Nexus Protocol
Links and social media
Features
Roadmap
Timeframe
Features
2021 Oct
Nexus V1 Launch : bLUNA & bETH Anchor vaults
2021 Q4
Expansion to Ethereum : EthNexus
2021 Q4 / 2022 Q1
Nexus LTV Management system upgrade: Optimal mode added
2022 Q1
Nexus V2: Mirror Delta Neutral vault + Upgrade bLuna/bETH Anchor vaults
2022 Q2
More vaults
2022 Q3/Q4
Expansion to DOT, SOL, and other chains
bLUNA/bETH Anchor Vault
The bLUNA / bETH vault will allow users to deposit bLUNA / bETH. That deposit will be placed in Anchor Protocol as collateral to be borrowed against.
Borrowed funds can be then deployed to one of the other vaults implementing various strategies (at launch: simply depositing them to Anchor).
The vault will take care of LTV management - no need to worry about the liquidation; under most of the conditions. 3 different modes will be used for that:
Mode
LTV
When used
Optimal mode
99% of max LTV
(not available at launch)
Default mode
Safe mode
80% of max LTV
(default at launch)
Nexus price oracle failure
Emergency mode
50% of target LTV
Anchor price oracle failure
LTV management modes
At launch, only Safe mode and Emergency mode will be available. Optimal mode will be deployed at a later time.
Optimal mode
In Optimal mode operation Nexus will be running its own price oracle for bAssets (bLUNA, bETH, etc.) that will feed the price every 15 seconds. The oracle will use the same logic as the price oracle of Anchor Protocol. Since Anchor's oracle feeds the price every 30 seconds, Nexus will know the prices a little sooner.
This will allow Nexus to assess the risk of liquidation in the next 15 seconds and keep LTV at 99% of max LTV.
In simple words: higher LTV = more UST borrowed = more revenue generated from Anchor borrowing incentives + more yield on borrowed UST (from Anchor Earn or other strategies).
Safe mode
It might happen that Nexus's price oracle would fail. In such case Nexus will have no time advantage vs Anchor - they will get the bAsset price information at the same time.
In such scenario Safe mode will be used, decreasing the LTV to 80% of max LTV to reduce the risk of liquidation.
Emergency mode
In case of Anchor's price oracle failure, all liquidation processes on Anchor will be paused - no liquidations in that period. Unfortunately, as soon as the oracle starts working again, the prices provided might differ significantly vs last prices provided before failure.
In those short moments after restart the risk of liquidations is significantly increased due to above circumstances. To mitigate that, Emergency mode will be used by Nexus, effectively decreasing LTV to 50% of target LTV.
UST Mirror Vault
Once the UST Mirror Vault is deployed, Nexus will be able to use the delta-neutral farming strategy on mAssets. The strategy can be implemented in a few variants, e.g.:
Deposit 2X amount of UST to Anchor Earn - get aUST
Provide aUST as collateral to mint and sell an mAsset (short position + short farming APR received) with LTV
Use another X amount of UST to purchase the shorted mAsset (long position)
Deposit purchased mAsset to mAsset-UST LP to earn farming rewards.
After 2 weeks, once the funds from shorting are unlocked: deposit to Anchor Earn
Summary:
Total investment: 4X
Total yield: 3X earning Anchor Earn yield (19.5%), X earning mAsset sLP yield (variable), 2X earning mAsset-UST LP yield (variable).
Above description assumes LTV=200% in minting/shorting the mAsset, which is desirable for manual LTV management, and can result in APR of 30%-35%.
In case of automated LTV management by Nexus, LTV might be set more aggressively, improving capital efficiency and resulting in even higher APR.
Advantages of UST Mirror Vault
Automatic selection of mAssets based on APR APRs of mAssets vary in time - both for long mAsset-UST LP farm and for short mAsset sLP farm. Mirror Vault will take these APRs into account whenever new funds (from MIR rewards, from new deposits, from unlocked UST after shorting an mAsset, etc.) are allocated into the delta-neutral farming. Therefore the overall APR will be kept at a high level.
Automated optimization of LTV for minted/shorted mAssets Since LTV for shorted/minted mAssets will be managed automatically, it may be kept just above the liquidation threshold of 150%. For manual LTV management it is advised to maintain LTV of ~200%. Therefore automation will allow for ~33% better capital efficiency on shorting/minting mAssets, resulting in higher ROI.
Automated MIR rewards claiming The vault will operate with much higher UST amount than a regular investor. That will allow more frequent collection of MIR rewards as transaction fee will become less and less significant with growing vault TVL. In result, this will allow for auto-compounding of APR.
EthNexus
EthNexus will be an offering of Nexus Protocol for users of ETH on Ethereum blockchain.
Users will be able to deposit ETH to EthNexus. In the background, EthNexus will use ETH to mint bETH, bridge it to Terra blockchain and provide to bETH Anchor vault. Yield generated in Terra will be bridged back to Ethereum blockchain and paid out in ETH/stETH.
Nexus Protocol team predicts that EthNexus might offer ~10% APR on deposited ETH, which is significantly higher than any offering currently available on Ethereum ecosystem.
Since entire deposited ETH ends up as bETH on Terra, this will increase TVL on Anchor Protocol and value-capture for the Terra ecosystem.
Team
6 persons are contributing at the moment (as per Terra Project Spotlight). Notable mentions:
Shimmy - admin on the Telegram group
Partnerships
Audit - Halborn Security
Audit has been completed on 20 Sep 2021, report is available here. Vulnerabilities found:
Risk level
No. of findings
Remediation
Critical
None
N/A
High
3
All remediated
Medium
1
All remediated
Low
3
All remediated
Informational
10
2 remediated
8 acknowledged
Tokenomics
PSI Distribution - TOTAL
Share
PSI Amount
Community Fund
10%
1,000,000,000
PSI-UST LP Incentives
10%
1,000,000,000
nAsset-PSI LP Incentives
25%
2,500,000,000
nAsset rewards
5%
500,000,000
Investment
Private sale: <amount not yet disclosed>
Public sale - Pylon Swap: 300,000,000 PSI
Pylon Pools: <amount not yet disclosed>
Other investment opportunities: <amount not yet disclosed>
15%
1,500,000,000
Operation
3%
300,000,000
Team and Advisors
20%
2,000,000,000
ANC Gov. Staking Airdrops
11%
1,100,000,000
Other airdrops
1%
100,000,000
TOTAL
100%
10,000,000,000
PSI Distribution breakdown - at TGE
PSI Amount
ANC Gov. staking
100,000,000
Public sale: 25% of Pylon Swap
75,000,000
Operation - for governance voting
300,000,000
Team and Advisors:
PSI-UST LP
50,000,000
TOTAL
525,000,000
Value accrual - why is it good to hold PSI?
There are 2 reasons to hold PSI tokens:
Revenue from protocol fees Each vault will have a benchmark yield defined, e.g. Anchor rate for the UST Mirror Vault. If the APR generated by the vault is higher than the benchmark, part of the excess will be split between vault depositors (yield) and the protocol (fee). Protocol fee will be used to buy-back PSI on the market (PSI-UST LP) and reward:
nAsset holders
PSI stakers
Community Pool
Governance voting A number of topics will be handled via PSI governance voting, including (among others):
Protocol fee rate = part of excess yield (above benchmark yield) to be used for PSI buybacks
Tax rate = part of PSI buyback that feeds the Community Pool
Whitelisting additional assets
Updating logic of yield optimizers
Setting performance benchmarks
Usage of the Community Pool
Strategy Bounty system parameters
PSI token vesting
Vesting
Community Fund
not yet announced
PSI-UST LP Incentives
not yet announced
nAsset-PSI LP Incentives
not yet announced
nAsset rewards
not yet announced
Investment
Private sale:
Public sale - Pylon Swap:
Pylon Pools:
Other investment opportunities:
10 month lockup, 14 month linear vesting afterwards
25% unlocked at TGE, 75% unlocked after 2 months
not yet announced
not yet announced
Operation
not yet announced
Team and Advisors
12 month cliff followed by 24 months of linear vesting (total of 36 months)
0.5% release at TGE for initial PSI-UST LP
ANC Gov. Staking Airdrops
n/a
Other airdrops
n/a
Launch
Token Generation Event (TGE): 11 Oct 2021
Pylon Swap
When: 5 Oct 2021 PSI tokens available for purchase: 300,000,000 PSI Price: 0.01 UST per PSI Max purchase limit: will be announced on 30 Sep 2021, after KYC closes Condition to enter: complete KYC - link to KYC form Vesting: 25% unlocked at TGE, remainder unlocked after 2 months
Pylon Pools
The only information available now is that there will be some PSI available in Pylon Pools.
No more information has been disclosed yet (types of pools, allocations, durations, vesting, etc.)
Airdrop to ANC governance stakers
At TGE
Amount: 100m PSI tokens Timing: at TGE Snapshot: not taken yet - to be done in Sep 2021
With ~39m ANC staked (data from 27 Sep 2021), that translates to ~2.56 PSI per ANC staked in governance.
Weekly airdrop
Hourly snapshots will be taken over the 4 years after launch to calculate distribution of the weekly PSI airdrop to ANC governance stakers. My math tells me that:
Total airdrop over 4 years = 1b PSI Airdrop - yearly = 250m PSI Airdrop - weekly = 4.79m PSI
With current ANC staked (~39m) that works out to 0.122 PSI per ANC staked.
Airdrop to MINE governance stakers
Amount: 50m PSI tokens Timing: not yet announced Snapshot: not taken yet - to be done in Sep 2021
With ~258m ANC staked (data from 27 Sep 2021), that translates to ~0.194 PSI per MINE staked in governance.
Initial PSI-UST LP
$1m TVL will be provided as initial liquidity for the PSI-UST pair (likely: on TerraSwap). The listing price will be the same as Pylon Swap: 0.01 UST, which only means that initial composition of the LP will be:
500k UST + 50m PSI
Strategy Bounty Program
As the Terra ecosystem grows and becomes more connected with other ecosystems (e.g. through IBC or Wormhole), more yield opportunities will arise.
Nexus Protocol plans on creating a bounty program to reward community members that come up with new yield strategies to be implemented as new vaults.
Beyond yield optimization and LTV management
As described in the early post on Terra Agora, Nexus Protocol is targeting another market opportunity.
Soon we can expect merchants to start accepting UST payments directly. With this, a new group of ecosystem participants will emerge - one that might benefit from delta-neutral strategies (e.g. UST Mirror Vault) and the high APR it provides.
As such, these merchants would have an additional incentive to:
Start accepting UST in the first place
Keep part of the collected UST in Nexus Protocol to earn high yield
References
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