Nexo allows "zero interest" cryptocurrency lending! Borrowing against BTC and ETH collateral is interest-free

Nexo launches “Zero Profit Credit” product, allowing Bitcoin and Ethereum holders to borrow cryptocurrencies at zero interest rates. The loan terms are fixed, and at maturity, repayment can be made with stablecoins or collateral. By 2025, over $140 million in loans have been facilitated. In the context of DeFi lending’s total locked value soaring from $48.15 billion at the start of the year to a peak of $91.98 billion, the zero-interest strategy marks a comprehensive recovery in the cryptocurrency lending industry.

How Zero-Interest Cryptocurrency Lending Works

Nexo’s “Zero Profit Credit” product breaks the traditional interest model of crypto lending. Borrowers use Bitcoin or Ethereum as collateral to receive a fixed-term stablecoin loan, with no interest paid during the entire borrowing period. This zero-interest structure is extremely rare in the crypto lending market, as most platforms typically have annualized rates between 5% and 15%.

The core of the product mechanism lies in the pre-set repayment conditions. Borrowers determine the loan amount, term, and settlement method at the start, with built-in protections against early liquidation. At maturity, borrowers can choose to repay the principal with stablecoins or settle directly with the collateralized crypto assets, and they can also opt to renew under new terms. This flexibility allows holders to access liquidity without selling BTC or ETH.

Nexo is not the first to attempt structured loans, but this is the first time such a model has been expanded from private and OTC channels to a broader user base. The $140 million in loans facilitated through structured lending by 2025 demonstrates market demand, and the launch of zero interest indicates Nexo’s active pursuit of market share in crypto lending.

From a business perspective, zero interest is not entirely unprofitable. Nexo may profit through collateral management, renewal fees, or cross-selling other financial products. Additionally, attracting more users to lock in BTC and ETH as collateral can enhance the platform’s asset size and market position. This strategy is similar to the “loss leader” model in traditional finance, where an attractive product is used to build customer relationships.

Evolution of Lending Models from 2022 Crisis to 2025 Recovery

Crypto lending has undergone dramatic changes over the past three years. In 2022, the collapse of Celsius and BlockFi shocked the industry, widely blamed for exacerbating market contagion and deepening the impact of the FTX crash. These platforms shared common issues of high-risk fractional reserve models, using user deposits for risky investments, which failed to meet withdrawal demands during market downturns.

By 2025, the crypto lending market is entirely different. Centralized lenders like Nexo, Ledn, Xapo Bank, and Coinbase have expanded their operations but adopted more conservative, fully collateralized structures. This means each loan is backed by sufficient or even excess crypto assets, and platforms no longer use user funds for speculative investments. After reaching a settlement of $45 million with the U.S. Securities and Exchange Commission in early 2023, Nexo announced its return to the US market in April 2025, demonstrating significant compliance improvements.

Comparison of Crypto Lending Models: 2022 vs. 2025

Risk Management: Shift from fractional reserves to full collateralization, with collateral ratios typically above 150%

Transparency: Transition from opaque fund management to public disclosure of collateral and reserve proofs

Regulatory Compliance: Move from regulatory gray areas to actively seeking licenses and compliance frameworks

Product Design: Shift from high-yield, high-risk products to structured products with preset risk parameters

The robust growth of DeFi lending protocols further confirms market confidence recovery. According to DefiLlama data, the total locked value of DeFi lending products increased from approximately $48.15 billion on January 1, 2025, to a peak of $91.98 billion on October 7, a 91% increase. Despite a pullback after the October 10 crypto liquidation event, the market stabilized in November, with total locked value around $66 billion, still 37% higher than at the start of the year.

Positioning Zero-Interest Strategy Amid Intense Competition

Nexo’s zero-interest strategy must be understood within an increasingly fierce competitive environment. The DeFi lending market is led by Aave, with over $22 billion in outstanding loans and more than $55 billion in deposit assets. Morpho ranks second, with approximately $3.6 billion in outstanding loans and about $10 billion in liquidity support. In contrast, Nexo, as a centralized platform, needs to find differentiated competitive advantages.

Zero interest is precisely this differentiation. DeFi protocols set interest rates algorithmically based on supply and demand, generally unable to offer zero-interest products. Centralized platforms can subsidize rates through their own capital and business strategies, and Nexo has clearly chosen this path. For long-term holders optimistic about BTC and ETH but needing short-term liquidity, zero-interest crypto lending is highly attractive, as it eliminates the trade-off between holding costs and opportunity costs.

However, the zero-interest strategy also faces challenges. First, sustainability—if a large number of users flock in, Nexo must have sufficient capital or revenue sources to support zero interest costs. Second, risk management—zero interest may attract more speculative borrowers, increasing default risk. Third, competitive pressure—if other platforms adopt zero-interest strategies, Nexo could lose its differentiation advantage.

From industry trends, crypto lending is shifting from a high-interest era to low or zero-interest. As the market matures and competition intensifies, declining lending rates are inevitable. Nexo’s zero-interest product may be a pioneer in this trend, signaling that the entire crypto lending industry will enter a new phase of price competition.