Nexo High-Yield Bearing Crypto Products Come Into Question As Market Deflates
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Nexo has come under the microscope for its high-yield-bearing crypto products.
Analysts argue that Nexo's double-digital yields can't be sustainable.
Regulators, including the U.S. SEC, have clamped down on similar products over the last year.
Nexo has come under the radar for its high-yield-bearing crypto products when the broader market remains weak. The concerns come a month after the co-founders assured that the platform is solvent.
Several crypto commentators took to Twitter to point out how Nexo’s double digital yields couldn’t be sustainable—especially considering the recent collapse of crypto exchange FTX.
Crypto analyst Dylan Leclair questioned how Nexo is managing higher yields of 10% while “every counterparty in the crypto space has blown up,” His argument is based on Nexo’s rate of return against the yield of treasury bills and the average decentralized finance (DeFi) market.
LeClair explained, “If the yield is greater than the ‘risk free’ market rate, they are by definition taking a directional risk to chase said ‘yield.’
According to the analyst, it could also be said about any other company in a similar position.
Other crypto lenders like Celsius, BlockFi, Voyager, and Vauld have been victims of the so-called ‘crypto contagion,’ after the collapse of FTX.
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