rates, and higher LTV. But holding 10%+ of your portfolio in NEXO tokens introduces concentration risk and exposes you to NEXO's price volatility.

You can also choose to earn interest in NEXO tokens instead of the deposited asset, which grants a bonus multiplier. For example, earning USDC interest in NEXO may push your effective APY above 12%, but you're converting stable yield into a volatile token.

Yields Are Not Guaranteed—And Custody Matters

Nexo's interest rates fluctuate. The platform publishes current APY on each asset page, but historical snapshots show rates have dropped significantly since 2021–2022. Always check live figures and assume rates may decline further.

When you deposit, Nexo takes custody of your assets. The company holds crypto in omnibus accounts managed by third-party custodians like BitGo and Bakkt. While Nexo publishes attestations and claims insurance coverage, you do not control private keys—custody and counterparty risk are yours to assess.

For users who prioritize non-custodial alternatives or transparent, diversified strategies, platforms like EarnPark offer institutional-grade automation with clear risk tiers and real-time APY disclosure—though every yield product carries risk, and no returns are guaranteed.

Next: Now that you understand what Nexo offers, the next chapter examines how the platform operates behind the scenes—custody arrangements, the lending model that powers interest payments, and the security measures Nexo uses to protect user funds.

How Nexo Works: Custody, Lending Model, and Security

What is Nexo's custody model? Nexo operates a centralized custody model where users deposit digital assets into Nexo-controlled wallets, and the platform pools these funds to lend to vetted institutions, market makers, and other borrowers at higher rates than it pays depositors.

Understanding how Nexo works requires examining three pillars: custody architecture, lending operations, and the security framework that supports both. Each element involves a trade-off between operational efficiency and the counterparty risk inherent to centralized platforms.

Centralized Custody: How Assets Move

When you deposit crypto to earn yield on Nexo, you transfer ownership to Nexo-controlled wallets. The platform does not issue wrapped tokens or maintain on-chain proof of reserves in real time. Instead, Nexo aggregates user deposits and deploys them across institutional lending desks.

This centralized approach enables Nexo to negotiate favorable rates with borrowers and manage liquidity dynamically. However, it also means users rely entirely on Nexo's solvency, operational security, and business continuity—factors outside individual control.

For context, non-custodial or automated yield models (such as those used by regulated platforms with algorithmic rebalancing) allow users to retain private-key control or benefit from transparent, auditable smart contracts. The trade-off: centralized models often deliver higher advertised rates, while decentralized or hybrid models prioritize transparency and reduced counterparty exposure.

The Lending Model: Where Your Crypto Goes

Nexo's core revenue driver is its institutional lending book. The platform underwrites loans to hedge funds, trading desks, and corporate borrowers, typically secured by crypto collateral. Borrowers pay interest; Nexo retains a spread and passes a portion to depositors as yield.

This model works well in liquid, stable markets. During periods of high volatility or borrower default, however, centralized lenders face liquidity crunches and potential insolvency—risks demonstrated industry-wide in 2022. Nexo has not disclosed granular loan-book data, collateral ratios, or real-time attestations, which limits independent risk assessment.

Users seeking more visibility into how their capital is deployed may prefer platforms that publish strategy details, risk parameters, and third-party audits. Comparing custody models is an essential step before committing significant capital to any yield product.

Insurance and Asset Protection

Nexo states that custodied assets are insured up to $775 million through a Lloyd's of London syndicate (as of mid-2023 disclosures). This policy covers losses from custodial breaches, hacks, and insider theft—but typically excludes borrower defaults, platform insolvency, or regulatory seizures.

Key limitations to note:

• Insurance applies to custodial storage only, not to assets actively lent or deployed.
• Claims processes can be lengthy, and coverage caps are aggregate across all users.
• Policy terms and underwriters may change; always verify current coverage in Nexo's terms of service.

No insurance policy fully eliminates counterparty risk in centralized finance. It serves as a partial safety net, not a guarantee. Before depositing, review the platform's risk disclosure and consider position sizing appropriate to your risk tolerance.

Security Measures and Regulatory Licenses

Nexo employs multi-signature cold storage for the majority of custodied assets, with a smaller hot-wallet allocation for daily withdrawals. The platform has reported partnerships with Ledger Vault and BitGo for institutional-grade custody infrastructure.

On the regulatory front, Nexo holds several licenses:

• EU: Credit institution and payment service provider licenses in certain jurisdictions.
• United States: Money transmitter licenses in multiple states; the platform ceased offering interest-earning accounts to U.S. retail customers in late 2022 following SEC scrutiny.
• Australia and other markets: Compliance registrations vary by region.

Nexo has published periodic attestations from accounting firms, though these are not full reserve audits and do not verify real-time solvency or loan-book health. The absence of continuous, on-chain proof of reserves remains a point of differentiation versus platforms that prioritize transparency through automated, publish verifiable data.

Trust Trade-Off: Efficiency vs. Counterparty Risk

Centralized custody and lending models offer streamlined user experiences, higher potential yields, and rapid liquidity. The cost is counterparty risk: users must trust the platform's management, security practices, financial health, and regulatory compliance.

Automated, non-custodial, or hybrid models distribute risk differently. They may deliver modestly lower APY but provide on-chain transparency, reduced single-point-of-failure exposure, and verifiable fund flows. Neither approach is universally superior; the choice depends on individual priorities around yield, transparency, and control.

Key insight: Centralized models excel in user experience and rate optimization but concentrate risk. Transparent, automated alternatives trade some yield for verifiable security and reduced trust requirements.

Q: Does Nexo's insurance cover all my deposits?

A: No. Coverage applies to custodial holdings only, excludes assets actively lent, and is capped at an aggregate limit shared across all users. Always review current policy terms.

Q: Can I verify Nexo's reserves in real time?

A: Nexo publishes periodic attestations but does not offer continuous, on-chain proof of reserves. Independent verification of loan-book health and collateral ratios is not publicly available.

In the next chapter, we'll compare Nexo's custody and transparency practices directly with EarnPark's regulated, algorithmic approach—highlighting where each model excels and what trade-offs matter most to different user profiles.

Nexo vs. EarnPark: Custody, Transparency, and Strategy

What is Nexo? Nexo is a centralized crypto lending and yield platform that holds user assets in custody and generates returns primarily through institutional lending, while EarnPark operates a non-custodial model with AI-driven, delta-neutral trading strategies designed for transparent, risk-tiered yield generation.

Understanding how what is nexo as a platform differs from algorithmic alternatives helps you choose the right fit for your custody preferences, risk tolerance, and transparency needs. Both models serve distinct user segments—centralized convenience versus automated, strategy-driven control.

The table below compares Nexo and EarnPark across seven critical dimensions: custody, yield generation, transparency, regulation, token requirements, insurance coverage, and user control over capital deployment.

Key insight: Nexo prioritizes streamlined, custodial convenience with insurance-backed storage, while EarnPark emphasizes algorithmic transparency, non-custodial architecture, and user-selected risk tiers without native token requirements.

Custody and Counterparty Risk

Nexo's custodial model means users transfer ownership of assets to Nexo-controlled wallets. Third-party custodians (BitGo, Ledger Vault) secure private keys, but lending counterparty risk remains—if institutional borrowers default and collateral proves insufficient, user funds may be affected. Nexo's insurance covers custodial breaches, not lending losses.

EarnPark's non-custodial or hybrid design keeps private keys with users or in segregated, API-permissioned accounts. Strategies execute via smart contracts and exchange APIs without transferring full custody. This reduces single-point-of-failure risk but requires users to manage their own wallet security or rely on EarnPark's key-management partners. Review our risk disclosure for detailed counterparty and smart-contract risk explanations.

Yield Generation and Strategy Transparency

Nexo generates yield by lending user deposits to institutions and retail borrowers, earning interest spreads. The platform publishes APY rates (historically 4–12% on stablecoins, variable by asset and loyalty tier) but does not disclose individual loan terms, borrower identities, or real-time collateralization ratios. Users trust Nexo's credit underwriting and risk management.

EarnPark deploys capital through AI-optimized, delta-neutral strategies—simultaneously holding long and short positions to capture funding rate arbitrage, basis spreads, and market-making fees while minimizing directional price risk. The platform publishes live APY ranges (e.g., Conservative 8–12%, Moderate 12–18%, Aggressive 18–25%) and names specific strategy types. Historical performance and drawdown data are available in user dashboards, enabling informed risk selection.

Regulation, Tokens, and User Autonomy

Both platforms operate under regulatory frameworks: Nexo via EU banking licenses and selective U.S. state registrations, EarnPark through UK FCA oversight and SEC registration. Nexo's NEXO token offers utility (higher yields, lower borrow rates) but introduces portfolio concentration risk. EarnPark imposes no token requirement, decoupling yield from platform-token price performance.

User control differs markedly. Nexo users deposit and earn passively; capital allocation is opaque. EarnPark users choose risk tiers, monitor live strategy metrics, and adjust exposure—aligning with users who value transparency and active risk management over set-and-forget simplicity.

Which model suits your needs? If you prioritize custodial insurance, lending-based yield, and minimal configuration, Nexo's centralized approach may fit. If you value non-custodial architecture, algorithmic strategy transparency, and tiered risk selection without token dependencies, EarnPark's model aligns with those priorities. Neither is inherently superior—each serves different segments of the crypto yield landscape.

Next, we'll explore whether Nexo is the right choice for your specific use case, examine risk scenarios, and review alternative platforms in the final chapter.

Is Nexo Right for You? Risk, Use Cases, and Alternatives

What is Nexo best suited for? Nexo is designed for users who value centralized custody, instant credit lines backed by crypto collateral, and spending perks through its branded card—especially if they hold or are willing to acquire NEXO tokens to unlock higher loyalty tiers and better rates.

The platform appeals to borrowers and holders who want liquidity without selling assets. If you hold Bitcoin or Ethereum long-term and occasionally need fiat or stablecoins for expenses, Nexo's credit line model can make sense. Card users who want cashback in crypto and access to higher loyalty tiers will also find value in the NEXO token system.

But Nexo is less transparent about how your deposited assets generate yield. The platform does not publish real-time strategy composition, delta exposure, or counterparty weighting. For users who prioritize algorithmic, rule-based strategies and full visibility into risk, platforms like EarnPark offer a contrasting approach with published APY ranges and methodologies.

Key Risks to Consider

Every centralized platform carries platform risk: the solvency and operational security of the company holding your assets. Nexo publishes attestations, but these are snapshots, not audits. In a liquidity crunch or regulatory action, withdrawals may be delayed or restricted.

Regulatory risk is evolving rapidly. Nexo has exited certain markets (including the United States for Earn products) and settled with regulators over unregistered securities allegations. Future restrictions could limit product availability or force structural changes that affect your deposits.

Market liquidity risk applies to the NEXO token itself. Loyalty tiers depend on holding NEXO, but token price and liquidity can fluctuate. A sharp decline may erode the effective APY boost your holdings were meant to provide.

Before committing capital, review Nexo's terms and compare them with your own risk tolerance. Resources like EarnPark's risk disclosure can help frame the questions you should ask any platform.

When Nexo May Not Be the Best Fit

If you prefer algorithmic, delta-neutral strategies that publish methodology and hedge directional exposure, Nexo's lending-and-trading model may feel opaque. Users who want to see exactly how their USDT is deployed—across funding rates, DeFi protocols, or market-making—should explore platforms that document strategy weights and rebalancing rules.

Nexo also requires trust in centralized custody. If you value self-custody, on-chain transparency, or the ability to verify reserves in real time, decentralized or hybrid platforms may align better with your principles.

Finally, if you do not plan to hold NEXO tokens, you will earn base-tier rates that often trail competitors. Users unwilling to take on token price risk may find better risk-adjusted returns elsewhere.

Alternatives Worth Exploring

Several platforms compete in the centralized crypto yield and credit space, each with different trade-offs:

• BlockFi and Celsius — Both filed for bankruptcy in 2022, underscoring platform risk. Avoid platforms without transparent reserves or insurance.
• Ledn and YouHodler — Smaller lenders with simpler product sets. Lower brand recognition but clearer custody disclosures in some cases.
• EarnPark — Focuses on algorithmic, automated strategies with published APY ranges and risk tiers. No native token required. UK-licensed and SEC-compliant, with transparency prioritized over loyalty rewards.

Each alternative has strengths. The right choice depends on whether you prioritize credit features, token rewards, algorithmic transparency, or regulatory jurisdiction.

Frequently Asked Questions

Q: Is Nexo safe?

A: Nexo publishes reserve attestations and holds licenses in several jurisdictions, but it is a centralized custodian with inherent platform risk. No yield platform can guarantee safety; evaluate attestations, insurance, and regulatory history before depositing.

Q: Do I need NEXO tokens to use the platform?

A: No, but earning competitive APY and unlocking card perks or reduced loan rates requires holding NEXO tokens in your account. Without them, you receive base-tier rates that may lag competing platforms.

Q: What happens if Nexo fails?

A: Nexo claims $100M custodial insurance through Arch and other carriers, but coverage caps, exclusions, and claim processes are not fully public. In a bankruptcy scenario, users become unsecured creditors unless assets are held in segregated, insured custody.

Q: How does Nexo compare to algorithmic yield platforms?

A: Nexo relies on lending, trading, and proprietary allocation without publishing real-time strategy breakdowns. Algorithmic platforms disclose delta-neutral tactics, rebalancing rules, and risk tiers, offering more transparency at the cost of fewer credit or card features.

Making Your Decision

Understanding what is nexo and whether it fits your goals comes down to three questions: Do you need credit or card functionality? Are you comfortable with centralized custody and limited strategy disclosure? Will you hold NEXO tokens to access higher tiers?

If the answer to all three is yes, Nexo may serve you well. If transparency, algorithmic structure, or token-free yield matters more, explore alternatives that align with those priorities. No single platform is right for everyone—match the tool to your risk profile, not the other way around.

Key Takeaways

Nexo offers centralized crypto lending with competitive yields, credit lines, and global licensing—ideal for users prioritizing convenience and borrowing features. However, custody and opacity around lending counterparties introduce platform risk. If you value algorithmic transparency, non-custodial strategies, and clear risk tiers, explore EarnPark's delta-neutral approach. Choose your risk, see how capital works, and build digital wealth without FOMO.