Regardless of posting a proof-of-reserves with neither asset breakdown nor pockets addresses, Nexo praised its threat engine as the only real purpose for no unhealthy money owed.
In keeping with the Nov. 28 tweets, most exchanges had been submitting proof of reserves however failing to show whether or not their property exceeded the liabilities.
The agency which was fortunate to withdraw its FTX steadiness on the ultimate countdown claimed it had property each on-chain and off-chain. As such, exchanges and another Nexo competitor wanted to get exterior auditors to observe each property and liabilities.
Nexo’s audit of custodial property revealed $3.4 billion in buyer liabilities and a 100% collateralized ratio for adequately backing the property. Within the thread, the agency insisted on the significance of Proof of Reserves however referred to as for extra transparency within the house, citing the necessity for credible attestation from exterior accounting corporations. By the assistance of the PCAOB auditors board in 2021, Nexo developed a device for evaluating the ratio of property to liabilities.
Nexo underscored the necessity for an impartial auditor for corporations to proceed offering monetary providers. Nevertheless, the agency wished these corporations to indicate their liabilities alongside the property. This is able to assist companions determine dangers and keep away from huge losses within the occasion of a financial institution run.
In the meantime, the corporate requested companies to keep away from uncollateralized loans, notably in periods of market turmoil. The tweets identified how managing unhealthy debt enabled Nexo to comprehend sustainability, optimistic revenue margins and scalability.
Our buying and selling providers don’t depend on in-house matching engines & order books (like conventional crypto exchanges) however combination liquidity from 10+ venues through good order routing. Shoppers get finest costs & entry to low cost liquidity; Nexo can cost spreads & charges – a win-win. 12/33
— Nexo (@Nexo) November 28, 2022
After going through $0 losses following the autumn of FTX, Nexo stated it had prolonged a completely collateralized mortgage to Alameda Analysis however its threat managers managed to recuperate funds by promoting the collateral. Moreover, the thread famous the corporate’s threat administration enabled it to have $0 publicity to not solely FTX but additionally Gemini, Genesis, BlockFi, Celsius, struggling miners and Three Arrow Capital. Components attributing to the success included making certain no forex, maturity or rate of interest mismatches.
