11-22-2022, 02:53 PM
Is it true that a bank can pay 10% interest while being over-collateralized?
<!-- SC_OFF --><div class="md"><p>Hi guys,</p> <p>This is in reference to NEXO, a crypto cefi bank that has managed to outlive Luna FTX and all the rest.</p> <p>They are the only company to have a daily attestation by an independent or accounting firm of 100% fully backed over-collateralized accounts. </p> <p>Meaning if everyone pulls out their money, they would be able to meet depositors demands.</p> <p>I wonder however, how can this be if they are paying up 10% interest on USD? </p> <p>What is the underlying economics behind this?</p> <p>Note: assume for the sake of argument that they were over collateralized. I don’t want the non economic cop-out answer of it’s a scam.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/JusticeForSimpleRick"> /u/JusticeForSimpleRick </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/z1hxss/is_it_true_that_a_bank_can_pay_10_interest_while/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/z1hxss/is_it_true_that_a_bank_can_pay_10_interest_while/">[comments]</a></span>
<!-- SC_OFF --><div class="md"><p>Hi guys,</p> <p>This is in reference to NEXO, a crypto cefi bank that has managed to outlive Luna FTX and all the rest.</p> <p>They are the only company to have a daily attestation by an independent or accounting firm of 100% fully backed over-collateralized accounts. </p> <p>Meaning if everyone pulls out their money, they would be able to meet depositors demands.</p> <p>I wonder however, how can this be if they are paying up 10% interest on USD? </p> <p>What is the underlying economics behind this?</p> <p>Note: assume for the sake of argument that they were over collateralized. I don’t want the non economic cop-out answer of it’s a scam.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/JusticeForSimpleRick"> /u/JusticeForSimpleRick </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/z1hxss/is_it_true_that_a_bank_can_pay_10_interest_while/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/z1hxss/is_it_true_that_a_bank_can_pay_10_interest_while/">[comments]</a></span>