Nexo and ChainLink announce partnership
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Nexo (NEXO) is a crypto lending platform that gives digital asset holders instant access to cash while they retain ownership of their assets. Built by European fintech company Credissimo, the service covers 45+ fiat currencies in more than 200 jurisdictions.
The platforms native token, NEXO, can be used to access cheaper loans when used as collateral and regular passive income from 30 percent of the company’s profits. Two dividends have already been paid out. The first was for US$912,071 and was distributed on December 15, 2018. The second was for US$2,409,57 and was distributed on August 15, 2019. There is an upcoming dividend set to distributed on August 5th, 2020.
The asset currently has a listed market capitalization of US$126.6 million and trades for ~US$0.23. The NEXO market cap has risen 85% in the last month.
The new partnership with ChainLink will boost Nexo’s security and enable increased custody of user funds, greater loan volumes, and a more active OTC desk. ChainLink (LINK) is a decentralized oracle network built on Ethereum (ETH). The network is designed to connect off-chain data sources, such as APIs, data feeds, or bank payments, to on-chain smart contracts. The Chainlink price is up almost 25% since the LINK news was announced.
The ChainLink decentralized oracle network has three approaches for preventing faulty data and reducing single oracle vulnerabilities. Data sent through the network is curated and verified through majority voting amongst nodes. This prevents a single point of failure in the oracle system.
The network also cycles through oracles and introduces a reputation and certification system for oracle performance. There are also Hardware components that are used to protect the integrity and confidentiality of data. The hardware is used to ensure tamper-proof and private data transfers between oracles and smart contracts.
Nexo loans are currently established by the Nexo Oracle and stored in an Ethereum smart contract. When a client transfers their digital assets to their Nexo wallet for a loan, a smart contract is created. Loan contracts are stored and replicated on the blockchain in order to make them immutable and verifiable. The client’s crypto assets are securely stored and can be unlocked by Nexo only if the client fails to pay their loan.
The Nexo oracle operates autonomously and checks various data points to evaluate the predefined conditions written for the original smart contract. The value of the client’s Crypto assets is determined in real-time based on data from multiple exchanges in order to minimize risk for both parties.
Once any of the pre-written conditions behind the code for a loan are hit, the loan automatically adjusts. If, for example, there is an appreciation in the value of a client’s crypto assets, the Nexo smart contract will adjust the loan limits for the client automatically.
Using ChainLink’s oracle networks would boost Nexo’s security and enable increased custody of user funds, greater loan volumes, and a more active OTC desk. This additional security would be achieved through the blending of Nexo’s highly performant infrastructure, which secures over $600M in user funds, with the decentralized infrastructure of ChainLink’s price reference data oracle networks, which also secure hundreds of millions of USD in value.
As part of this integration, Nexo intends to use ChainLink’s oracle networks to produce on-chain audit trails of its lending and borrowing operations. In situations where Nexo loans make interest payments in a separate currency than what the loan is denominated in, ChainLink would provide a reliable and transparent exchange rate for calculating the interest payments. In addition, ChainLink price feeds will provide collateralization checks on borrowers, alerting Nexo when users have hit their liquidation price.
Commenting on the long term institutional perspective of the Chainlink news, Nexo Co-founder and Managing Partner Antoni Trenchev said, “Nexo’s mission is to bridge the gap between digital and traditional finance and our developing collaboration with ChainLink brings us a step closer to achieving this. We are very much on the same page — both in terms of how our respective services currently align, and in terms of our shared vision for a digital, decentralized future of finance. We’re thrilled to have them on board.”
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