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How to earn crypto with NEXO in 2022

Nexo users can earn crypto and passive income with the daily compounding interest on cryptocurrency, stable coins and fiat.

Depending on the asset and the user’s Loyalty Level, the interest can be up to 18% APR that it is paid daily.

Additionally, new Nexo users may be elegible to earn some Bitcoin by opening a Nexo account and users with ‘Silver’, ‘Gold’ and ‘Platinum’ loyalty levels can earn cashback by using the Nexo exchange.

As Nexo users, from our own knowledge and experience, on this page we are going to:

– Explain how to earn interest on crypto with Nexo.

 – Provide an overview of the Nexo services so you can have a better understanding of the benefits and the risks.

Nexo dashboard assets balance

But before we start, you need to be aware that higher rewards have a higher risk.

Nexo offers high interests because their business model has higher risks.

The safest would be to store your digital assets on a cold wallet, but even a cold wallet has the risk of being lost or stolen. 

There are no risk free options and the more you learn, experience and research, the better you will be prepared to understand the risks and avoid or minimize their impact.

Do your own research

Our content is intended to be used and must be used for informational purpose only and it is not intended to provide investment, financial, accounting, legal, tax or other professional advice.

It is very important to do your own research and verify any information you find on this website, or take independent financial advice before making any investment based on your own personal circumstances.

What is Nexo

Nexo is a blockchain based platform for instant crypto loans. This is: 

– Nexo lends the digital assets that the users have deposited in their accounts.

– In return for allowing Nexo to lend their digital assets, the users do earn interest or can access crypto loans.

Additionally, Nexo is also an exchange where the users can buy, sell and swap digital assets like crypto.

Like any other exchange, Nexo collects a fee every time a user makes a transaction on their exchange. 

HOW TO EARN INTEREST ON CRYPTO WITH NEXO

Nexo users do earn interest on the assets they have deposited on their Nexo account.

Open a Nexo account >> Deposit supported assets >> Earn interest.

Nexo has a crypto yield calculator that can give you an approximation on the yield based on the supported assets.

But the calculated yield must be taken just as an approximation because the interest is calculated based on variable factors like the currency market value of the asset or the user’s Loyalty Level.

Nexo yield calculator

Nexo has its own token, the Nexo token.

Depending on the amounts of Nexo tokens a user has in the account, the user has access to different benefits like higher interest rates.

The user from the picture below has an 8.12% of its portfolio in Nexo tokens so the user has achieved ‘Gold’ tier and can earn an interest of 4,5% in cryptocurrencies, 5% in fiat or 9% in stablecoins.

The interest is paid on the same currency or fiat that is deposited in the user’s account. But if the user decided to get the interest paid in Nexo tokens, and additional bonus is applied. 

For example, by having a ‘Gold’ Loyalty Level, this user could chose to get the interest paid in Nexo and receive an additional 1% of interest as bonus.

Nexo Loyalty Levels based on the amount of Nexo tokens hold by an user account

One of the benefits that Nexo has over other similar platforms, like Blockfi, it is that the interest it is paid daily. With Nexo the interest compounds daily and that allows even higher returns.

Because this user has BTC and Nexo tokens deposited in his user account, the user gets daily interest payments in both BTC and Nexo tokens.

If the user would decide to get paid only in Nexo tokens, he would get an additional 1% interest bonus but he would not get any BTC. 

Nexo interest transaction history

Crypto loans

Nexo’s Instant Credit Lines allow users to take out a fiat loan by staking their digital assest like cryptocurrencies, stablecoins or fiat to serve as collateral.

As Nexo explains on their website, the Nexo Oracle does employ a ratio in its computations to determine a client’s creditworthiness without having to review his or her bank account or credit rating data.

The Oracle algorithm, for example, can analyze a client holding USD 1000 in BTC and assign a 56% LTV ration, indicating that the client is elegible to borrow USD 1000 as the minimum loan in fiat money.

In Nexo, a user can borrow Thether or USDC

Also, as Nexo describes in their website:

Nexo’s Instant Crypto Credit Lines allow users to take out a fiat loan by staking a variety of supported cryptocurrencies, in their Nexo Wallet to serve as collateral. 

The list of accepted collateral currently includes Bitcoin, Ethereum, Litecoin, Ripple, Stellar, Bitcoin Cash, EOS and others, with the Nexo team continuously working to make more assets available on the Nexo platform.  

Once the collateral has been deposited, clients have instant access to the value of their crypto in 40+ fiat currencies across 200+ jurisdictions. 

Nexo loan in USDC

With Nexo it is a very simple and fast process to apply for a loan and receive the funds.

But note that Crypto loans come with a VERY HIGH RISK. 

If the collateral, let’s say BTC, was to decrease very quick in value, the user may lose part of the total amount of BTC used as collateral for the loan.

Is Nexo safe?

According to the Nexo security web page:

– Nexo has a 375 million USD insurance for their digital assets  

– Nexo is working on a real-time reserves audit

– The assets are stored in a military-grade Class III vaults  

And they make sure that users assets are safe by providing 2FA authentication or biometric access options.

But in general this is the kind of information that similar entities do provide and while the security measures give some level of relief, still the question remains:

Are our digital assets really safe?

The straight answer may be disappointing but… it depends on your personal situation and your risk tolerance.

Learning from the past

If you have a Nexo account or you are considering to opening one, you must realize that you are giving ownership of your digital assets to Nexo.

If Nexo goes bankrupt or has major problems, like a hacking, you may lose part of the full amount of the assets you have deposited.

As an example, Mt. Gox was a bitcoin exchange that at the time was handling 70% of all Bitcoin transactions worldwide and was the largest bitcoin intermediary and the world’s leading Bitcoin exchange.

And then, in February 2014 Mt. Gox suspended trading, closed the website and filed for bankruptcy. Approximately 850,000 Bitcoins in custody by Mt. Gox went missing and it has been a long process for the owners to try to recover even a part of those missing Bitcoins.  

Please, now go ahead and do your own research about Mt.Gox, similar cases or the so called ‘rug pulls’ in the crypto world.

Lessons learnt

Once you give ownership of your digital assets to a centralized blockchain  platform like Nexo, you must realize that:

– Your control over your digital assets it is decreased because you are trusting your crypto to a third party.

– Therefore the risk of losing your crypto does increase because the third party is in possession of the private keys.

But even having digital assets stored at home in a cold wallet are also at risk. 

It may happen that the house may burn down, or someone may break into it and stole your wallet or seeds, or a natural disaster may destroy your wallet and seeds, or someone may find out you wallet seeds, …

Even having your assets stored in a cold wallet in a bank safe box has it’s risks. Probably the risk is low, to and extend, but there are risks.

So, having a part of your digital assets stored in Nexo may be a good way to manage risk, by not having all your digital assets in one single place and exposed to a single point of failure. 

And if this is the case, having part of the digital assets in Nexo has the advantages of receiving interest or being able to apply for a loan.

In the end, it is up to the personal circumstances of each one of us, and each particular person must decide if having the digital assets in custody of a third party is worth the risk or not.

You must ask yourself:

– Are my digital assets safely stored? Is it safe to keep all my digital assets in one single location?

– As an alternative so keeping my assets in one single location, do I have easy and cheap access to a bank safe box and, if so, is it a bank that I trust?

– Do I trust Nexo?* 

– Are there any other companies that provide the same or similar service and they are safer than Nexo?*

*And here come into play the additional research that your are going to do into Nexo and some alternative platforms like Blockfi, Celsius,…

All in all, you are the only person who can decide if your digital assets are safe in Nexo.

How to use Nexo

Nexo has made sure that the platform it is very user friendly so creating an account, depositing funds or buying digital assets are simple processes.

HOW TO OPEN A NEXO ACCOUNT AND EARN CRYPTO

To open an account with Nexo it is quite a straightforward process.

Just make sure that you use a safe email address and a very safe password that you are not using anywhere else.

How to create a Nexo account

If you use our referral link you will be eligible to get 10 USD in BTC if you top up the account with 100 USD, or equivalent, complete the advance verification and keep the funds for at least 30 days in your account.

Effiworkx referral link to Nexo

If you think that the content we create is of value to you, we would appreciate if you use our referral link. Using our referral link does cost you nothing and your support will contribute to keep this website up and running.

How to deposit funds

If it is the first time buying cryptocurrencies, you can fund your Nexo wallet with Fiat but you must be aware that depending on the currency there are different conditions:

– Euro: Only SEPA transfers are allowed with a minimum of 1000 EUR 

– USD: Only WIRE transfers are allowed with a minimum of 10 USD

– GBP: FPS and SWIFT transfers are allowed with a minimum of 10 POUNDS

Nexo account top up

If your want to top up your Nexo account with Crypto, just make sure that you read transfer details very carefully.

You should know that you crypto may be partially or totally lost if you send it to the incorrect address or you use the incorrect network.

How to buy, sell and swap and EARN CASH BACK

Nexo has made very simple to buy, sell or swap digital assets.

Just be aware that to buy digital assets you can only pay with EUR, USD or GBP.

And make sure that you carefully review the transaction to make sure that you agree with the exchange rate.

Nexo crypto buy, sell, swap

The ‘Silver’, ‘Gold’ and ‘Platinum’ Nexo loyalty levels can earn cashback by using the Nexo exchage to buy, sell or swap digital assets.

Nexo exchange cashback

How to withdraw

Withdrawing fiat or crypto it is also a simple process which just requires from the user to double and triple check that the withdrawal details are correct:

Nexo withdraw cryptocurrency assets

Depending on the user’s loyalty level, Nexo allow a number of free withdrawals per month.

From one free withdrawal per month for the ‘Base’ loyalty level to five free withdrawals per month to the ‘Platinum’ loyalty level.

Nexo free withdrawals per month

Additional benefits

Depending on your Loyalty Level you may get cash back when you utilize the Nexo exchange.

For example, a user with ‘Gold’ Loyalty Level will get a 0.25% cash back when buying, selling or swapping using the Nexo Exchange service.

Nexo exchange benefits

Nexo KYC

KYC stand for Know Your Customer.

KYC is a standard practice for companies that offer financial services and it is used to prevent money laundering and eliminate bad actors.

Most, if not all, of the reputable crypto exchange platform have KYC and Nexo it is not different. 

Nexo has three different KYC levels and for anyone with a Nexo account or thinking to open a Nexo account, it is recommendable to go through the KYC process.

There has been some cases of users without KYC having problems to withdraw funds within short periods of time. 

This is, is suddenly you need to withdraw your funds and you have not completed the KYC verification, you may run into delays and miss deadlines.

Very important, ONLY THE ADVANCE KYC VERIFICATION LEVEL ALLOWS FIAT WITHDRAWAL.

Nexo starter KYC verification

Note that with the started KYC verification it is possible to deposit fiat but not to withdraw fiat. But it is possible to both deposit and withdraw crypto.

Nexo starter verification

Nexo Basic KYC verification

Note that with the Basic KYC verification it is possible to deposit fiat but not to withdraw fiat. But it is possible to both deposit and withdraw crypto.

Nexo basic verification

Nexo Advance KYC verification

Note that with the Advance KYC verification it is the only KYC level that allows to withdraw fiat.

Nexo advance verification

Nexo and tax obligations

Most of us have to declare capital gains on our cryptocurrency holdings.

And most of us have to use a cryptocurrency tax calculator to be able to calculate our cryptocurrency taxes.

For Nexo, when it comes to tax declaration, there are a few points that the users need to take into account:

In Nexo, the interests are paid daily so there is one transaction per asset per day. And for someone with three or more assets that may mean over 1000 transactions per year. That volume of transactions may complicate the tax calculations.

– Some tax calculation services that have plans levels linked to the number if transaction per year. The Nexo daily interest payment transactions could make the tax calculations more costly.

– Nexo allows the users to export and download the transactions history in CSV format. 

Nexo transactions download to excel

Koinly tax calculator and tax report

Koinly is a tax calculation and tax report service that allows the user to keep tack of the capital gains, income, … 

The main advantage is that with Koinly the user is able to very easily keep track of the portfolio total value, the cost basis and the realized and unrealized gains.

Koinly also keeps track on important information like expenses and trading fees that they are tax deductible in some countries.

Note that to open a Koinly account and keeping track of the portfolio is a free service.

Koinly dashboard overview

But the most important part is that Koinly can generate a yearly tax plan that can be presented as part of the tax declaration.

Note that while keeping track of the portfolio is a free service, the tax plan is a paid service.

As an example, as shown on the picture above, this user had over 3000 transactions in 2021 so that means that to get the tax plan prepared by Koinly, the user needs to chose the ‘Trader’ plan.

And here it comes into play the number of interest payment transactions by Nexo. 

For one single asset in Nexo, 365 interest payment transactions are generated so the user would need to chose the ‘Hodler’ plan to be able to generate the tax report.

For three single assets in Nexo, over 3000 interest transactions are generates so the user would need to chose the ‘Trader’ plan to be able to generate the tax report.

Koinly tax plans and cost per plan

Please go ahead and do your own research in order to make sure that you understand your tax obligations and decide if Koinly fits your needs.

If you decide to open a Koinly account and use our referral link you will be eligible to get 20 USD, or equivalent, on your first order.

Effiworkx referral link to Koinly

If you think that the content we create is of value to you, we would appreciate if you use our referral link. Using our referral link does cost you nothing and your support will contribute to keep this website up and running.

A note for beginners

When it comes to paying taxes for your crypto holdings, you may want to have into account the following:

– You need to know your crypto tax obligations. 

– You need to keep track of all your transactions and expenses to be able to calculate the capital gains, expenses, …

– Keeping track of your tax obligations by using tools like excel it may be OK if you don’t trade very often but it is not the best option if you trade often, receive frequent crypto interest payments, receive airdrops, receive frequent staking rewards,…

– Consider to use a tax calculation and tax report software. It is going to cost some money but you most probably will save on time, headaches and problems.

We hope that you have found this article of interest.

If you think that we should add more information or give more details for any specific  topic, please let us know in the comments.

We will be glad to hear from you.

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