Most investors need to understand the importance of valuation in cryptocurrency because valuing things makes investing more accessible. People do not put weightage on valuation because it is hard to do the valuation, and you will see why if you finish reading this article.
So let’s get started with the nexo coin. Nexo is an old project, and it has come a long way with different products being launched in the last four years or so. You can find the valuation of any token by checking how many tokens are being burnt. If 1 Million USD worth of tokens is burnt each year, then the project has a valuation of 10 Million USD. Most people must consider this foundational formula for valuing any stock or cryptocurrency.
If you go on this page, there is a lot of information regarding their buyback program through which we can understand the actual valuation. One obvious thing is that there are no direct token burns here, so we will have to figure out their real net profit through other remaining information.
Nexo has repurchased nearly 50 million USD worth of tokens in the last six months, so let us assume they can buy back around 100 Million worth of tokens in a year. They even did buy 100 Million worth of tokens in the previous year.
As you can see here, that nexo has clearly stated that they are using these buybacks to give existing users rewards and for other mergers, and indeed they have been doing some deals. My point is that we will have to assume their profits based on the money they can afford to buy new companies. They have yet to mention how much they are using for buybacks and how much they are using for mergers and acquisitions. We cannot afford to consider the money they give as rewards in profits. Overall, they can make 20% profits if they squeeze a little on the reward side and find better deals on the merger/acquisition side. That leads us to fundamentally evaluate the nexo coin at 200 Million USD. Wait, there is more. We cannot value things so quickly in such a complex crypto market. I will continue my analysis on the nexo coin in the future but if you are interested in investing the nexo coin then you can invest in my fund which contains nexo and matic coin on enzyme finance. You can withdraw the funds anytime and only you control the funds as this is a defi platform.