Thank you for stopping by and reading the first of a series of posts detailing tokens with market caps below one billion dollars $US. We'll be examining their history, their role in the greater crypto exosphere, and if they're poised for major growth that's worth your time and money. 

To begin, we'll be taking a look at a token that acts like almost like a stock: NEXO 

Primary Info: 

The following is sourced from nexologist.com and accurate at the time of this posting

Supply (Circulating/Total): 560 Million / 1 Billion

Total on Exchanges: 62.37M/~11% of circulating supply

Primary Exchanges: Huobi ~80%, Binance Dex ~13% (Note: NEXO tokens can also be purchased straight from their website)

Created soon after Nexo's founding in 2017 by Swiss fintech company Credissimo, the NEXO token is an interesting mix of concepts from traditional and decentralized finance that may prove to be a template for future digital lending and exchange securities. While it does not provide voting rights/governance like traditional common stocks or other organizational based tokens like UNI or COMP, it does provided a set yearly dividend of 30% of net profits as well as significant bonuses and discounts for its saving and lending services. Recently the benefits for staking NEXO within the service have changed and a buyback program has begun, both helping drive its rather outstanding run since November which has seen the token go from $0.18 on Nov 1st to the mid $0.60s half way through December.

I'll be getting into Nexo's services in more detail in a future post, but for now I want to focus on two aspects of NEXO: It's dividend and it's ability to maintain it's quickly rising price.

Dividend

The NEXO dividend is actually split up between a base dividend and a loyalty dividend, each totaling 15% of Nexo's net profits for the year.

The base dividend is a simple division of the assigned profit by the number of circulating shares. For the most recent dividend paid Aug 15, 2020, the base dividend totaled a bit over $3.064M. When factoring in the qualifying amount of tokens, this came out to ~$0.007/NEXO on a record price of ~$0.2373/NEXO that was set on the dividends declaration day of Aug 5th. This equaled a yield of around 3% which is average for traditional stocks listed on the NYSE, but holders were not happy as the price of NEXO had dropped by almost a third during the 10 days between the record date and the payment date as numerous holders either sold off once they had qualified for the dividend or figured they had milked the volatile activity for all that they could. This led to the remaining holders receiving NEXO worth significantly less than what was calculated on the record day.

Now, traditional stocks will see a drop right after the last day to qualify for a dividend as the company paying the dividend is effectively losing value as it pays out cash to shareholders. However, these drops usually equal the amount of the dividend and are not as extreme as we saw here. For it's part NEXO has not made any announcements regarding changes to this process so we must assume there could be another run up and then drop around the next dividend declaration.

The second half of the NEXO dividend, the loyalty dividend, can't really be calculated as it depends on how much and how long you hold NEXO in their platform and how this compares to everyone else. Suffice to say if you do plan to add NEXO to your portfolio for investment purposes you should deposit it within their system ASAP to gain the largest share possible.

Price Support

NEXO is trading WELL above its previous all time highs, with gains well over 200% the last month spanning November-December 2020. This can be contributed to growing interest in the service as well as their buyback program, a $12 million commitment that started in early December and so far has purchased almost 900,000 NEXO off the open market. Even at the current highs this doesn't even equal 5% of the announced program, so it's quite likely we'll see more growth in NEXO's price from this alone. Tokens purchased through the buyback program will be vested for a minimum of 12 months and will NOT be eligible for dividends, boosting the value on that end as well. You can read more about the announcement here.

With a clearly stated commitment to increasing the value of the NEXO token, I believe it's reasonable to assume there won't be any major drops in price for a while save for events that cause major losses in value across all sectors of the crypto universe. There is a concern we might see another token dump after the 2021 dividend declaration but if NEXO can continue to build support my guess would be any drop would be much shallower and shorter lasting.

Final Thoughts

It's important to note that these guys didn't just spin up their servers yesterday. In an industry where DeFi orgs are popping up left and right, Nexo has a proven track record of success and a team experienced in fintech. Nexo's lending business has been on a solid upward trend, and they've taken large strides to meet regulatory and industry best-practice demands to show their reliability as an industry leader in digital finance. I know there will be folks in this space who balk at the word regulation like a vampire to garlic, but I believe this is a major asset for Nexo as legislatures and regulators across the globe are already paying more attention to cryptocurrencies then they ever have before and can be counted on to start laying down firmer ground rules.

Nexo seems poised to be a very active bridge between the fiat and digital economies, which means the NEXO token should see increasing value in the coming years. I doubt it will be 200%/month growth, but if Nexo can maintain their growth in lending as well as their buyback program then I believe their token can reach north of $1 by the end of 2021. If overall dividend yields can reach 5% or more, then NEXO would see even more upward pressure from long term investors.

Nothing is guaranteed, of course, but I believe NEXO could be worth your time looking into as a possible addition to your portfolio. Whether it's actually a good fit is another matter that only you can decide.

If there are any tokens you'd like me to review or if you have more questions related to NEXO leave a comment below.

Good luck and good hunting!

(Disclosure: The author owns a small amount of NEXO currently staked on their platform. You should consider your own investment plan and research before purchasing any type of security.)

Resources:

Nexologist.com - Unaffiliated Nexo activity tracker https://nexologist.com/

Article detailing 2020 dividend controversy via FullyCrypto - https://fullycrypto.com/nexo-dividend-recipients-revolt-after-token-price-crash

Nexo buyback program announcement via Buisnesswire - https://www.businesswire.com/news/home/20201203005759/en/Nexo-Launches-Buyback-Program-Commits-Initial-12M