Nexo allocates $50M for its token buyback initiative, as the cryptocurrency exchange said on August 30 that it will conduct discretionary and periodic buyback of the NEXO token on the open market.

According to the company’s announcement, this would be the exchange’s second investment in repurchasing its tokens this year. The first occasion was in May, when they announced a $100 million buyback of NEXO tokens.

Wanting To Demonstrate Liquidity

Nexo co-founder and managing partner Antoni Trenchev stated that the $50 million allocation reflects the company’s “strong liquidity position” in a time when several cryptocurrency exchanges have had to shut down operations.

“The allocation of an additional $50 million to our buyback plan is a result of our solid liquidity position and Nexo’s ability and readiness to spur on its own products, token, and community, alongside its outward-facing initiatives of injecting liquidity into the industry,”

Trenchev went on to say that, despite “difficult market conditions,” the firm and the NEXO token had constantly moved in lockstep with BTC and ETH, demonstrating the asset’s stability and demand. Nexo now has a total market value of more than $581 million, according to CoinMarketCap statistics.

The $50 million repurchase equals nearly 10% of the token’s entire capitalization. However, NEXO says the buybacks will take place over a six-month period “depending on market conditions” in order not to affect the token’s price. And so Nexo allocates $50M for its token buyback initiative, in the hopes of surviving the crypto winter.

Repurchased Tokens Will Be Blocked

Repurchased tokens will be frozen and stored in the NEXO’s Investor Protection Reserve (IPR) for 12 months, subject to a vesting time, according to the exchange. Following the expiration of this term, the corporation will be able to use the tokens to pay daily interest or make strategic investments via “token mergers.”

“Once the lock-up term has expired, repurchased tokens might be dedicated to daily interest payouts in NEXO Tokens and strategic investments via token mergers with applicable vesting schemes to ensure token holder interests.”

This suggests that the exchange is not interested in “burning” NEXO tokens to lower overall market supply, as Binance has done by “burning” massive sums of its native Binance Coin (BNB) cryptocurrency to enhance the token’s value by decreasing supply.

Nexo has demonstrated its potential to compete with the big boys of the cryptocurrency business. While other exchanges are declaring bankruptcy and laying off employees, Nexo declared a 200% growth in workforce over the last year while continuing to make multi-million dollar expenditures to broaden its impact.

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