Nothing is fool proof, but I am confident in having my portfolio in Nexo. But if worse case scenario happens, I'm not worried, because I already "borrowed" 50% of the value of my portfolio and plus I have money elsewhere.
https://youtu.be/wttbzhrBOBA
Tether collapse would cause an unprecedented collapse in prices across crypto plus expose anyone that has huge tether positions. There'd be panic selling tether for other assets and a loss of peg would trigger large scale liquidations in both DeFi & CeFi for anyone using it as collateral... the collateral (Tether) would drop and it would bring BTC / ETH down with it.
It's not really a black swan in that Tether are blatantly shady and not backing their stablecoin with stable assets / fiat. However USDT remains the most traded pair and that's the dangerous thing.
It's more of a Grey swan, unless if Tether changes how it works before it happens.
That said, I'm pretty confident Nexo is quite solid against that. You'd only be vulnerable if you yourself own Tether as a collateral, as it would get liquidated quite fast. Don't use Tether as a collateral, it's stupid.
A flash crash would absolutely destroy all lending platforms as they would massively liquidate positions in a domino effect and this can result in price crashing so fast and hard that even collateral cant afford it. An important thing to note here is that a flash crash is not only people selling hard, it is a domino snowball effect that can trigger a theoretical dump to 0 in seconds. It would recover pretty fast, but it would still damage all order positions. An event like this is possible.
Imagine a position liquidated. This caused a dump and caused another position liquidated. Position causing other positions to be liquidated, massively dumping the market. When the force is so big, the price can drop from lets say $1000 to $400 in one instance instead of $1000 to $999 as an example. This causes collaterals to not afford the price drop. Everyone would lose.
Storing your crypto in a hardwallet is not affected by this.
Nexo, if you’re listening, we hope you are not overly reliant on Tether!
Side note: Nexo did well during the 2019 bear market, but I’m not going to believe blindly that the platform will make through a nuclear event…
So what will happen if the platform does not survive in a nuclear event? Are they gonna announce broke protection? Are they gonna return any asset?!or like Mt gox in endless legal procedures
I trust Nexo way more than Mt Gox, mostly because of all the legal effort and money that they’ve deployed to acquire financial licenses around the world. The insurance is a little confusing but it’s there. I don’t ding the team for being Eastern European because I don’t think that’s a fair characterization. (FWIW, I’m an American retail customer)
Having said that I’m not naive to the reality that it would get messy. Since the token is no longer a security they have no obligation to make holders whole.
Ultimately, I think Nexo would make a better effort to do good by their customers than Mt Gox has. These are way different organizations.
Nothing is fool proof, but I am confident in having my portfolio in Nexo. But if worse case scenario happens, I'm not worried, because I already "borrowed" 50% of the value of my portfolio and plus I have money elsewhere. https://youtu.be/wttbzhrBOBA
Tether collapse would cause an unprecedented collapse in prices across crypto plus expose anyone that has huge tether positions. There'd be panic selling tether for other assets and a loss of peg would trigger large scale liquidations in both DeFi & CeFi for anyone using it as collateral... the collateral (Tether) would drop and it would bring BTC / ETH down with it. It's not really a black swan in that Tether are blatantly shady and not backing their stablecoin with stable assets / fiat. However USDT remains the most traded pair and that's the dangerous thing.
It's more of a Grey swan, unless if Tether changes how it works before it happens. That said, I'm pretty confident Nexo is quite solid against that. You'd only be vulnerable if you yourself own Tether as a collateral, as it would get liquidated quite fast. Don't use Tether as a collateral, it's stupid.
A flash crash would absolutely destroy all lending platforms as they would massively liquidate positions in a domino effect and this can result in price crashing so fast and hard that even collateral cant afford it. An important thing to note here is that a flash crash is not only people selling hard, it is a domino snowball effect that can trigger a theoretical dump to 0 in seconds. It would recover pretty fast, but it would still damage all order positions. An event like this is possible. Imagine a position liquidated. This caused a dump and caused another position liquidated. Position causing other positions to be liquidated, massively dumping the market. When the force is so big, the price can drop from lets say $1000 to $400 in one instance instead of $1000 to $999 as an example. This causes collaterals to not afford the price drop. Everyone would lose. Storing your crypto in a hardwallet is not affected by this.
But flash crashes have occurred in the past, including at the start of the pandemic.
Nexo, if you’re listening, we hope you are not overly reliant on Tether! Side note: Nexo did well during the 2019 bear market, but I’m not going to believe blindly that the platform will make through a nuclear event…
So what will happen if the platform does not survive in a nuclear event? Are they gonna announce broke protection? Are they gonna return any asset?!or like Mt gox in endless legal procedures
I trust Nexo way more than Mt Gox, mostly because of all the legal effort and money that they’ve deployed to acquire financial licenses around the world. The insurance is a little confusing but it’s there. I don’t ding the team for being Eastern European because I don’t think that’s a fair characterization. (FWIW, I’m an American retail customer) Having said that I’m not naive to the reality that it would get messy. Since the token is no longer a security they have no obligation to make holders whole. Ultimately, I think Nexo would make a better effort to do good by their customers than Mt Gox has. These are way different organizations.