Nexo Dividend Recipients Revolt After Token Price Crash

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  • NEXO token holders have complained after their dividend payouts lost value due to apre-dividend price crash
  • Complaints focused on the volatile nature of the NEXO token around dividend time
  • Investors have called for the Nexo dividend to be paid in a stablecoin

The dividend paid out to NEXO token holders has been met with anger after the NEXO coin price crashed before the payout. The Nexo dividend, which sees a proportion of the company’s profits paid out to NEXO token holders, was paid out on Saturday, but investors have taken the company to task about the mechanics of the dividend after the NEXO price crashed in advance of the payout.

Nexo Dividend Announcement Falls Flat

Nexo, which offers crypto-backed credit facilities, announced the date of their third dividend payment on August 5, stating that $6.1 million would be handed out to NEXO token holders on August 15, a 154% increase on the last dividend in August 2019. The announcement was made just hours after the dividend snapshot was taken, with token holders due to be paid out NEXO tokens to the dollar value of their holdings at the time of the snapshot:

However, the reaction to the announcement was almost entirely negative, with investors complaining about both the payout amount and the discrepancy between the value of the dividend on payment day compared to the date of the dividend snapshot.

NEXO Token Price Action Penalizes Holders

The crux of the complaints centered around the fact that the Nexo dividend is paid out in NEXO tokens, the value of which is hugely volatile around dividend time. The Nexo dividend snapshot is taken in advance of the payout day, where the balances of NEXO token holders are recorded and the dividend amount divided up between them according to their holdings.

The issue is that speculators have traditionally bought up NEXO tokens in the lead up to the snapshot in order to maximize their payout amount (or simply trade based on the news), which artificially raises the NEXO price, causing it to drop when the dividend comes through. The same thing seems to have happened this time round too:

Nexo token price

As we can see from the chart, the NEXO token price was valued at $0.128 on June 15, but within a month it jumped to $0.244. It was at $0.255 when the news of the Nexo dividend came out on August 5, after which it immediately plummeted 37%. This fact wasn’t missed by investors:

The most popular solution proposed by the community was payment via a stablecoin so that the dollar value of the Nexo dividend remained the same after the snapshot rather than running the risk of being depreciated by a post-announcement sell off. However, Nexo doesn’t seem inclined to change the way they operate their Nexo dividend, meaning that investors will have to put up with this kind of activity around dividend time for the foreseeable future: