We’ve reviewed Nexo Wallet and discussed what makes it work as a crypto savings account, but now it’s time to get more in-depth about something that makes it particularly unique - Nexo Tokens.
What exactly are Nexo Tokens, you might ask. Well, Nexo Tokens work just like many other types of cryptocurrencies, in fact, they are another cryptocurrency, only they’re connected to the use of Nexo Wallet and its blockchain infrastructure which means they are classified as tokens.
Nexo Wallet is becoming a really sought-after option for people who want to hodl but still let their crypto earn them money and it makes it especially interesting when Nexo has a token that allows you to earn interest on it in unique ways. Let’s discuss what Nexo tokens are and how they work!
What is a Token vs Coin?
First things first, we need to differentiate between tokens and coins. The difference between Bitcoin (BTC) and a Nexo Token is more than just price and name, they operate differently.
BTC is on the Bitcoin blockchain while Nexo Token is native to the Nexo Wallet, but runs on the ERC-20 network, which means it’s on the Ethereum blockchain.
This simply means that Nexo Tokens do not exist on their own, they rely on an existing blockchain network for transactions to be validated and secured.
In addition to this, Nexo Tokens are one of a handful of different types of tokens. These tokens are as follows:
Utility Tokens
This is what type of token the Nexo Tokens are. Utility tokens are considerably more unique than the other tokens for the sole fact that they can often increase in value based on supply.
These tokens are also application tokens meaning they provide access or use for a service or product, ie. Nexo Wallet.
Equity Tokens
Equity tokens work similarly to equity in securities of a company. When someone buys equity tokens in a company, they’re buying into the company itself just like buying shares. These are not as common because there is still some confusion on what is regulated and unregulated regarding issuing tokens as equity.
Payment Tokens
Simply put, payment tokens are used to pay for goods and services. They often do not work like other cryptocurrencies that can be used to pay for things because these tokens are of use for a specific service or good only.
Security Tokens
Lastly are security tokens. These tokens are similar to equity tokens in that an ICO listing can be bought into by purchasing security tokens to ensure their investment. They are usually treated like traditional security.
How Nexo Tokens Work
Now that we’ve covered tokens vs coins, we can begin discussing Nexo Tokens in particular. Nexo Tokens are, as mentioned, a utility token, which means they can be used to buy other cryptocurrencies on Nexo Wallet, exchange them for other cryptocurrencies, and can be bought or sold on Nexo Wallet as well.
The other function of Nexo Tokens is to provide voting rights for owners. On Nexo Wallet, with a minimum of 1 Nexo Token, users can exercise their right to vote on governance issues. Each Nexo Token owned is a vote, so if you owned 200 Nexo Tokens, that equates to 200 votes.
The last vote ended on June 8th, 2021. It resulted in 90% in favor of daily interest rewards on Nexo Tokens vs. 10% against daily interest.
Aside from the governance capabilities of Nexo Tokens, owners can also increase their Loyalty Levels. On the Nexo Wallet, the percentage of your wallet that is represented by Nexo Tokens determines your loyalty level, which in turn impacts how much daily interest is accrued.
As you can see, it’s more beneficial to hold more Nexo Tokens as it increases daily interest across the board for crypto coins, stablecoins, fiat currency, and Nexo Tokens. It also lowers borrowing rate for loans and increases the total number of free crypto withdrawals per month to 5.
Why Would You Choose to Own Nexo Tokens Over Cryptocurrencies?
Nexo Tokens are not worth as much as BTC or ETH, but the potential it holds is enough to convince people to own them.
Strictly speaking, on the Nexo Wallet, it makes sense to hold Nexo Tokens for the governance and loyalty level benefits, but there is also the potential growth it holds.
Like many cryptocurrencies before it and many yet to come, Nexo Tokens are on a capped supply.
Currently, there is a total supply of 1,000,000,000 Nexo Tokens, with a circulating supply of 560,000,011, meaning there is a good possibility for them to increase in value as supply becomes more scarce, similar to BTC.
There is also the question of token burn. Burning tokens or coins happens when a part of the supply, the tokens or coins, are destroyed by miners and/or developers to create an artificial supply crunch. Nexo Tokens do not have a burn in the traditional sense, instead, they are taken out of circulation and put in a lock-up period of 12 months when bought back and cannot earn dividends during that period.
The purpose of owning Nexo Tokens comes twofold in its utility on its native service of Nexo Wallet and in the potential value growth it possesses as a token. It’s currently hovering around $1.71 per token.
How to Buy Nexo Tokens
If you’re convinced enough to want to buy Nexo Tokens for yourself, the first thing you’ll need to do is create an account with Nexo Wallet. It’s fairly simple and not unlike opening an account with other exchanges and crypto services.
Buying Nexo Tokens on Nexo Wallet can be done with USD, EUR, or GBP from a connected bank/credit account. Similarly, you can exchange or swap BTC, ETH, or UDST for Nexo Tokens. These are the only three fiat currencies/cryptocurrencies that are possible to buy or swap with.
Nexo Wallet is also issuing a Nexo Card soon that will provide 2% cashback on all purchases in either Nexo Tokens or BTC. This is another way to accumulate Nexo Tokens without directly purchasing them. The card is currently being issued by position on the waiting list but they are being rolled out and offers a unique way to earn crypto.
You can improve your verification levels of your account by providing more in-depth KYC (know your customer) details, such as government ID. Not only does this make your account more secure, but you can also take advantage of better cryptocurrency and bank limits.
Nexo Wallet Limits
1. Limits for Stablecoins and Cryptocurrency withdrawals
2. Limits for Fiat Currency Withdrawals
Increased top-ups and increased daily withdrawal mean it is more advantageous to reach advanced verification.
What Concerns Are There for Nexo Tokens
As is the case with many of the assets in the crypto sphere, there are some concerns that need to be addressed before purchasing a token or coin. Nexo Token offers plenty of value and is attractive for various reasons, but it’s not impervious to skepticism.
One of the biggest concerns is whether or not the token will have value in the future or not.
While Nexo Wallet and the company have delivered on plenty of their promises and show no signs of slowing down, there is no guarantee that Nexo Tokens will “moon” in value or not. This is the speculative property that afflicts nearly all cryptocurrencies.
There is also the fact that Nexo Tokens are not transferable across all wallets or exchanges, being associated with its own wallet. This may not be an issue for some, but for others, they like to know that their crypto can be moved around with ease.
Bottom Line
This isn’t the first time a crypto service has issued its own token, but Nexo Tokens represent the best of how to issue a utility token with its potential for growth in value, governance capabilities, and improvement in service offers by holding it on Nexo Wallet.
Nexo Wallets’ primary claim to fame is the ability to earn interest while hodling and saving your cryptocurrency, but just as important is the Nexo Token itself which as you now see, could be worth adding to your portfolio.
So far, this has been the best article I’ve read about the Nexo Token!
So far it has been the best article I have read about Nexo Token!