The new Exchange Collateral feature – what it is and how to use it
Unlock Fixed Terms – an introduction to the new Automatic Collateral Transfer option
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Exchange Collateral Explained
Exchange Collateral has not one, but two applications for clients:
Maintaining a healthy loan-to-value (LTV) ratio during a market downturn
Exchanging collateralized assets for investment strategies
In the first scenario, clients can swap their collateralized assets for other, less volatile cryptocurrencies or even stablecoins. This way if the market dips, they can minimize the risk of liquidations. However, what many clients don’t realize is that they don’t have to exchange all of their collateral and they’re also not limited to swapping it all for stablecoins. In practice, if you see your assets dropping in value you can start by exchanging small parts of your collateral to stabilize your LTV, rather than swapping all of it to stablecoins at the first sign of a market downturn.
Exchange Collateral is also unique as it allows you to take advantage of trading opportunities in the market using collateralized assets. For example, in a hypothetical situation in which you are using Bitcoin as collateral but see that Ethereum is rising fast and perform better in the short-, mid-, or even long-term depending on your investment strategy. In this case, you can swap your BTC for ETH and enjoy the higher gains. The only requirement is that you can only swap collateral for assets with the same or a higher permitted LTV.
About Unlock Fixed Terms
Unlock Fixed Terms is the newest addition to Automatic Collateral Transfer – the feature that automatically moves assets from FLEX accounts in your Saving Wallet (these are non-collateralized assets earning interest on Nexo) to your Credit Line Wallet to help protect your collateral from liquidation in times of market volatility. When you enable Unlock Fixed Terms, Automatic Collateral Transfer will also move assets from your Fixed Terms, thus giving you an extra layer of protection. The only catch is that you lose the interest accumulated in the unlocked Fixed Term, however, you get to keep all your original assets and your collateral.
If you’re new to the Nexo Brainer, or if you missed any of the previous episodes, you can catch up here. Also, remember to subscribe to our YouTube channel to be the first to know when a new installment of the Nexo Brainer comes out.
Nexo Brainer, hosted by our Business Developer George Manolov, is designed to keep you up to date on the latest Nexo features. In each episode, our expert team shares strategies on how to use our products to your best advantage, so make sure you check out the videos.