COINBASE for Crypto has come

[vimothy]

tether are already lending to nexo tho

 

[Clinamenic]

At my level, I'd be getting 10% on stablecoins. But if I had $20,000,000 worth of USDT, maybe Nexo couldn't afford to pay me 2,000,000 USDT annually. More than that actually, taking variable compounding rates into account.

Well, they'd be able to pay one person that, definitely, but my point is I don't know how scalable their model is. I don't know if they could have a bunch of depositor accounts of that size.

 

[Clinamenic]

tether are already lending to nexo tho

I could be wrong, but I remember the Protos report just conveying that massive inflows of USDT were going into Nexo, but I'm not sure it necessarily means lending. Lending could be part of it, but so could transactions, say between NEXO token and USDT.

 

[Clinamenic]

I forget if the report has any evidence of NEXO token movements. It's all happening on Ethereum, so the records are there and public.

 

[vimothy]

2.6 billion last year, according to that protos article

 

[vimothy]

I could be wrong, but I remember the Protos report just conveying that massive inflows of USDT were going into Nexo, but I'm not sure it necessarily means lending. Lending could be part of it, but so could transactions, say between NEXO token and USDT.

I see. well, some amount of that is obvs loans. but nexo will need to get that at a rate which is lower that that which its offering to its borrowers in order to make a profit

 

[Clinamenic]

2.6 billion last year, according to that protos article

Of USDT yeah, but I'm talking about Nexo's own token, NEXO. Its possible that Nexo sent Tether a supply of NEXO in exchange for USDT, but this doesn't necessarily mean there isn't any lending going on. Could be a combo of both. Its also possible that Nexo acquired all $2.6 billon in USDT in exchange for NEXO tokens, as a sort of treasury swap.

 

[vimothy]

doesnt really matter what format the liabilities take, tether issue their liabilities and acquire as an asset nexos liabilities

 

[Clinamenic]

doesnt really matter what format the liabilities take, tether issue their liabilities and acquire as an asset nexos liabilities

But this way, its not like Nexo building it's lending platform using borrowed capital, no? At least not to any significant degree. I could be wrong, but it seems like building this lending model on a pool of capital of which a significant portion is borrowed, seems less sustainable.

 

[vimothy]

nexo is 100% using leverage

 

[vimothy]

everyone is

 

[Clinamenic]

nexo is 100% using leverage

Yeah I'd be surprised if they weren't at all, but I'd also be surprised, and obviously alarmed, if their liquidity pools are largely comprised of borrowed funds.

 

[Clinamenic]

everyone is

Yeah its really one of the primary sources for Nexo's profit: people taking out loans and immediately putting themselves in leveraged positions.

 

[vimothy]

if nexo are making loans then they're definitely borrowing to support them, nothing else makes sense from a bottom line business pov

 

[vimothy]

especially if they're lending usdt or even dollara

 

[Clinamenic]

if nexo are making loans then they're definitely borrowing to support them, nothing else makes sense from a bottom line business pov

Would it make sense to initially borrow just to bootstrap this business model, until they have enough capital, from lending revenue, to just cover the overhead of liquidity pools and lending? They're also able to dial up and down a variety of different rates and factors on the platform.

 

[vimothy]

i dont think so. if they want to make loans in USDT then they should borrow at favourable rates from tether and lend at higher ones, that's a model which scales

 

[Clinamenic]

i dont think so. if they want to make loans in USDT then they should borrow at favourable rates from tether and lend at higher ones, that's a model which scales

Yeah they'd be lending at way higher rates, considering how high the depositor interest rates are. But yeah that makes sense to me. Nexo could be borrowing USDT at a rate of maybe 1-3%, if not even lower, depending on what the size of the loan is.

 

[Clinamenic]

And so ultimately the financial growth of Nexo's business model seems predicated on A) overall appreciation of assets in the market, and/or B) the financial success of borrowers who take out a loan and manage to repay it plus interest without collateral liquidation, and/or C) leveraged borrowers getting liquidated and losing more than their initial loan value.

 

[vimothy]

in the tether papers article (did you post that, btw? it's really good), they seem to think theres some ambiguity about whether usdt is fully backed, which seems crazy to me. what tether are doing could not be more obvious.