Cryptocurrency lender Nexo has allocated another $50 million to the buyback program of its native token, NEXO. Shortly after the company announced its decision to spend more money on repurchasing NEXO, the digital asset jumped from $0.9 to $1.2 before retracing to $1.05 at the time of writing.
Nexo Allocates More Funds to its Buyback Program
Nexo’s buyback initiative is a form of program that allows the company to periodically and discretionarily repurchase its token from the crypto market and keep it locked away for some time to bolster the utility and liquidity of the asset.
The latest addition makes it the second time the company is rebuying the NEXO token this year. In May, the lender spent $100 million on the buyback initiative.
Antoni Trenchev, Nexo’s co-founder and managing partner, said the new funds show the “solid liquidity position” the company has demonstrated in these challenging market conditions that have seen many institutions shut down because of poor investment decisions.
“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 on products, token, and community, alongside its outward-facing initiatives of injecting liquidity into the industry,” he said.
Nexo had previously boasted of its financial strength by signing an indicative term sheet to bail out its troubled rival Vauld after the lender filed for bankruptcy protection due to the market crisis in Q2.
Repurchased Tokens to be Completed in Six Months
Per the announcement, the $50 million token purchase would be conducted within six months, depending on the state of the market. Nexo stated that each set of tokens purchased would be deposited to the company’s established on-chain Investor Protection Reserve (IPR).
The cryptocurrency will also be subjected to a 12-month vesting period. Upon expiration of the vesting period, the tokens may be used for daily interest payouts or investments via “token merger” to ensure it generates token holder interest.
“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,” the company said.
Source: https://coinfomania.com/nexo-commits-5m-to-token-buyback/