# Nolus Blog — full corpus > Every published post from https://nolus.io/blog, concatenated for LLM ingestion. Updated 2026-08-10. Post count: 83. # Changelog 2026.8 Published: 2026-08-05 URL: https://nolus.io/blog/2026-8-changelog Tags: Announcements, Changelog, Interop Excerpt: Solray reaches end-to-end milestones, the money market prepares its next generation, and every surface gets steadier. ![Nolus 2026.8 changelog cover](https://nolus.io/blog/assets/2026-8-changelog/cover.webp) Over the past three months, work across Nolus converged in one direction: bringing Solana online as a first-class home for the protocol. The **Solray SDK** hit its first end-to-end milestones, the money market was rebuilt for remote execution on Solana, and the app, data, and public surfaces all got steadier. ## Solray SDK **The IBC link between Nolus and Solana runs end to end.** The IBC connection and channel handshake complete in both directions, and token transfers round-trip both ways. The relayer's Solana backend grew from a skeleton into a complete endpoint: full query and message coverage, and event ingestion. **Remote margin positions execute on Solana end to end.** The money market application carries a position through opening, swapping, transferring out, and closing, including atomic two-leg swaps routed through the Metis API in a single delivery. First-time recipients no longer need a pre-existing token account; the transfer creates one on the fly. The focus was foundational, setting up the user-facing flows that follow. ## Protocol & Contracts **A new generation of the Nolus money market is getting prepped.** The contracts were rebuilt around the remote execution: instead of leaning on interchain accounts and DEX connections reachable from Nolus, margin speaks to a dedicated controller that carries opening, swapping, repaying, liquidating, and closing to the network where the liquidity lives, with Solana registered as the first remote target. The superseded apparatus was deprecated outright. This generation is built and tested but not yet live; it arrives through governance in the releases ahead. **The remote path defends itself.** **Market Anomaly Guard (MAG)**, the safeguard that shields margin positions from unfair liquidations in volatile markets, now covers the remote path: every swap leg carries its slippage protection, a liquidation swap that times out is re-quoted automatically to buy time for the market to correct itself, and retries draw from a bounded budget. Error acknowledgements carry a cause code understood on both sides, so a failure is handled by what went wrong, not where it happened. Late, stale, or malformed callbacks are absorbed and failed opening swaps unwind cleanly. The net effect is that cross-chain hiccups resolve themselves instead of freezing a margin mid-flight. **A chain upgrade stages the network side.** A new node release refreshes the chain's core dependencies and prepares its IBC layer for the Solana connection, alongside quality-of-life work: a node command for decoding contract queries and first-time documentation for the chain's custom modules. ## Web App **A simpler, sturdier wallet lineup.** Leap was retired end to end, with a self-healing guard so returning sessions reconnect instead of crashing. Phantom and Solflare connect through their native Solana interfaces, and direct Ledger connections left the picker while existing Ledger sessions keep reconnecting. Assets sharing an IBC denomination, most visibly USDC, no longer show a zero price and sink to the bottom of dropdowns; a routing failure no longer wedges swaps until reload. External deposits show up without a refresh, and the hardened live stream can no longer blank out PnL or interest figures. **Clearer answers across the dApp.** Exceeding the wallet's balance now says exactly that instead of an unexpected error, and the liquidation line on a position's chart was corrected and upgraded to a stepped history, rendering a moved trigger as it actually happened. ## Blockchain Data & Indexing (ETL) **Ready before the protocol moves.** The indexer was prepared for the next protocol generation ahead of its rollout: new margin states parse cleanly, reshaped events no longer abort aggregation snapshots, and the new cross-chain operations are recognized end to end. Any event the indexer does not yet recognize is captured and replayed once support ships, so nothing emitted ahead of its handler is lost. ## nolus.io **The changelog archive came home.** Twenty-three past editions, reaching back to the weekly era, now live on the Nolus blog, and the external changelog collection was retired. Elsewhere on the site, the brand page gained its hero artwork, an intermittent hover flicker was eliminated at its root cause, and proposal summaries no longer cut mid-word. ## Knowledge Hub **Help-center answers were audited against reality.** Every answer the AI support agent grounds on was checked against a verified brief: stale entries removed, others corrected in place, and four internal answers promoted to public articles. Support now says what the protocol actually does. ## Docs **docs.nolus.io opened its doors.** Developer documentation moved out of the Knowledge Hub into a purpose-built site: protocol concepts, complete node, validator, and relayer operator guides, live network endpoints, and a reference for the public data API's seventy-plus paths, with diagrams-as-code instead of screenshots and the security policy mirrored where developers read. The site also carries the agent-readiness signals the previous cycle brought to the dApp and nolus.io: machine-readable robots directives, an API catalog, and integrity-stamped manifests of its machine-readable corpora, with all three agent-facing surfaces documented in one place. The practical effect is that AI-assisted tooling can integrate with Nolus by contract, on every surface it touches. --- # Changelog 2026.5 Published: 2026-05-12 URL: https://nolus.io/blog/2026-5-changelog Tags: Announcements, Changelog, Interop Excerpt: Two months of work across nolus.io, the dApp, the Solray SDK, governance tooling, ETL, and agent-readiness surfaces. ![Nolus 2026.5 changelog cover](https://nolus.io/blog/assets/2026-5-changelog/cover.webp) Over the past two months, work across Nolus focused on the surfaces people interact with the most. The nolus.io website was rebuilt around a refreshed brand and a proper blog, the dApp's leveraged-trading flow was steadied and given a new way to share results, the **Solray SDK** passed a meaningful milestone, a new internal governance tooling layer came online, and Nolus surfaces were made legible to a new generation of AI-assisted clients. ## Web App **Share PnL card.** Leveraged positions can now be shared as a polished social card showing the hero PnL figure, leverage row, branded logo, and a clean timestamp. Field-level toggles let traders decide what to include before sharing. **A steadier SHORT experience.** The SHORT-position flow received a focused round of corrections. Position size now renders correctly in the positions list, fees route through the right asset on opening and adjustments, and a stricter pacing rule on fee lookups stays within external rate limits. The net effect is fewer surprises when opening, adjusting, or closing a short. **Faster governance, calmer reconnects.** Governance proposals are now cached on the backend and tallied in parallel, noticeably shortening the wait when the proposals view is opened. The live data stream behind the dApp gained a reconnect watchdog and a silence timeout, so the interface recovers on its own when a network blip drops the connection. The network filter is now driven from the connected wallet, removing a class of mismatches when switching chains. **Legacy protocols visible again.** Positions opened under protocols that have since been retired are once again rendered correctly, so users with long-held positions can see and manage them as before. ## nolus.io The public website was rebuilt across the cycle. A new **/blog** experience replaced the team's reliance on external publishing. The full archive of fifty-seven past posts was brought back home with tags, alt text, and a sidebar topic navigation, and visuals were redesigned around a hero artwork treatment. Readers can now follow the blog via RSS or a dedicated AI feed. A new **/brand** page was introduced, mirroring the official Nolus brand kit and making logo, colour, typography, and voice guidance directly available to partners, integrators, and the press. The homepage gained a **Watch explainer** call-to-action that opens the full-length explainer video in a viewport-filling modal, giving first-time visitors a single click into what the protocol does. ## Solray SDK The **Solray SDK**, the trustless IBC implementation that lets Solana speak natively with Cosmos chains, passed a meaningful milestone. The IBC channel handlers were wired through both the send and receive paths for source and sink tokens, the on-chain storage layer for clients and connections was consolidated, and the rent and resize behaviour on Solana accounts was tightened. A first-wave **BPF integration test harness** was brought online, giving the SDK an end-to-end verification path on a real Solana runtime. The cycle's focus was foundational rather than user-visible, and it positions Solana as a first-class IBC destination for the user-facing flows that follow in the next releases. ## Governance Tooling A new internal service for preparing and submitting governance proposals was rolled out across the cycle. Proposal authors now move through typed wizards for contract migrations, swap-tree updates, LPP configuration, oracle settings, and protocol close-down campaigns, with AI-assisted title and summary suggestions and a Keplr-friendly preview before submission. The Web App's recovery wizard now surfaces IBC client status alongside the existing flow. For users, the practical impact is faster, more consistent, and better-explained governance items appearing on chain. ## Blockchain Data & Indexing (ETL) The indexer gained a **gap-fill breaker and reactivation** path, so brief upstream interruptions no longer leave stale or missing data on the dApp's balances, history, and analytics views. A partial-close residual reconciliation issue that could leave a fully repaid loan with a small leftover figure has been fixed, restoring exact position accounting. A new **`GET /leases/active-counts`** endpoint was added for integrators, and hourly restarts caused by queries against deprecated LPP contracts have been eliminated. ## Agent Readiness A cross-cutting effort made Nolus surfaces legible to AI-assisted clients. The dApp publishes an **OpenAPI** specification, agent discovery metadata under `/.well-known/`, and a set of in-page tools registered through the browser's Model Context interface; nolus.io adds matching robots signals, an `llms.txt`, and agent and MCP server cards; and the ETL service exposes its own OpenAPI and discovery assets. The practical effect for users is that the next generation of AI-assisted DeFi tooling can integrate with Nolus directly, through a documented contract, rather than by scraping the screen. --- # When the Weakest Link Isn't the Code Published: 2026-04-24 URL: https://nolus.io/blog/when-the-weakest-link-isnt-the-code Tags: Deep Dives, Explainers Excerpt: In April 2026, Drift Protocol lost $285M in 12 minutes, not to a smart contract exploit. The attack pattern has shifted from breaking code to compromising control. In April 2026, Drift Protocol lost $285M in under 12 minutes. Not to a smart contract exploit, not to a hidden bug in the code, but to an attack that had been running for six months. The attackers didn't rush. They embedded themselves. They posed as a trading firm, deposited over $1M to build credibility, attended conferences, and built relationships with the team over time. When the moment came, they compromised two developers using a malicious repository and a fake TestFlight app. With access secured, they executed pre-signed admin transactions and drained the protocol across 31 transactions before anyone noticed. What makes this incident important is not the scale. It is the method. The Drift attack was not an exception. It was the latest step in a clear and accelerating pattern. ## From Phishing to Embedded Operations To understand where DeFi risk actually sits today, it helps to look at how attacks have evolved. In March 2022, Ronin Bridge lost $625M. The entry point was a LinkedIn message. A senior engineer at Sky Mavis received a fake job offer, went through a convincing interview process, and was eventually sent a malicious PDF. That single file compromised their device. From there, the attackers gained access to validator keys. Four keys came from that machine. The fifth came from a dormant permission that no longer required active authorization. The system assumed five keys would be independent. They weren't. The breach went unnoticed for six days. Four months later, Harmony Horizon lost $100M. A 2-of-5 multisig meant two compromised signers were enough. The attack didn't require sophistication, only a low threshold. By 2024, the approach had shifted. When WazirX lost $235M, the attackers didn't just steal access. They controlled perception. A fake custody interface showed legitimate-looking transactions while a malicious contract update was being approved underneath. Radiant Capital followed a similar path. Malware spoofed the Safe Wallet interface. Signers verified what they saw and approved what looked routine. In reality, they were transferring control of lending pools. In February 2025, the scale escalated again. Bybit lost $1.5B. This time, the attackers didn't target the signers directly. They compromised Safe Wallet's development environment. The malicious code remained dormant for 17 days and activated only when Bybit's multisig interacted with the interface. From test transaction to full drain: 14 minutes. By April 2026, with Drift, the model had matured into something else entirely. Not phishing. Not spoofing. A six-month embedded operation with real capital, real presence, and precise execution. ## The Real Vulnerability Across Ronin, Harmony, WazirX, Radiant, Bybit, and Drift, nearly $2.8B was lost. Different architectures. Different teams. All audited. All technically sound. The failure point wasn't code. It was control. In every case, protocol authority was concentrated in a small group of key holders. Multisig structures varied, but the underlying assumption was consistent: that compromising enough individuals would be impractical. In practice, it proved otherwise. Multisig distributes responsibility, but it does not remove shared risk. Each signer operates through personal devices, familiar interfaces, and everyday workflows. That environment becomes the real attack surface. If enough signers are compromised, the system behaves exactly as intended. Transactions are signed. Permissions are granted. Funds move. Nothing breaks, which is precisely why detection comes too late. The incentives reinforce this dynamic. When the cost of a coordinated attack is measured in months, but the reward is measured in hundreds of millions, the strategy is obvious. This is why attacks have evolved so consistently, from phishing messages to interface spoofing, to infrastructure compromise, and now to long-term infiltration. The code has become harder to break. So attackers stopped targeting it. ## From Code Security to Control Security This shift exposes a deeper limitation in how DeFi evaluates risk. Audits verify that smart contracts behave as intended. They do not determine who controls those contracts, how that control is exercised, or how easily it can be compromised. As a result, a protocol can be technically sound and still structurally vulnerable. ### Where architecture becomes decisive Most of the incidents described above share one critical property: a small group of actors can execute protocol-level changes quickly. Once the required threshold is reached, execution is immediate. ### Nolus takes a different approach Protocol upgrades, parameter changes, and critical operations are executed through on-chain governance. NLS token holders vote on every change, removing the possibility of unilateral action by a small group. ### How this changes the security model **Compromising individuals is no longer sufficient.** There is no fixed set of two or five people whose access grants control over the protocol. An attacker would need to either accumulate enough NLS to pass a proposal or compromise a distributed validator set. Both paths are more complex, more expensive, and far more visible. **Execution is no longer instantaneous.** Governance introduces a delay between proposal and implementation. This delay creates time for review, discussion, and rejection. In previous exploits, execution happened in minutes. Here, it unfolds over a defined process. **Visibility becomes a built-in defense.** Governance proposals are public and exist on-chain before execution. They can be inspected by validators and the broader community. A malicious change cannot be hidden behind a misleading interface or disguised as a routine transaction. **Even infrastructure-level attacks are contained.** Compromising a wallet interface does not grant the ability to alter protocol parameters. Critical changes require consensus at the network level, not approval through a single interface. This design introduces a tradeoff. Governance is slower than multisig. Routine operations take longer and require coordination. But that slowness is not a limitation, it is a security property. It ensures that protocol-level changes cannot happen in minutes. It forces time into the system, and time allows scrutiny. ## What This Means Attack methods will continue to evolve. The progression from phishing to embedded operations makes that clear. But the target remains consistent: concentrated control. As long as protocol authority is held by a small number of individuals, those individuals become the most efficient path of attack. Not because they are careless, but because they operate in environments that can be studied, replicated, and exploited. This shifts the fundamental question users should ask. It is no longer enough to ask whether a protocol has been audited. The more relevant question is: who can change the rules of the system, and what would it take to compromise them? - If that answer involves a handful of people and the right attack vector, the risk persists. - If it requires capital, coordination, visibility, and time, the system is materially more resilient. **Sources** - [Ronin Bridge (March 2022)](https://web.archive.org/web/20250820204958/https://roninchain.com/blog/posts/back-to-building-ronin-security-breach-6513cc78a5edc1001b03c364): $625M lost. Senior Sky Mavis engineer compromised through fake LinkedIn job offer and malicious PDF. 5 of 9 validator keys accessed from single device. Undetected for 6 days. - [Harmony Horizon Bridge (June 2022)](https://medium.com/harmony-one/harmonys-horizon-bridge-hack-1e8d283b6d66): $100M lost. 2-of-5 multisig compromise via targeted attack on two key holders. - [WazirX (July 2024)](https://wazirx.com/blog/wazirx-cyber-attack-key-insights-and-learnings/): $235M lost. Multi-party custody signers phished, malicious contract update hidden behind fake custody interface. - [Radiant Capital (October 2024)](https://medium.com/@RadiantCapital/radiant-post-mortem-fecd6cd38081): $50M lost. 3 of 11 multisig key holders compromised through Telegram-delivered malware spoofing Safe Wallet interface. Lending pool ownership transferred. - [Bybit (February 2025)](https://www.nccgroup.com/research/in-depth-technical-analysis-of-the-bybit-hack/): $1.5B lost. Supply-chain attack on Safe Wallet infrastructure via compromised developer machine. Conditional JavaScript payload activated only for Bybit's multisig. 14 minutes from test transaction to full drain. - [Drift Protocol (April 2026)](https://www.chainalysis.com/blog/lessons-from-the-drift-hack/): $285M lost. Six-month social engineering operation. Attackers posed as trading firm, attended conferences, compromised two developers, pre-signed admin transactions. 31 transactions in 12 minutes. - [2024 DeFi security data (Chainalysis)](https://www.chainalysis.com/blog/crypto-hacking-stolen-funds-2025/): Majority of stolen funds attributed to private key compromises and operational failures. --- # Changelog 2026.3 Published: 2026-03-23 URL: https://nolus.io/blog/2026-3-changelog Tags: Announcements, Changelog Excerpt: Development updates across Money Market, Web App, ETL, nolus.js, and IBC Solray. Over the past two months, development across Nolus focused on strengthening the core systems behind the protocol. The work was centered around improving architecture, simplifying internal logic, and making the overall stack more scalable and maintainable. ## Development Summary During this period: - 359 commits (~11 per day) - +34,565 / -25,570 lines changed (60k+ total churn) - Net +8,995 lines added - 28 PRs opened, 21 merged (75% merge rate) This cycle focused on **refactoring, architectural improvements, and long-term system reliability**, rather than feature-heavy releases. ## Money Market The Money Market was updated with release **v0.8.24**, focusing on improvements to the lending layer and internal structure. The update included refactoring of loan and repayment logic, improvements to liquidity flow handling, and general codebase cleanup. These changes are not directly visible in the UI, but they affect how margin positions are executed and managed under the hood. More predictable loan handling and simplified internal logic improve stability and make future upgrades easier to implement. Given that Nolus positions rely on fixed protocol interest and structured loan lifecycle management, these improvements strengthen the reliability of the core system. ## Web App The Web App was transitioning toward a **Backend-for-Frontend (BFF)** architecture. This introduces a backend layer that aggregates and serves data to the frontend, replacing the previous approach where the frontend interacted with multiple services directly. As part of this shift, data handling logic is being centralized and removed from the client. The change improves consistency across views, reduces frontend complexity, and enables better performance through caching and controlled data access. It also creates a more flexible foundation for future product development. ## ETL The ETL system was restructured to separate **data ingestion** from **data serving**. A dedicated ingest layer now handles raw blockchain data processing, while a separate API layer serves structured, query-ready data to applications and services. Previously, these responsibilities were more tightly coupled. This separation allows ingestion and query workloads to scale independently, improves reliability under load, and creates clearer boundaries between data processing and data access. It also provides a more stable foundation for analytics, dashboards, and integrations. ## nolus.js (MCP Server) The nolus.js library was extended with the introduction of an **MCP server**. This adds a structured interface for interacting with Nolus programmatically, making it easier to build integrations and external tooling. Instead of relying on fragmented access patterns, developers now have a more unified way to interact with protocol data and services. This improves developer experience and enables use cases such as automation, custom dashboards, and more advanced integrations. ## IBC Solray Development of **IBC Solray** continued actively over the past two months and remains one of the primary long-term initiatives. This period was focused on **moving the project closer to a production-ready architecture**, with work concentrated around: - Advancing token transfer logic and execution flows - Iterating on application-level logic specific to Nolus use cases - Continued restructuring of modules as the design stabilizes The current phase is no longer purely experimental. The repository shows a transition toward **finalizing core flows**, particularly around how assets move between the two ecosystems and how those flows integrate with Nolus margin positions. --- # Nolus Web App Architectural Evolution Published: 2026-03-10 URL: https://nolus.io/blog/nolus-web-app-architectural-evolution Tags: Deep Dives, Announcements Excerpt: The latest version of the Nolus web app marks a fundamental architectural evolution. ![Nolus web app architecture cover depicting a Backend-for-Frontend layer streaming live protocol state to the client](https://nolus.io/blog/assets/nolus-web-app-architectural-evolution/cover.webp) At the center of this change is the adoption of a **Backend-for-Frontend (BFF)** architecture. Rather than being a cosmetic update, this shift redefines how the application retrieves data, processes protocol state, and delivers information to users. It changes how transactions are tracked, how state updates propagate through the interface, and how the platform scales as usage grows. For users, the result is an interface that behaves less like a traditional DeFi dashboard and more like a **live client connected directly to the protocol’s evolving state**. ## Why the Architecture Needed to Evolve Nolus is not a simple swap interface. The protocol supports margin positions executed cross-chain, each operating with **fixed interest for the duration of the position** and risk mechanisms such as **partial liquidations**. Beyond positions, the application also manages Earn positions, staking, and cross-chain transaction flows. Each of these elements introduces layers of state: - live price data from the oracle - collateral and debt balances - liquidation thresholds and health metrics - wallet state - transaction lifecycle events Previously, much of this state had to be assembled directly in the frontend by coordinating multiple services and endpoints. As the product evolves and the number of users grows, that approach becomes increasingly complex. Inconsistent responses, partial reconnections, or fragmented transaction updates can lead to situations where the interface temporarily diverges from the protocol’s actual state. The new architecture removes that burden from the client. With the BFF model, a dedicated backend layer now aggregates protocol data, validates responses, and prepares structured state specifically for the web application. The frontend no longer needs to reconstruct complex state from disparate sources. Instead, it subscribes to a unified stream of authoritative data. This makes the experience more deterministic and reliable. ## Real-Time State, Without Guesswork One of the most noticeable improvements is the way information now updates in the interface. Prices, balances, margin positions, earn positions, staking updates, and transaction progress are synchronized continuously. Rather than refreshing pages or relying on static snapshots, the application remains connected to a live stream of state updates. For users managing leverage positions, this is particularly important. Collateral values, liquidation thresholds, and debt balances can change as prices move or transactions finalize. Real-time synchronization ensures that the information displayed in the interface reflects the current protocol state with greater accuracy. The web app now behaves more like a connected client than a periodically refreshed dashboard. ## Clearer Transaction Lifecycle Tracking Transactions in decentralized systems often involve multiple steps, especially when cross-chain flows are involved. In previous models, different parts of the transaction lifecycle could appear fragmented across services, creating uncertainty around whether an operation was still pending or already completed. The BFF architecture introduces centralized transaction lifecycle tracking. Status updates are coordinated by the backend layer and streamed directly to the client, allowing the interface to present clearer progress transitions as operations move from submission to confirmation. This reduces ambiguity and provides users with a more transparent view of what is happening during execution. ## Improved Stability and Failure Handling Reliability is another area where the new architecture delivers meaningful improvements. Initialization logic, connection handling, and wallet synchronization are now coordinated centrally. If a connection drops, subscriptions automatically resynchronize. When a wallet address changes, the application refreshes state in a controlled way. If initialization encounters an issue, the failure is surfaced clearly rather than leaving the interface in a partially loaded state. These changes reduce the likelihood of stale balances, inconsistent views, or the familiar “reload the page to fix it” experience that many decentralized applications still struggle with. A more stable interface ultimately translates into greater confidence when interacting with the protocol. ## Performance and Scalability The BFF model also improves performance and scalability by shifting heavy data aggregation away from the client. Instead of each user’s browser independently reconstructing derived metrics and issuing repeated RPC requests, the backend prepares optimized responses tailored to the needs of the web app. This reduces redundant network calls, improves perceived responsiveness, and allows the system to handle higher levels of activity more efficiently. As Nolus grows, this architectural foundation will help the application scale alongside it. ## A Stronger Foundation for Future Development The move to a BFF architecture is ultimately about preparing the web app for the next phase of the protocol’s growth. By separating orchestration from presentation, the new design creates a cleaner foundation for introducing additional capabilities. More advanced analytics, deeper risk metrics, and new product modules can be integrated without compounding frontend complexity. The interface itself may appear familiar, but the system beneath it is significantly more robust and structured. This upgrade aligns the web app with the complexity of Nolus’ asset-backed margin leverage model and sets the stage for continued innovation. --- # Changelog 2026.1 Published: 2026-01-27 URL: https://nolus.io/blog/2026-1-changelog Tags: Announcements, Changelog Excerpt: Development updates across Web App, ETL, Money Market, Solray and Hermes Lite, Infrastructure, and more. Over the last month, Nolus has gone through an intensive development cycle focused on core protocol systems, infrastructure, and developer tooling. Across the Nolus GitHub organization, the team shipped **772 commits in 31 days**, with nearly **193,000 lines of code changed** and a net increase of **over 40,000 lines** after substantial refactoring and cleanup. Work was deliberately concentrated across a small number of critical repositories, reflecting a focus on long-term maintainability, performance, and scalability rather than surface-level changes. The sections below highlight the most meaningful outcomes of this effort and how they translate into tangible improvements across the Nolus stack ## Web App The Nolus web app now runs entirely on **Nolus-owned, enterprise-grade infrastructure**, with no reliance on external cloud providers such as AWS or Google Cloud. This shift gives the team full control over performance, reliability, and security at the application layer. A major architectural improvement in this release is the introduction of **server-side rendering (SSR)**. As a result, initial load times and overall navigation responsiveness have improved significantly, particularly for first-time visits and lower-latency connections. On the user experience side, the update introduces: - smoother page transition animations - refined modal and popup animations - improved large-number rendering for balances, PnL, and position metrics These changes are part of an ongoing initiative to make the app feel more **fluid, responsive, and predictable**, especially during frequent interactions such as opening, managing, and repaying margin positions. In parallel, the UX has been simplified by **removing non-core complexity**. This includes deprecating flows such as multi-hop token transfers from EVM networks and other edge-case interactions that were not essential to Nolus’ core protocol offering. The result is a more focused product surface that emphasizes clarity over optional complexity. ## ETL (Indexer) The Nolus ETL system has undergone its **largest upgrade since its initial production release nearly two years ago**. It now provides: - full historical protocol data - structured and normalized storage in a PostgreSQL database - publicly accessible API endpoints Despite the significantly larger data scope, performance has improved. Thanks to enhanced caching and query optimization, most API responses are returned in **milliseconds**, while maintaining **near real-time freshness**. This upgrade lays the groundwork for: - more advanced analytics - improved dashboards and monitoring - future public and internal data tooling built on reliable historical datasets ## Money Market A long-running refactoring effort of the Nolus money market codebase is nearing completion, with finalization expected by **mid-February**. The primary goal of this initiative is **simplification and maintainability**: - reducing internal complexity - clarifying responsibilities across modules - making the system easier to reason about and extend Once completed, this refactor will significantly lower the cost of future development, enabling the team to deliver **new features and scalability improvements faster and with lower operational risk**. ## Solray and Hermes Lite Development of **IBC Solray** has progressed substantially over the past month and is now in its **final phase**. The remaining work focuses on application-level logic for: - token transfers - flows tailored specifically to Nolus protocol needs At the same time, the dedicated relayer **hermes-lite** has been heavily refactored and simplified. This effort resulted in: - nearly **40,000 lines of code removed** - approximately **one-third fewer external dependencies** The outcome is a leaner, easier-to-audit relayer that is simpler to operate and extend. Hermes-lite is now prepared for its next phase: **extending support to Solana**, alongside existing Cosmos-based workflows. At this stage, it represents one of the most streamlined and purpose-built Cosmos relayer forks in active use. ## Infrastructure Nolus now operates a **full-stack Solana infrastructure in-house**, supporting both **Solana devnet and mainnet** environments. This setup includes: - RPC nodes - Yellowstone gRPC - Metis API The team is investing heavily in hardware and software optimization to achieve: - low latency - high request throughput - robustness under sustained load Owning this infrastructure removes external bottlenecks and allows the system to be tuned specifically for Nolus’ protocol and application requirements. ## Other Notable Additions A new **centralized monitoring, alerting, and action backend** has been added to the internal software stack. This system enables the team to: - monitor infrastructure and services in real time - trigger alerts and automated actions - manage endpoints - analyze on-chain data - provide faster and more effective user support It acts as a unified control layer across infrastructure, protocol operations, and support workflows, significantly reducing response times and operational overhead. --- # Nolus Roadmap: H1 2026 Published: 2026-01-15 URL: https://nolus.io/blog/nolus-roadmap-h1-2026 Tags: Announcements, Interop Excerpt: The first half of 2026 marks a focused building phase for Nolus, not in the sense of adding features for their own sake, but in expanding ![H1 2026 Nolus roadmap cover highlighting Solana connectivity and fixed-rate overcollateralized loans](https://nolus.io/blog/assets/nolus-roadmap-h1-2026/cover.webp) The first half of 2026 marks a focused building phase for Nolus, not in the sense of adding features for their own sake, but in expanding what the protocol can do while staying aligned with the principles it was built on: trust minimization, predictable costs, and keeping user funds isolated and not reused elsewhere. ## Q1: Extending Nolus to Solana In Q1 2026, Nolus will begin connecting to Solana through a trust-minimized IBC setup built on the in-house Solray architecture. The objective is straightforward: enable Nolus to interact with Solana’s liquidity and execution environment without relying on bridges, multisigs, or custodial intermediaries. At the protocol level, this work introduces symmetric light clients on both chains. Nolus will verify Solana state directly, and Solana will verify Nolus state in return. Cross-chain instructions will only be executed when they originate from valid, consensus-verified state transitions on both networks. From a user perspective, this means actions initiated on Nolus, such as opening or closing margin positions or executing swaps, can execute natively on Solana while remaining governed by Nolus’ existing risk engine and fixed cost model. _The underlying architecture, security assumptions, and relayer design of Solray are covered in detail in this article:_ [Extending IBC to Solana with Solray](/blog/extending-ibc-to-solana-with-solray) ## Making Complexity Disappear Alongside Solana connectivity, Q1 will place significant focus on the Nolus web app. As the protocol expands across chains and products, the role of the interface is not simply to expose new functionality. It is to absorb complexity and present it coherently. The goal is to make interacting with Nolus feel fluid and predictable, even as the underlying system spans multiple chains and execution environments. Key areas of work include: - Improving performance and reducing latency across core actions - Making cross-chain execution feel continuous rather than step-based - Smoother transitions between opening, managing, and closing positions - Clearer presentation of costs and risk without overwhelming the interface The focus is not on visual polish. It is on interaction flow. As the protocol becomes more powerful, the experience should remain responsive, legible, and predictable. ## Q2: Fixed Rate Overcollateralized Loans In Q2 2026, Nolus will introduce Fixed Rate Overcollateralized Loans as a deliberate expansion beyond position-bound leverage, offering a borrowing primitive that provides immediate liquidity while preserving the same clarity around cost and risk as margin positions today. ## How Fixed Rate Loans Work With fixed rate loans, users will be able to borrow assets such as USDC against collateral like BTC, SOL, or ATOM at a fixed interest rate that does not change over the life of the loan. Unlike Nolus margin positions, where collateral and borrowed funds remain inside the position, fixed rate loans will deliver the borrowed asset directly to the user’s wallet. This allows the capital to be used freely across ecosystems and applications. Interest will accrue in cycles, consistent with how Nolus operates today, giving borrowers predictable financing costs from day one. ## Risk and Collateral Management Collateral will be held in a position-scoped account managed by the Nolus protocol. To retrieve the collateral, the loan must be repaid in full, including accrued interest. Loan parameters will be defined per market and per collateral type. These include maximum borrow LTVs and liquidation thresholds that reflect the volatility and liquidity profile of each asset. As with margin positions, risk will be managed through Nolus’ partial liquidation engine. If a loan approaches its liquidation threshold, the protocol will sell only the minimum amount of collateral required to restore the position’s health. This avoids the all-or-nothing liquidations common in many lending markets and allows positions to unwind gradually rather than being forcibly closed. ## What This Unlocks Fixed term loans are designed for users who want access to liquidity without selling their assets, or who need stablecoin liquidity while maintaining long-term exposure. They combine: - Fixed and predictable borrowing costs - Immediate, wallet-level access to capital - Partial liquidations instead of forced exits ## Final Thoughts H1 2026 is about extending Nolus without diluting its core design. Solana connectivity expands where Nolus can execute at scale. Fixed term loans expand how users can access liquidity. Improvements to the web app ensure both feel natural rather than complex. Across all of this work, the underlying goal remains unchanged: to build systems that behave predictably, remain verifiable, and stay resilient across market conditions. --- # Nolus in 2025: A Year in Review Published: 2025-12-16 Updated: 2026-08-10 URL: https://nolus.io/blog/nolus-in-2025-a-year-in-review Tags: Metrics, Announcements Excerpt: From long-only leveraged spot to two-sided asset-backed margin positions, smarter partial liquidations, and trust-minimized expansion beyond Cosmos. ![Recap of Nolus 2025 evolution into an asset-backed margin engine with MAG, Solray, and the October stress test](https://nolus.io/blog/assets/nolus-in-2025-a-year-in-review/cover.webp) _Nolus Protocol in 2025: A Year in Review_ Looking back at 2025, it was a defining year for Nolus. Not just in performance, but in architectural evolution. Over twelve months, Nolus transitioned from a successful DeFi leasing product into a full-fledged, asset-backed margin leverage protocol. The scope expanded, the risk engine matured, and the system proved itself under the most extreme market conditions crypto has ever seen. This is how Nolus evolved in 2025 and why those changes position it strongly for 2026. ## From DeFi Leasing to an Asset-Backed Margin Engine Nolus began as a DeFi leasing protocol, enabling users to acquire more spot assets with less upfront capital using fixed-interest loans and built-in risk controls. The model achieved strong product-market fit, but it had a structural limitation: it was long-only. Users could amplify upside, but could not profit from downturns, hedge exposure, or express two-sided market views. As markets matured, this limitation became increasingly apparent. In 2025, Nolus removed that ceiling. By introducing short-selling and expanding its position architecture, Nolus evolved into a two-sided, asset-backed margin leverage instrument. Users gained the ability to: - Open long and short margin positions - Hedge spot exposure - Navigate both rising and falling markets All while preserving Nolus’ core principle: **real asset ownership inside each margin position**, backed by fixed protocol interest for the position’s duration. With these upgrades, Nolus completed its transition from a single-purpose leverage tool into a structure capable of rivaling both spot and perpetual markets, without inheriting their fragility. ## Refined Trading Experience The Nolus interface was redesigned to support more informed decision-making without overwhelming users. Improvements included clearer position analytics, richer charts, and improved walkthroughs. The goal was not to gamify trading, but to make structure visible, so users understand how leverage, collateral, and risk interact. ## Advanced Risk Management Tools Stop-loss and take-profit orders were introduced, adding familiar but essential controls to margin positions. These tools allow users to define downside protection, lock in gains, and enforce discipline during volatility, while working alongside Nolus’ partial liquidation system rather than replacing it. ## Optimized Transaction Framework Fee abstraction reduced friction by allowing transaction fees to be paid in multiple supported assets instead of a single gas token. Expanded wallet support ensured smooth usage across browser-based and mobile non-custodial wallets, improving accessibility without compromising self-custody. ## AI-Infused Trading Insights Nolus introduced **Kai**, an AI-powered companion focused on situational awareness rather than prediction. Kai delivers context-aware insights, position-relevant alerts, and market summaries to help users stay oriented in fast-moving conditions. ## Market Anomaly Guard (MAG) Volatility exposes a weakness in many liquidation systems: execution at the worst possible moment. During sharp market moves, prices can temporarily diverge across venues. On-chain liquidity may lag, and DEX prices can briefly fall far below fair value. In most systems, liquidation executes immediately, often resulting in over-liquidation at irrational prices, harming users and increasing protocol risk. **Market Anomaly Guard (MAG)** is a protection mechanism designed to prevent liquidations from executing under anomalous conditions. ### How It Works - Liquidation thresholds rely on EMA pricing to filter short-lived spikes - Swap output is simulated before execution. If the expected output falls below a safety threshold, liquidation pauses - If prices recover above the trigger, liquidation is canceled By allowing liquidations to pause or cancel during temporary market dislocations, this logic avoids forced execution at irrational prices. The result is fewer unfair liquidations, less collateral destruction, and improved protocol safety. Nolus waits for conditions to normalize before executing, rather than reacting to transient volatility ## The October Stress Test In mid-October, crypto experienced the largest single-day deleveraging event in its history. Within 24 hours, nearly $20B in value was liquidated, over **1.6M accounts** experienced liquidations, and many altcoins lost **30 – 70%** of their value. This was not a routine correction. It was a system-wide stress test. During the event, roughly **81% of Nolus’ portfolio remained intact** after the crash, striking a balance between capital efficiency and risk containment. ## Why Nolus Withstood the Shock So Well Three design choices proved decisive: - **Partial liquidations** preserved user exposure - **EMA-based oracle pricing** reduced false triggers - **MAG** protected approximately **24% of Nolus’ portfolio** from unfair liquidation No bad debt. No cascading failures. No emergency intervention. ## Extending IBC to Solana With Solray While improving leverage mechanics, Nolus also invested in infrastructure. IBC has proven itself as one of the most secure interoperability standards in production. However, interoperability limited to Cosmos alone is no longer sufficient. Solana’s liquidity depth and execution environment make it a critical ecosystem to connect. IBC Solray extends IBC’s trust-minimized model to Solana by implementing IBC verification and messaging directly within a Solana program. This enables direct, consensus-backed communication between Nolus and Solana without relying on custodial bridges. With Solray, margin flows can execute natively in Solana’s high-performance, high-liquidity environment, expanding what is possible for users across both ecosystems. ## Looking Ahead to 2026 2025 was a year of transformation and validation. Nolus expanded beyond long-only leverage, refined risk controls instead of loosening them, proved resilience under extreme volatility, and laid the groundwork for trust-minimized cross-chain execution. Nolus did not avoid volatility in 2025. It learned how to navigate it intelligently. That foundation sets the stage for 2026: deeper liquidity, support for larger positions, and access to a broader user base. With integration into Solana, an ecosystem with billions in total value locked and swap efficiency comparable to leading centralized exchanges, Nolus is positioned to scale its asset-backed margin engine without compromising structure, risk discipline, or self-custody. The product is no longer preparing for that environment; it is ready to operate within it. --- # Extending IBC to Solana with Solray Published: 2025-11-25 URL: https://nolus.io/blog/extending-ibc-to-solana-with-solray Tags: Interop, Deep Dives, Announcements Excerpt: IBC has been the Cosmos ecosystem’s long-standing foundation for secure, trust-minimized interoperability. ![Conceptual visual of Solray extending IBC interoperability between Cosmos chains and Solana](https://nolus.io/blog/assets/extending-ibc-to-solana-with-solray/cover.webp) [IBC](https://ibcprotocol.dev/) has been the Cosmos ecosystem’s long-standing foundation for secure, trust-minimized interoperability. Since its launch in 2021, it has processed tens of millions of cross-chain messages without a custodial failure, establishing itself as one of the most reliable interoperability standards in production. Unlike traditional bridges that rely on multisigs or external operators, IBC uses on-chain verification: each chain maintains a light client of the other and validates block headers, proofs, and signatures before any message is accepted. This design allows independent chains to exchange verifiable state updates under the same security assumptions that protect their own consensus. IBC is the backbone of Cosmos interoperability and a proven model for trust-minimized communication between sovereign blockchains. But interoperability within Cosmos alone is no longer enough. ## Introducing IBC Solray Solray extends the IBC model to Solana. It implements IBC’s verification and messaging semantics inside a single Solana program, enabling Solana to function as a first-class participant in the IBC network. Solray establishes: - Light client on Solana that verifies messages and proofs originating from any Cosmos chain - Solana light client hosted on Cosmos networks through the standard IBC module - Channel and packet handling adapted to Solana’s account model and execution environment Together, these components create a symmetric, trust-minimized communication layer where Solana and Cosmos chains authenticate each other directly without custodial bridges, cross-chain committees, or added trust assumptions. ## Hermes-lite IBC relies on neutral relayers to transport packets. Relayers cannot modify messages, access funds, or influence verification. They simply observe events on one chain and forward the corresponding packets to another. Cosmos chains commonly use Hermes, the production-grade relayer developed and maintained by [Informal Systems](https://github.com/informalsystems/hermes). To support Solray, we are building Hermes-lite, a stripped-down fork of Hermes with a focused mandate: efficient, reliable packet relaying between Cosmos chains and Solana. Hermes-lite removes support for less common or specialized IBC functionalities, such as non-standard IBC implementations, CCV modules, ICQ modules, fee repayer logic, ICA modules, and other auxiliary tooling, so the codebase stays lightweight and operationally simple. The result is a relayer focused on what matters most for Solray: robust, trust-minimized packet forwarding between chains, while preserving full compatibility with the IBCv1 standard used across Cosmos today. ## What Solray Enables for Nolus Solray lets Nolus execute cross-chain workflows on Solana without compromising trust minimization. Actions initiated on Nolus, such as opening or closing leverage positions are verified through IBC and executed natively on Solana through programs like Jupiter Ultra. **Illustrative example:** - A user opens a long SOL leverage position using USDC collateral - Nolus calculates the borrowed amount and sends an IBC instruction to Solana - A Solray gateway program performs a USDC → SOL swap on Jupiter Ultra and holds the SOL in a position-scoped account - When the user closes the position, Nolus sends another IBC instruction, the gateway performs the reverse swap and returns funds to Nolus for settlement The workflow is non-custodial, consensus-verified by both chains, and designed to be seamless from the user’s perspective. ## What Solray Enables for Solana and the Cosmos Ecosystem Solray provides Solana with a direct, trust-minimized connection to the entire Cosmos IBC network. **Solana programs can:** - Receive IBC packets backed by on-chain light-client verification (eg, token transfers, swaps and other types of instructions) - React to authenticated state changes from external chains - Integrate Cosmos-based liquidity, data, or application flows without relying on traditional bridge infrastructure At the same time, Solray becomes available to all +120 IBC-enabled Cosmos chains. Any network can deploy the Solana Light Client and interact with Solana using the same trust-minimized guarantees that Cosmos chains rely on today **This unlocks new cross-chain applications, including:** - Native cross-chain swaps - Lending markets accessing Solana’s liquidity profile - Liquid-staking and restaking flows - Multi-chain yield and routing strategies - High-performance execution pipelines that combine Solana throughput with Cosmos composability > **Disclosure:** Solray is currently under active development and remains closed source until the implementation reaches production maturity. The repository will be open sourced once development concludes and has undergone a structured verification cycle to confirm its operational soundness and protocol conformance. --- # October 2025 Crash: How Nolus Liquidations Compared Published: 2025-11-07 Updated: 2026-08-07 URL: https://nolus.io/blog/liquidation-impacts Tags: Metrics, Explainers Excerpt: Liquidation intensity and portfolio reduction across Aave, Kamino, Hyperliquid, dYdX and Nolus during the sharpest deleveraging event to date. ![Analysis of the October 2025 crypto deleveraging event and how Nolus liquidations compared to other protocols](https://nolus.io/blog/assets/liquidation-impacts/cover.webp) The catalyst came late on October 10, when U.S. President Donald Trump announced 100% tariffs on all Chinese imports, triggering panic across global markets. With traditional financial markets closed for the weekend, the 24/7 crypto ecosystem bore the entire shock. - Bitcoin plunged over 14%, briefly dipping below $110,000 - Ether fell around 12%, while numerous altcoins crashed 30 – 70% within hours - Over 1.6 million trading accounts were liquidated The event exposed a key vulnerability: hidden leverage. Aggregate open interest was near all-time highs going into the weekend, meaning even a modest macro shock cascaded into a violent chain of automated liquidations. This was not an isolated dip but a system-wide stress test that revealed how different DeFi and CeFi platforms manage risk under extreme volatility. ## Liquidation Intensity Liquidation Intensity represents the _total liquidation power_ of an event, meaning the value of liquidations relative to a protocol’s total active portfolio value. - For perpetual markets, this compares liquidations to total open interest - For overcollateralized lenders, it’s relative to borrowed value - For margin platforms like Nolus, it’s relative to the value of open margin positions This metric normalizes liquidation impact across different market models, providing a cleaner comparison of systemic pressure. ![Chart comparing liquidation intensity across Aave, Kamino, Hyperliquid, dYdX and Nolus during the October 2025 crash](https://nolus.io/blog/assets/liquidation-impacts/figure-1.webp) **Overcollateralized lenders** such as **Aave** and **Kamino** barely flinched. Aave saw only **0.9%** of its **$21.5B loan book** liquidated (around $190M), and Kamino reported about **1.1%** ($20M on a $1.8B portfolio). Their conservative loan-to-value ratios and excess collateral buffers acted as natural shock absorbers. By contrast, **perpetual markets** endured the most severe stress. **Hyperliquid**, one of the largest on-chain perpetual exchanges, recorded roughly **$12.8B in liquidations** over the 24-hour window against about **$13.8B in open interest** prior to the crash. At first glance, that implies an extreme **90% liquidation-to-open-interest ratio**, but this interpretation misses a key dynamic: **open interest is constantly replenished**. As older positions were forcibly closed, **new ones were opened** in rapid succession during the volatility spike. Post-event, Hyperliquid’s open interest stabilized near **$6.4B**, showing not a collapse but a **massive churn and rebalancing** of leverage within its ecosystem. Other decentralized perp venues like **dYdX** also experienced elevated stress, with about **14% of its $168M open interest** liquidated. Significant, but far more contained. In comparison, **Nolus** recorded **$275K in liquidations** out of **$2.61M** in active margin loans equating to **10.5% liquidation intensity**. This represents **a controlled deleveraging process** rather than the cascading wipeouts seen in high-leverage environments. ## Portfolio Reduction While liquidation intensity measures pressure, **Portfolio Reduction** shows how much total exposure a protocol lost from before to after the crash, through both liquidations and voluntary closures. ![Chart of portfolio reduction by protocol type: lenders at 8-10%, Nolus at 23%, perpetual venues at 40-55%](https://nolus.io/blog/assets/liquidation-impacts/figure-2.webp) - **Overcollateralized lenders**: ~8 – 10% portfolio reduction.  Most users either topped up collateral or weathered the volatility without issue - **Perpetual markets**: ~40 – 55% portfolio reduction.  Large swaths of open interest vanished as overextended traders were flushed out. - **Nolus**: **~23.4% contraction** (from $2.61M to ~$2.00M).  Roughly three-quarters of Nolus’s portfolio remained intact, boasting an impressive retention rate given the extreme market stress. This underscores Nolus’s **resilience and measured risk calibration**: higher leverage than lenders, but with a much softer landing than perpetual exchanges. ## Value Preserved To quantify how _efficiently_ protocols managed deleveraging, we define the **Liquidation Efficiency Ratio (LER)** ![Liquidation Efficiency Ratio formula used to quantify how efficiently protocols managed deleveraging](https://nolus.io/blog/assets/liquidation-impacts/figure-3.webp) Nolus’s ratio highlights its ability to **contain volatility with limited collateral destruction**, confirming that its liquidation thresholds and price protection mechanisms are well-calibrated. ## Why Nolus Withstood the Shock Beyond the metrics, three **design features** enabled Nolus to maintain composure during the crash: 1. **Partial Liquidations (5.6% of positions)** Instead of liquidating entire accounts, Nolus liquidated only the riskiest portion of positions. This allowed most users to retain partial exposure and recover after prices stabilized. 2. **EMA-Based Oracle Pricing** The Nolus oracle uses an **Exponential Moving Average (EMA)** for pricing, smoothing out short-term volatility. This prevented premature or “false” liquidations triggered by flash wicks and on-chain liquidity spikes. 3. **Market Anomaly Guard (MAG)** During sudden on-chain liquidity drains, MAG temporarily halts liquidation execution when price inputs deviate abnormally from oracle medians. In the October crash, this mechanism **protected roughly $610K (~23% of all active positions)** from unfair liquidations. [Market Anomaly Guard: Fairer Margin Liquidations](/blog/mag-safeguarding-your-margin-position-in-volatile-markets) Together, these mechanisms created a **multi-layered defense system** minimizing liquidation power, filtering short-lived volatility, and ensuring users’ capital was protected even during systemic shocks. The **October 10, 2025 flash crash** was more than a market panic. It was a once-in-a-cycle stress test for every leverage architecture in crypto. - **Overcollateralized lenders** demonstrated impeccable safety but limited capital efficiency. - **Perpetual markets** showcased extreme efficiency at the cost of extreme fragility. - **Nolus** struck a rare balance between the two: offering meaningful leverage and yield opportunities, while avoiding systemic breakdown through thoughtful risk design. With **no bad debt**, **contained liquidation power**, and **advanced safeguards** like EMA-based smoothing and Market Anomaly Guard (MAG), **Nolus proved that leverage can be efficient without being reckless**. As markets recalibrate post-crash, Nolus emerges validated, not for avoiding volatility, but for mastering how to **navigate it intelligently**. **_Sources:_** - CoinDesk: _“‘_[_Largest Ever’ Crypto Liquidation Event Wipes Out 6,300 Wallets on Hyperliquid_](https://www.coindesk.com/markets/2025/10/11/largest-ever-crypto-liquidation-event-wipes-out-6-300-wallets-on-hyperliquid)_”_ - Bitget News: _“The largest liquidation in crypto history:_ [_Hyperliquid… hardest hit_](https://www.bitget.com/news/detail/12560605010983)_.”_ - ChainUp Blog: _“_[_October 2025 Crypto Crash: A Necessary Deleveraging and Market Reset_](https://www.chainup.com/blog/crypto-crash-october-2025/#:~:text=The%20October%202025%20crypto%20crash,before%20staging%20partial%20recoveries)_”_ - CoinDesk: _“_[_AAVE Sees 64% Flash Crash as DeFi Protocol Endures ‘Largest Stress Test_](https://www.coindesk.com/markets/2025/10/11/aave-sees-64-flash-crash-as-defi-protocol-endures-largest-stress-test)_’”_ - Kamino Finance Governance: _“_[_Risk Event Analysis: 10th of October 2025_](https://gov.kamino.finance/t/kamino-lend-risk-event-analysis-10th-of-october-2025/847)_”_ - Nolus Official Stats: [_Lending Stats and Metrics_](https://app.nolus.io/stats) - Aavescan: [_Aave V3 Ethereum market data_](https://aavescan.com/ethereum-v3/aave) _(loan totals & liquidations)_ - Hyperliquid Stats: [_Hyperliquid exchange stats_](https://stats.hyperliquid.xyz/) _(OI and liquidations on 10 – 11 Oct 2025)_ - Datalenses (dYdX): [_dYdX chain trading volume and liquidation data_](https://www.datalenses.zone/chain/dydx/trading_volume) _(Oct 2025)_ - DeFiLlama: [_Kamino Borrowed TVL charts_](https://defillama.com/protocol/borrowed/kamino) _(Sept – Oct 2025)_ --- # Changelog 2025.9 Published: 2025-09-25 URL: https://nolus.io/blog/2025-9-changelog Tags: Announcements, Changelog Excerpt: Development updates across Money Market Updates v0.8.17, Closure of Neutron axlUSDC Long Market, Blockchain Data & Indexing (ETL) v3.14.2, Web App Enhancements, and Project X → IBC-Solray. The past month has brought significant updates across the Nolus. With enhancements at the protocol, data, and application layers, these improvements have strengthened performance, refined user experience, and aligned the platform with long-term development goals. ## Money Market Updates v0.8.17 The latest Money Market release has delivered key refinements to protocol functionality. - **Code Refactor**: The deprecated _Paid_ state has been fully removed, accompanied by a comprehensive code clean-up to simplify architecture and support future development. - **Reserve Recovery**: A mechanism has been introduced to automatically recover excess funds from reserve contract instances when inactive protocols are decommissioned. ## Closure of Neutron axlUSDC Long Market The Neutron axlUSDC long market has been retired. Following the introduction of native USDC on Nolus, the market had seen declining usage and was deprecated from the interface. Its closure has followed a structured process designed to safeguard user funds and streamline the system: 1. **Automatic Return of Deposits** – Approximately 1.53k axlUSDC has been distributed back to lenders, ensuring no capital remained stranded. 2. **Market Retirement** – After settlement, the market has been fully closed, removing an underutilized component and simplifying the overall protocol design. ## Blockchain Data & Indexing (ETL) v3.14.2 The Nolus blockchain indexer has been upgraded with additional database fields, enabling richer queries and improved access to historical data. Users have gained the ability to export well-structured records of taxable events, enhancing compliance and reporting capabilities. ## Web App Enhancements A number of updates have improved the functionality and usability of the Nolus web application: - **Tax-Ready Exports**: Historical position data can now be exported in CSV format, structured for seamless integration with major tax reporting platforms such as Koinly. - **Mobile Wallet Support**: WalletConnect integration has enabled Keplr and Leap to connect directly from preferred mobile browsers. Alongside this, extensive UI optimizations have improved navigation and responsiveness on mobile devices. - **Staking Improvements**: A new one-click option has been introduced for restaking assets from jailed validators, simplifying staking management and ensuring uninterrupted participation. ## Project X → IBC-Solray The initiative previously referred to as _Project X_ has been formally named **IBC-Solray**. Development has advanced steadily, and the project remains the team’s primary focus for the months ahead. --- # Project X Unlocking Cross-Chain Interoperability for Nolus Published: 2025-08-22 URL: https://nolus.io/blog/project-x-unlocking-cross-chain-interoperability-for-nolus Tags: Interop, Deep Dives Excerpt: For Nolus, interoperability has always been more than a buzzword, it’s the backbone of how our Money Market works. ![Project X cover visualising cross-chain interoperability between Nolus, Cosmos IBC and non-Cosmos liquidity networks](https://nolus.io/blog/assets/project-x-unlocking-cross-chain-interoperability-for-nolus/cover.webp) For Nolus, interoperability has always been more than a buzzword, it’s the backbone of how our [Money Market](https://hub.nolus.io/en/articles/9679621-supported-networks-assets) works. Built on the Cosmos SDK and powered by the [Inter-Blockchain Communication (IBC) protocol](https://tutorials.cosmos.network/academy/3-ibc/1-what-is-ibc.html), Nolus is able to source liquidity and execute leveraged positions across multiple connected networks. At the same time, its core logic runs on an isolated, semi-permissioned chain, ensuring that security and operational integrity are never compromised. But there’s a catch. The IBC framework in its current form has important limitations, especially when it comes to Interchain Accounts (ICA). These restrictions not only increase technical overhead but also prevent Nolus from tapping into broader liquidity hubs outside of Cosmos. That’s where **Project X** comes in: a long-term research initiative, now moving into active development, designed to reimagine Nolus’s cross-chain scalability and bring truly seamless interoperability to our users. ## Why IBC and ICA Feel Cumbersome To understand why Project X is needed, let’s look at how Interchain Accounts work today. Imagine you want to control a bank account at another branch. Every time you open a new account, you’re required to build a brand-new private tunnel to that branch, digging it from scratch, complete with doors, locks, and security guards. That’s essentially what happens with ICA in [IBC v1](https://github.com/cosmos/ibc/tree/main/spec/core). Each new ICA requires an entirely new **channel**, which means going through the full “handshake” process: first establishing a secure connection, then setting up a dedicated channel, and finally provisioning the account. Multiply that by dozens or hundreds of accounts, and suddenly you’re managing a sprawling maze of tunnels which are costly to maintain and prone to operational complexity. For Nolus, which depends on dynamic cross-chain interactions to source liquidity and execute positions, this is like trying to run a modern financial network on outdated infrastructure. It works, but it’s slow, rigid, and difficult to scale. ## The Promise of IBC v2 [IBC v2](https://ibcprotocol.dev/blog/ibc-v2-announcement) was introduced to solve some of these inefficiencies, and it does so in important ways. Instead of building a new tunnel for every account, v2 lets multiple accounts share the same “superhighway.” A single connection can now handle multiple applications, reducing duplication and complexity. Think of it as moving from a system where every passenger had to build their own road to the airport, to one where everyone shares a modern highway with multiple lanes. Suddenly, the infrastructure makes sense again. IBC v2 also simplifies the architecture itself. By streamlining how clients, routers, and applications interact, it makes it easier to add upgrades, route traffic, and integrate new networks. And, importantly, v2 is designed with compatibility in mind. It doesn’t lock developers into Cosmos-only environments but instead opens the door to other ecosystems. However, while the blueprint is there, the tools are not. Light clients for non-Cosmos chains are still underdeveloped, and popular relayer software (the “postal service” that carries messages between chains) hasn’t fully caught up. In other words, the highway exists on paper, but the vehicles and traffic lights aren’t ready yet. ## The Gap Even with IBC v2, Nolus faces two big challenges. First, the lack of mature [light clients](https://tutorials.cosmos.network/academy/3-ibc/5-light-client-dev.html) outside Cosmos means that connecting to ecosystems isn’t yet seamless. Second, relayer infrastructure, which is the middleware that keeps cross-chain communication flowing, isn’t fully adapted to the new v2 model. This leaves Nolus at a crossroads. On one hand, sticking to the status quo means limiting integrations to Cosmos-based liquidity hubs. On the other hand, waiting for the ecosystem to develop organically risks missing out on strategic opportunities in the broader crypto landscape. ## Enter Project X Project X is Nolus’s answer to this gap. By forking and extending IBC v2, we’re building the missing components ourselves and tailoring them to the unique needs of the protocol. That includes: - **Multiplexing ICA Accounts:** Instead of creating a new channel for each account, Nolus will be able to route multiple accounts through a single channel, cutting down on complexity and speeding up execution. - **Custom Light Clients:** We’re exploring new light client models that will allow Nolus to connect securely to non-Cosmos ecosystems in a fully trust-minimized way without relying on multisigs, admin keys, or other centralized points of failure. - **Enhanced Relayer Support:** By adapting relayer software, Nolus can ensure that once the connections exist, they remain reliable, efficient, and easy to use. The result is an infrastructure that doesn’t just work within Cosmos, but across the broader crypto landscape. For users, this means faster onboarding of new integrations, access to more liquidity hubs, and a smoother experience when interacting with Nolus. ## Why This Matters Let’s put this into perspective. Today, if Nolus wanted to let users open a leveraged position using liquidity from Solana, the technical hurdles would be enormous. Each new account would need its own IBC channel, a compatible light client, and relayer support, none of which are readily available. With Project X, Nolus could bypass these bottlenecks. Imagine opening a leveraged SOL position on Nolus, but instead of sourcing liquidity only from Cosmos DEXs, the protocol could also tap into pools on Solana directly. To the end user, it feels no different than choosing between Jupiter or Osmosis liquidity, the complexity is abstracted away. That’s the true promise of Project X: making cross-chain financial interactions as simple and intuitive as picking an app on your phone. _The plan for that Solana connection is laid out in the H1 2026 roadmap:_ [Nolus Roadmap: H1 2026](/blog/nolus-roadmap-h1-2026) ## Building for the Future The shift from IBC v1 to IBC v2 represents a generational leap for cross-chain communication. But without the missing infrastructure it remains an unfinished story. Project X is Nolus’s commitment to finishing that story, bridging Cosmos with the wider crypto universe, and ensuring that Nolus’s Money Market remains at the forefront of interoperability. In the end, it’s not just about solving technical inefficiencies. It’s about empowering users with broader access, deeper liquidity, and a frictionless experience across ecosystems. With Project X, Nolus is laying the foundation for a new era of truly borderless DeFi. --- # Changelog 2025.8 Published: 2025-08-13 URL: https://nolus.io/blog/2025-8-changelog Tags: Announcements, Changelog Excerpt: Development updates across Money Market v0.8.16 – Production Release Next Week, Web Application Improvements, Blockchain Data & Indexing, Nolus.js SDK, Blockchain Infrastructure, and more. The last two months have been among the most substantial development cycles in recent memory, bringing deep upgrades to the Money Market smart contracts, major improvements in our web app’s user experience, significant infrastructure optimizations, and renewed progress on long-term projects. ## Money Market v0.8.16 – Production Release Next Week The upcoming Money Market v0.8.16 release, scheduled for deployment to the production blockchain next week, delivers a powerful combination of new features, stability improvements, and behind-the-scenes architectural refinements. On the functional side, users and integrators will benefit from configurable slippage tolerance in scripts, more efficient DEX operations with the ability to transfer out all coins in a single transaction, and improved lifecycle management for deposits and margin positions — including the capability to close all deposits at once or close only protocols with no active positions. The Lpp module now implements pool balance caching for the Lpn currency, reducing computational overhead, while access control has been streamlined through a new Permission abstraction that centralizes authorization checks. Under the hood, the update addresses several reliability and performance issues, including ensuring that DEX transfer operations wait for a tracked number of acknowledgements, improving pending transfer tracking during deposit closures, and enhancing cleanup logic when margin positions are removed so related customer data is also purged. Numerous linting issues have been resolved, unused code paths removed, and contract logic refactored for clarity and maintainability. Key optimizations include reducing dependencies, simplifying liquidity pool initialization, and explicitly saving deposit and loan changes only when required to optimize gas costs. Testing coverage has expanded significantly, with new integration tests for deposit closures and migration scenarios, refinements to event ordering for consistent outputs, and improvements to mocked bank modules used in simulations. Collectively, these changes make the Money Market more efficient, maintainable, and resilient — ready to handle increased on-chain activity with confidence. ## Web Application Improvements The web app now includes browser-based push notifications to keep users informed about their margin positions in real time. Notifications will trigger if the price of margined assets falls to the point where the loan-to-value ratio exceeds critical thresholds (L2%, L3%, and L4%) without an authorized repayment token present in the connected wallet. In addition, users will be alerted in the event of partial or full liquidations once LTV surpasses the highest thresholds. We have also completed the migration to a smart contract topology where supported asset details are queried directly on-chain via the admin contract, increasing transparency and accuracy. These updates are complemented by performance optimizations and a wide range of bug fixes for a smoother overall experience. ## Blockchain Data & Indexing (ETL) Our blockchain indexer has been enhanced with a built-in web server to power the new push notification system, while PgBouncer integration improves scalability and data distribution across services. Behind the scenes, we’ve delivered major performance improvements to data retention handling and gRPC query mechanics, significantly speeding up access to on-chain data for both internal systems and external integrations. ## Nolus.js SDK The TypeScript SDK for interacting with the Nolus Protocol has seen targeted enhancements and refinements, now accompanied by a full set of technical documentation for developers. The updated docs can be found at: 🔗 [https://nolus-protocol.github.io/nolus.js/](https://nolus-protocol.github.io/nolus.js/) ## Blockchain Infrastructure Our node operations have reached a new level of automation and reliability. All 29 Nolus-operated blockchain nodes now run on a Rust-based management system with built-in health monitoring, Hermes relayer management through a dedicated web interface, and automated pruning powered by **Fast CosmPruner**. Fast CosmPruner is an in house build, high-performance, Rust-based pruning tool specifically optimized for GoLevelDB. It delivers three to five times faster pruning compared to the standard `cosmprund`, significantly reducing storage overhead and improving node performance. ## Project X Finally, we are excited to share that **Project X** — our long-standing research initiative into scaling Nolus’ cross-chain capabilities — has moved out of the research phase and into active development. Originally conceptualized in 2024, Project X aims to bring a new era of scalability and interoperability to the Nolus Money Market, opening the door to advanced cross-chain use cases and broader ecosystems support --- # DeFi Leverage Compared: Fixed Rates vs Funding Published: 2025-07-30 Updated: 2026-08-07 URL: https://nolus.io/blog/beyond-the-leverage-multiple Tags: Strategies, Explainers Excerpt: A structural comparison of leveraged DeFi protocols: interest rate design, liquidation behavior, and the fees that quietly decide realized returns. ![Conceptual visual of leveraged DeFi trading across margin, perpetual and hybrid models](https://nolus.io/blog/assets/beyond-the-leverage-multiple/cover.webp) Leveraged exposure has become a cornerstone of modern DeFi strategy, but the mechanisms enabling it differ greatly in structure and sophistication. From margin lending to perpetual futures and hybrid models, today’s protocols offer varying trade-offs between capital efficiency, liquidation dynamics, and cost predictability. This analysis explores a curated selection of DeFi protocols offering leveraged exposure to BTC and ETH, examining how they differ in interest mechanics, liquidation behavior, and fee transparency. The goal is not to promote a specific platform, but to provide the structural and economic context traders need to navigate leverage decisions with greater clarity and precision. ## Core Variables That Define Leverage Dynamics Before assessing protocol-level performance, it’s essential to understand the foundational components that shape leverage outcomes: **Interest Rate Structure:** Fixed rates bring cost stability; dynamic funding adjusts to market sentiment. Each appeals to distinct strategies and risk appetites. **Liquidation Behavior:** Protocols vary in how aggressively they liquidate positions. Some opt for full liquidation upon breach, others unwind incrementally to preserve capital. **Fee Exposure:** Beyond headline rates, users contend with opening costs, swap fees, and liquidation penalties. These operational frictions impact realized returns. **Volatility Cushion:** While Nolus enforces a 2.5x leverage cap, most perpetuals platforms offer significantly higher leverage ceilings. The key distinction lies in the liquidation thresholds, which determine how much adverse price movement a position can endure before being forcefully closed. ## Protocol Breakdown ### Gearbox Gearbox implements leverage through modular credit accounts, enabling users to allocate borrowed capital across a range of integrated DeFi protocols. This design facilitates composable strategies while minimizing liquidation risk through a health factor model. **Advantages:** - Partial liquidation based on health factor, avoiding full wipeout - Transparent, itemized fee structure - Interest rates dynamically adjust based on pool utilization **Trade-offs:** - Steeper learning curve for new users - Liquidation premiums can reduce effective capital efficiency ### Nolus A fixed-interest, asset-backed leverage protocol that avoids full liquidation in favor of partial unwinding. It targets users who value capital preservation and predictable borrowing costs, while offering the ability to convert leveraged exposure into spot holdings upon debt repayment. **Advantages:** - Stability via fixed-rate borrowing - Partial liquidation safeguards capital - Positions can be settled into spot holdings after loan repayment **Trade-offs:** - Less competitive in low-interest rate environments - Limited market coverage and leverage ceiling ### Hyperliquid An execution-focused perpetuals platform optimized for short-term tactical trading. Hyperliquid emphasizes performance and speed, catering to users comfortable with active risk management and dynamic funding structures. **Advantages:** - High execution efficiency with low latency and minimal slippage - Competitive and transparent funding rates **Trade-offs:** - Full liquidation at strict margin thresholds - Best suited for experienced, hands-on traders ### dYdX A flagship platform in the perpetuals space, dYdX is engineered for high-frequency and institutional-grade users. It combines deep liquidity with competitive funding, suited for sophisticated trading strategies. **Advantages:** - Low and historically stable funding rates - High-performance infrastructure and mature UX **Trade-offs:** - Positions are subject to full liquidation - Variable funding can complicate longer-horizon trade planning ### GMX A decentralized perpetual protocol relying on oracle-based pricing and pooled counterparty liquidity. GMX offers a user-friendly experience with strong market depth but comes at the cost of elevated funding. **Advantages:** - Robust ecosystem adoption and liquidity depth - Streamlined user experience **Trade-offs:** - Consistently high average funding costs - Exposed to full liquidation risks during volatility ### Elys An emerging perpetual venue offering multi-asset exposure with a lean fee model. While still maturing, Elys provides traders with a straightforward, accessible framework for leveraged trading. **Advantages:** - Simple, flat fee structure - Support for a diverse range of assets **Trade-offs:** - Lack of transparent historical funding data - Full liquidation risk with limited tooling for position management ## Long Exposure Comparison ![Comparison table of long exposure funding, fees and liquidation thresholds across DeFi leverage protocols](https://nolus.io/blog/assets/beyond-the-leverage-multiple/figure-1.webp) ![Chart comparing long-position cost metrics for Nolus, Gearbox, Hyperliquid, dYdX, GMX, Mars and Elys](https://nolus.io/blog/assets/beyond-the-leverage-multiple/figure-2.webp) ## Short Exposure Comparison ![Comparison table of short exposure funding, fees and liquidation thresholds across DeFi leverage protocols](https://nolus.io/blog/assets/beyond-the-leverage-multiple/figure-3.webp) ![Chart comparing short-position cost metrics for Nolus, Gearbox, Hyperliquid, dYdX, GMX, Mars and Elys](https://nolus.io/blog/assets/beyond-the-leverage-multiple/figure-4.webp) No singular protocol is structurally optimal across all use cases. Each design reflects a particular philosophy around capital efficiency, liquidation risk, and user experience. Traders must calibrate their approach by aligning protocol features with their strategic intent. From predictable cost structures to high-throughput trading environments, the landscape accommodates a broad range of preferences. But nuance matters, particularly when it comes to liquidation logic, funding mechanisms, and composability. The comparative framework presented here aims to expose those layers, empowering more intentional positioning within the DeFi leverage ecosystem. For the concrete ways traders express those positions on Nolus, see the [leveraged long, short and delta-neutral strategies on Nolus Protocol](/blog/strategies-on-nolus-protocol-v2). ## Methodology & Sources The comparison tables in this article were compiled using publicly available dashboards, on-chain data explorers, and official documentation. Funding rate averages represent approximate values based on trailing 3 – 12 month periods where available. Fees include only those stated explicitly in protocol interfaces or documentation and may not reflect hidden costs such as slippage, price impact, or protocol-specific mechanics like liquidation premiums. Liquidation thresholds refer to the estimated percentage price movement required to trigger a full liquidation event at 2.5x leverage, where applicable. Protocols with partial liquidation or health factor-based unwinding are noted. This reference framework is meant to support strategic evaluation, not replace direct protocol research. **Data Sources:** [Gearbox Dune Dashboard](https://dune.com/desnakeee/borrowing-cost-comparison) | [Hyperliquid Stats](https://stats.hyperliquid.xyz/) | [GMX Funding Rates](https://dune.com/queries/4562744/7609789) | [dYdX Report](https://app.mode.com/dydx_eng/reports/40e033c6eb8d?secret_key=f830a729d9a763c938692b9e) | [Elys Perpetuals](https://app.elys.network/perpetual) | [Nolus Protocol Stats](https://app.nolus.io/stats) --- # Changelog 2025.6 Published: 2025-06-18 URL: https://nolus.io/blog/2025-6-changelog Tags: Announcements, Changelog Excerpt: Development updates across Money Market, WebApp, and ETL. ## Money Market The v0.8.9 update introduces the Market Anomaly Guard (MAG)—a production-ready enhancement to Nolus’ liquidation framework. MAG safeguards users against unfair liquidations by identifying extreme price anomalies on DEXs and temporarily pausing liquidation processes when swap outputs fall below a defined safety threshold. This mechanism ensures that positions are only liquidated under fair market conditions, offering users a critical buffer during periods of volatility. In addition to MAG, this release includes margin admin validation, internal storage upgrades, and multiple bug fixes and refactors that enhance system robustness and maintainability. Notably, a new liquidity pool in $OSMO has also been instantiated, enabling users to open short positions against the asset through Nolus’ margin trading module Following the upgrade to **Nolus Core v0.8.0**, which introduced support for **ibc-go v10 (IBC v2)**, several performance and UX enhancements are now undergoing testing. Most notably, these improvements include a **30% reduction in the time required to open a margin position** and the **complete removal of the “collect” state**. With this change, positions that have fully repaid their debt will automatically close, and remaining funds will be credited directly to the user’s wallet—streamlining the user experience and improving protocol efficiency ## WebApp Work on the integration of **WalletConnect**—aimed at enabling seamless mobile wallet connectivity—is currently on hold due to a bug identified in the WalletConnect library. Once the issue is resolved upstream, development will resume, bringing the full mobile experience and on-the-go access to Nolus’ DeFi tools closer to release A more streamlined architecture is also under active development to improve how the app consumes and configures supported protocols within the money market. This update will shift all references for available protocols, networks, assets, decimal precision, and related metadata to the **admin contract**—eliminating hardcoded definitions across the frontend. Once complete, this approach will significantly reduce maintenance overhead, ensure greater consistency, and accelerate the onboarding of new listings across supported environments ## ETL (Blockchain Indexer) A full revamp of the Nolus ETL (Extract, Transform, Load) module is currently underway to overcome existing scalability constraints and support more robust data delivery. The new architecture is designed to serve structured, query-ready datasets directly to consumer frontends—including the Nolus web app, DeFiLlama, third-party aggregators, and integrated protocols. This will enable faster access to accurate, real-time protocol metrics and improve overall interoperability --- # Market Anomaly Guard: Fairer Margin Liquidations Published: 2025-06-18 Updated: 2026-08-07 URL: https://nolus.io/blog/mag-safeguarding-your-margin-position-in-volatile-markets Tags: Deep Dives, Strategies Excerpt: How Market Anomaly Guard pauses, and sometimes cancels, a liquidation when a DEX quote drops far below the oracle price during volatile markets. ![Introduction to Market Anomaly Guard, the Nolus safeguard that pauses liquidations during anomalous DEX pricing](https://nolus.io/blog/assets/mag-safeguarding-your-margin-position-in-volatile-markets/cover.webp) Volatility is a double-edged sword in crypto: it creates opportunities for big gains, but also for sudden losses. At Nolus, we believe in maximizing opportunity while minimizing unnecessary risk. That’s why we’re introducing **Market Anomaly Guard (MAG):** a smart safeguard designed to shield users from unfair liquidations triggered by erratic pricing during market chaos ## The Problem: Swapping During Market Chaos When crypto markets become volatile, asset prices can temporarily diverge across exchanges and liquidity pools. Arbitrage usually corrects these gaps, but not instantly. For a brief window, a DEX might display a price **significantly below the market average**. Now imagine this: - A user’s **leverage position** on Nolus hits the liquidation threshold. - The protocol attempts a **partial liquidation** by swapping a fraction of the collateral on a DEX. - But that DEX shows a **temporarily depressed price:** far lower than Nolus’ oracle-based EMA (Exponential Moving Average). This can lead to **over-liquidation**, where more of the user’s position is sold than truly necessary, causing unfair loss for the user and potential **bad debt** for the protocol. ## The Solution: Market Anomaly Guard (MAG) To prevent such scenarios, we developed MAG, a price-protective algorithm that smartly evaluates liquidation risk _before_ executing a swap. ## How It Works ### 1. Triggering a Liquidation When a position crosses the liquidation threshold (determined by an EMA to avoid reacting to momentary dips), liquidation is **attempted**. ### 2. Minimum Output Requirement Before executing the swap, the protocol **simulates the trade**. If the expected output (i.e., what the user would get post-swap) falls **below a defined safety threshold**, the liquidation is **paused**. ### 3. Waiting for Better Prices MAG then enters a watchful state: - If **prices recover** and the output improves → the liquidation **resumes** and finalizes. - But here’s the game-changing part:  **If the asset price rises back above the liquidation trigger, the liquidation is fully canceled!** ## Why This Matters This cancellation logic is a major innovation. ✅ **It gives users a second chance**: Instead of liquidating at a temporarily bad price, MAG buys time for the market to correct itself.  ✅ **It favors users in volatile “knife-drop” scenarios**: Sudden sharp drops often bounce quickly, MAG is designed for that.  ✅ **It reduces unnecessary liquidation churn**: Less damage to user portfolios, fewer penalties, and a smoother trading experience.  ✅ **It protects the protocol**: By avoiding poorly-priced swaps that could lead to protocol losses. ## A Real-World Analogy Think of MAG like a **smart auto-sell filter with built-in patience**. Most protocols act like panic sellers: _“Price is low? Sell now!”_ MAG instead asks: “Is this really the best price we can get right now?”  If the answer is no, it **waits**. And if prices bounce? 💥 **Your liquidation is canceled. Your position survives.** That’s not just liquidation management. That’s **user-aligned, intelligent DeFi.** ## Why Nolus Is Different Unlike rigid protocols that: - Use **spot price only** - Liquidate **immediately and fully** - Offer **no protection once triggered** Nolus applies: ✅ **EMA smoothing** to avoid false liquidation triggers ✅ **Swap output simulation** before execution ✅ **Liquidation cancellation** if market recovery occurs This creates a **dynamic, fair, and user-centric** liquidation mechanism With **Market Anomaly Guard**, Nolus redefines how liquidations should work. Instead of rushing to sell at the first sign of weakness, it _waits_, _evaluates_, and **gives your position a second life** when possible. This is how Nolus turns volatility from a threat into a survivable event for both users and the protocol **Stay smart. Stay safe. Stay on Nolus** --- # Changelog 2025.4 Published: 2025-05-14 URL: https://nolus.io/blog/2025-4-changelog Tags: Announcements, Changelog Excerpt: Development updates across Money Market, Nolus Core Pre-Release – v0.8.0, and WebApp Enhancements. ## Money Market The Nolus Money Market continues to expand its asset coverage and user incentives with several key updates this month. We’ve added support for long positions on **$dNTRN** (via Astroport on Neutron), as well as **$BABY**, **$NIL**, and **$XION** (available through Osmosis). These additions offer users broader exposure across ecosystems while benefiting from Nolus’ signature leverage features. To encourage participation and experimentation with these assets, we’ve also launched a **limited-time incentive**: users can open **interest-free long positions** on **$BTC** and **$dNTRN** through **July 1st**. This allows for strategic entry points without the burden of protocol interest, giving users more flexibility in managing capital. ## Nolus Core Pre-Release – v0.8.0 The upcoming **v0.8.0** update to Nolus Core is now in **testnet** and will be deployed to mainnet soon. This release includes sweeping improvements across protocol logic, dependencies, and developer tooling. Key **bug fixes** include updated linting rules, a transition to Cosmos SDK v0.53, migration to the latest Nolus-specific SDK fork, and full integration of the v0.8.0 upgrade handler. We’ve also introduced new unit tests to bolster protocol stability and regression coverage. On the **maintenance and chore** side, we’ve removed the deprecated `x/crisis` module, bumped `wasmvm` to v2.2.3, upgraded to `wasmd` v0.54, and initiated support for `ibc-go` v10. While Transfer v2 support is not yet active, foundational work has been laid. We’ve also made initial efforts to reduce block time by 0.5s for faster transaction finality, alongside internal script refinements and dependency patching. This release includes substantial commits related to IBC improvements, SDK upgrades with unordered transaction support, and cleanup of non-deterministic checks—further aligning the core with modern Cosmos SDK development best practices. ## WebApp Enhancements A fresh wave of user experience and performance upgrades has landed on the Nolus WebApp. At the forefront is the integration of **WalletConnect**, currently in testing. This addition allows users to seamlessly connect mobile wallets and interact with Nolus on the go—bringing powerful DeFi tools to your fingertips, no matter where you are. We’ve also introduced **stop-loss** and **take-profit records** to the **historical data view**, giving users richer context and better visibility into their position outcomes over time. The **position close** and **repay popups** have been fully redesigned for cleaner, more intuitive interactions, while **localization support has expanded to 7 languages**—with more translations on the way. Finally, the app has undergone multiple bug fixes and general performance optimizations to ensure a smoother, more reliable experience across all user journeys. --- # How Nolus Keeps USDC Yields Above 10% APY Mark Published: 2025-04-16 URL: https://nolus.io/blog/how-nolus-keeps-usdc-yields-above-10-apy-mark Tags: Tokenomics, Strategies Excerpt: USDC yields on Nolus have captured attention with their consistency and competitiveness, often ranging from 10% to 16% APY. ![Conceptual visual of sustainable double-digit USDC yields generated on Nolus](https://nolus.io/blog/assets/how-nolus-keeps-usdc-yields-above-10-apy-mark/cover.webp) ## Yield Powered by Real Economic Activity At the core of Nolus’ high USDC yields is genuine borrower demand. The platform allows users to open margin leverage positions, both long and short. Borrowers pay interest to gain amplified exposure and that interest becomes real-time income for lenders. Unlike traditional platforms that may rely on token emissions or subsidies, Nolus yields are 100% organic, based solely on borrowers’ interest payments. This means: - **The more active the market**, the higher the yields. - **Returns reflect actual usage**, not artificial incentives. ![Chart of Nolus USDC lender APY driven by real borrower interest payments](https://nolus.io/blog/assets/how-nolus-keeps-usdc-yields-above-10-apy-mark/figure-1.webp) ## Prolonged Position Lifespan = Higher Utilization Most DeFi platforms suffer from short-lived leverage positions due to tight liquidation thresholds or volatile interest rates. Nolus solves this with: - **Lower interest rates** than competitors. - **Better liquidation thresholds**, offering more cushion for price volatility. This combination means borrowers keep their positions open longer, leading to consistently high utilization of lenders’ capital. And in DeFi lending, utilization is king. For example, the more deposited USDC is actively being used, the higher the proportional interest rate and APY on the protocol. ## Smart Deposit Management Preserves APY Integrity To prevent dilution of returns, Nolus uses a strategic deposit throttling mechanism: When borrower demand doesn’t match lender supply, new deposits are temporarily restricted. This ensures that existing lenders continue to enjoy high APY, instead of seeing it eroded by an oversupply of idle capital. It’s a feature that protects long-term returns and helps maintain platform equilibrium. Nolus represents a new standard in sustainable DeFi yields, built on real market activity and sound financial engineering. By aligning borrower demand with lender rewards and optimizing for long-term engagement- the protocol consistently delivers some of the highest real USDC yields in the space. --- # Changelog 2025.3 Published: 2025-04-11 URL: https://nolus.io/blog/2025-3-changelog Tags: Announcements, Changelog Excerpt: Development updates across Nolus App v2.0.0 Now Live, Nolus Core Update – v0.7.2 & v0.7.3, and Money Market Update - v0.8.7. ## Nolus App v2.0.0 Now Live The all-new **Nolus App v2** is officially here, bringing a suite of powerful features designed to elevate your trading experience. With a completely redesigned interface, users can now enjoy more intuitive navigation, structured data views, detailed analytics, and comprehensive charts—making market insights easier to access and act on. Position management has been significantly enhanced with the introduction of **stop-loss and take-profit orders**, empowering you to trade with precision and manage risk more effectively. These tools support more disciplined, strategy-driven decision-making. We’ve also introduced **fee abstraction**, allowing transactions to be executed using a range of supported assets—no more worrying about holding a specific token for network fees. The AI companion within Nolus, **Kai**, has been significantly upgraded to deliver **tailored insights** and **real-time alerts**, taking market awareness to the next level. Powered by advanced LLM technology, Kai now provides users with more personalized, actionable information—helping them stay ahead of market movements and make smarter decisions in real time. ## Nolus Core Update – v0.7.2 & v0.7.3 We’ve rolled out two new updates to **Nolus Core**, introducing important upgrades and maintenance improvements across the board. **v0.7.2** brings enhancements under the hood, including a bump to the latest **Cosmos SDK** and **x/tx** modules to address critical bug fixes. We’ve also updated to the newest **IBC-Go v8**, and improved our CI pipeline with an updated **golangci-lint** version and refined configuration. **v0.7.3** continues the momentum with updated dependencies for both **IBC-Go** and the **Cosmos SDK**, ensuring continued compatibility and performance improvements. ## Money Market Update - v0.8.7 The release of **Money Market v0.8.7** delivers a range of new features, security enhancements, and technical improvements that strengthen the Nolus protocol’s performance and reliability. This update introduces a more robust migration process by passing the `migrate_from` version to each contract during upgrades—making contract transitions clearer and easier to track. Additionally, leases undergoing liquidation now include a new `cause` field, providing greater visibility into liquidation events and supporting more transparent risk management. On the security front, this release addresses the **RUSTSEC-2024-0437** advisory by switching to a patched version of the **neutron-sdk**, ensuring a more secure dependency stack. Other notable changes include the decision to stop generating JSON Schema files, simplifying the development pipeline. The codebase has also been upgraded to adopt the **Rust 2024 edition**, aligning with the latest standards in Rust development. To improve IBC performance, the timeout period has been reduced to just one day—enhancing responsiveness in cross-chain operations. Finally, the update introduces support for **ATOM short positions** as well as **XION** and **NIL** assets for leveraged long positions—expanding the range of trading strategies available to users. It also includes several refactors to improve clarity and maintainability: price alarm events in the oracle module have been renamed for consistency, and obsolete migration logic from version 0.7.5 in the lease module has been removed. --- # How Nolus Became an Asset-Backed Margin Protocol Published: 2025-04-04 Updated: 2026-08-07 URL: https://nolus.io/blog/from-defi-leasing-to-margin-power-plays Tags: Strategies, Deep Dives Excerpt: How short selling, stop-loss and take-profit orders, and fee abstraction turned a long-only lending product into a two-sided margin protocol. Nolus started as a DeFi leasing protocol, allowing users to acquire more assets with less capital while maintaining controlled risk exposure. This model gained strong product-market fit but was inherently limited to long-only positions, preventing it from reaching its full potential. ![Stylized cover depicting Nolus evolution from DeFi leasing into asset-backed margin trading](https://nolus.io/blog/assets/from-defi-leasing-to-margin-power-plays/cover.webp) In 2024, the Nolus team addressed this shortcoming by introducing short-sell capabilities alongside many other features and refinements, giving users the tools to profit from both rising and falling markets, as well as to hedge their position, at the same time, the built-in risk controls ensure leveraged positions remain within safe, manageable limits. With its latest set of upgrades, Nolus completes its transformation into an asset-backed margin leverage instrument that can rival the trading activity of both spot and perpetual markets, much like similar instruments do in Traditional Finance. Despite becoming more feature-rich, Nolus continues to make sophisticated strategies accessible and empower both novice and experienced traders to navigate volatility with ease and confidence. ## Key Upgrades Shaping Nolus’ Transformation ### Refined Trading Experience A redesigned interface enhances data accessibility, offering a more structured approach to market analysis. Detailed analytics, comprehensive charts, and an improved walkthroughs contribute to a more intuitive trading environment, ensuring greater efficiency in decision-making. ### Advanced Risk Management Tools The introduction of stop-loss and take-profit orders strengthens position management by providing precise control over risk. These mechanisms enable more disciplined trading strategies, optimizing potential returns while mitigating downside risks. ### Optimized Transaction Framework Fee abstraction simplifies transaction execution by allowing payments in multiple supported assets, removing the complexity traditionally associated with network fees. Additionally, broader wallet compatibility ensures seamless integration with both browser-based and mobile non-custodial wallets, enhancing accessibility across different platforms. ### AI-Infused Trading Insights The AI companion within Nolus, Kai, leverages advanced LLM technology to enhance market awareness. By delivering tailored insights and real-time alerts, Kai helps users stay informed and responsive to fast-paced market shifts. ## Upcoming Advancements ### Faster Execution Speed Improvements in blockchain efficiency will result in faster block times, significantly enhancing execution speed and reducing latency. The upcoming advancements in IBC v2 will further streamline cross-chain transactions, establishing Nolus as the **gold standard** for cross-chain execution. ### Expanded Cross-Chain Reach With the upcoming IBC v2 enhancements, Nolus will be enabled for broader interoperability, extending its connectivity beyond current limits. This expansion will facilitate deeper liquidity access and strengthen integration with a more diverse range of liquidity hubs. --- # How Misconceptions Shape Our Views on Crypto Published: 2025-02-25 URL: https://nolus.io/blog/how-misconceptions-shape-our-views-on-crypto Tags: Explainers Excerpt: Have you ever heard that goldfish have only a three-second memory? Or that humans use just 10% of their brain? ![Conceptual visual of cognitive bias and anchoring shaping crypto perceptions](https://nolus.io/blog/assets/how-misconceptions-shape-our-views-on-crypto/cover.webp) ## What is the Anchoring Effect? The anchoring effect happens when we rely too heavily on the first piece of information we receive about a topic. This can shape our beliefs and decisions long after we’ve forgotten where we first heard it. For example, many people still believe that goldfish have terrible memory, even though research shows they can remember things for months. Similarly, the myth that we only use 10% of our brains persists despite overwhelming scientific evidence that our brains are fully active all the time. ## How Anchoring Affects Perceptions of Crypto This same bias plays a big role in shaping opinions about cryptocurrency. If someone’s first impression of Bitcoin was that it’s **too volatile to be a reliable investment**, that belief may persist, even as Bitcoin’s market behavior changes. Early on, Bitcoin did experience extreme price swings, but things have changed. In fact, a recent study showed that in late 2023, [Bitcoin was less volatile than 92 stocks in the S&P 500](https://www.fidelitydigitalassets.com/research-and-insights/closer-look-bitcoins-volatility). If Bitcoin is “too volatile,” then nearly 20% of S&P 500 stocks should be seen the same way! ## Why It’s Important to Challenge Anchors Crypto is a rapidly evolving space, and holding onto outdated beliefs can prevent people from understanding its true potential. The idea that Bitcoin is just a risky, unstable asset is an example of an anchored misconception. But as institutional investors enter the space and adoption grows, Bitcoin is proving to be more than just a speculative asset, it’s increasingly seen as **digital gold** and a hedge against inflation. ## Final Thoughts Cognitive biases like the anchoring effect can cause us to hold onto misconceptions, even when new evidence contradicts them. This applies to everyday myths, like goldfish memory, and complex topics, like crypto. Next time you hear someone claim that Bitcoin is too volatile or has no real value, consider whether they might be anchored in outdated information. Keeping an open mind and questioning initial assumptions can lead to better decision-making, especially in the fast-changing world of digital assets. **The key takeaway?** Always be willing to dive deeper than surface-level information. The more we challenge our biases, the better equipped we are to navigate the evolving landscape of crypto and beyond! --- # Changelog W05/25 Published: 2025-01-31 URL: https://nolus.io/blog/w05-25-changelog Tags: Announcements, Changelog Excerpt: Weekly development log across Money Market, Nolus Core, and Webapp. ## Money Market The **`0.7.6 release`** introduces several major enhancements, new features, bug fixes, and refinements. Among the key additions are **stop-loss and take-profit functionality**, allowing for better risk management in lease positions, as well as the **ability to query the future state of a lease position contract**, providing deeper insights into potential outcomes. Other improvements include the ability to generate currencies based on network topology, expanded API capabilities for lease policies, and optimizations for IBC timeout handling in preparation for an upcoming channel migration. Scripts now support more flexible linting options, and lease functionality enables **lazy migration from `v0.7.5`**. A **market price bug** has been addressed, ensuring better observation ordering. Significant **refactoring** efforts improve modularization, remove redundancies, and enhance code maintainability—especially in lease handling, currency definitions, and swap mechanisms. The update also includes **styling refinements**, such as better formatting, function structuring, and import consistency. ## Nolus Core The **`v0.7.0 release`** introduces the **v2 fee mechanism** for custom currencies, allowing them to be used as **network fee payment options**, improving transaction flexibility. Several **bug fixes** enhance stability, including updates to the **linter, WasmVM version, default unordered ICA channels**, and initialization scripts. Additional fixes ensure **better tax parameter validation and improved custom fee checks**. The release also introduces **new tax parameters**, along with **tests and logging enhancements** to improve reliability. ## Webapp The **Nolus App v2** is now in **beta**, undergoing internal testing to ensure a **smooth transition** and **quality assurance** for both new and existing functionalities. This update introduces **multi-currency network fee payments**, allowing users greater flexibility in transactions. A new **future interest display** eliminates residual dust in lease positions after full loan repayment. Additionally, the app now supports a **wider range of wallets** and delivers an **enhanced user experience** for managing lease positions. New functionalities, including **stop-loss and take-profit options for lease positions**, will also be available, providing users with **better risk management tools**. --- # Nolus in 2025: A Year of Excitement Published: 2025-01-15 URL: https://nolus.io/blog/nolus-in-2025-a-year-of-excitement Tags: Announcements, Metrics Excerpt: With 2025 underway, we hope that everybody had a great holiday period. ![Preview of the 2025 Nolus roadmap: NLS-gated leverage, stop-loss and take-profit orders, and ecosystem expansion](https://nolus.io/blog/assets/nolus-in-2025-a-year-of-excitement/cover.webp) ## Realigning Incentives The early part of 2025 will see a substantial focus on implementing changes that create additional demand for the $NLS token. This will be done by way of creating additional features that are gated behind the amount of $NLS that a user has staked. These early features will be: ### Interest Premium Fee & Discounting Nolus plans to introduce a new interest premium fee applied to DeFi Leases. There is work currently done to understand the size of the premium that can be used while maintaining Nolus’ competitive advantage over other DeFi protocols. Nolus will also implement a discounting model on this premium that is based on the amount of $NLS that the user has staked. The exact model for this discount model is also being worked on to reduce the ability for it to be gamed, but the premise will be that the greater the amount of $NLS staked by the user; the lower the interest premium fee charged to the user upon opening a DeFi Lease. As a small aside, this may create some additional income for depositors in the Liquidity Providers’ Pool which will boost yield and potentially further grow TVL, supporting the Nolus flywheel! ### Higher Leverage for Leases Another benefit available to $NLS stakers will be the ability to open DeFi Leases at higher leverages, up to 5x! The current maximum leverage of 2.5x allows users to borrow 150% of their collateral in opening a DeFi Lease. Eligible stakers will now be able to borrow 400% of their collateral when opening a DeFi Lease; offering an extra 167% in borrowable capacity. The Nolus core team will monitor this future to ensure that increased leveraging remains safe for all stakeholders. This feature will allow Nolus’ long-term stakeholders to generate even greater yields on their DeFi Leases. It will also result in higher interest income generated for depositors in the Liquidity Providers’ Pool boosting yields for depositors. As can be seen, there is a large emphasis on organically growing the Nolus flywheel through increasing borrowed capital! ## New Product Features The combination of Stop-Loss Orders and Take-Profit Orders will allow Nolus’ users to manage their risk at a significantly more granular level. ### Stop-Loss Orders Nolus will introduce a Stop-Loss Order feature to support our users’ risk management. This feature, which is found on many spot trading and perpetual trading platforms, is designed to limit a user’s loss on an individual position. For example, assume Alice purchased $BTC at $100,000 because she predicts that the price will continue to rise beyond that. However, she is only willing to accept a maximum 10% loss on this trade. Therefore, she creates a Stop-Loss Order at $90,000. Should the price of BTC touch $90,000, Alice’s $BTC will immediately be sold at the prevailing market price. This is different from a sell limit order where incremental amounts of $BTC would be sold only at $90,000 (meaning Alice may only have part of her $BTC sold). The material risk with Stop-Loss Orders is a flash crash in the price of an asset that then sees an immediate rebound. While the overall price of the asset may have only reduced marginally over the duration, the flash crash may have resulted in Alice’s Stop-Loss Order being hit and her $BTC being sold subsequently lower than the price at either end of the flash crash. ### Take-Profit Order Take-Profit Orders are another type of risk management feature that exists to support traders. This feature ensures that a user can have their assets sold once the market price reaches a certain value. This means that the user can be assured of making a certain amount of profit (subject to market depth). For example, when Alice purchased her $BTC above, she also created a Take-Profit Order at $120,000. This means that Alice’s $BTC will be sold immediately upon the price of $BTC reaching $120,000. As with Stop-Loss Orders, Alice’s $BTC would be sold at the prevailing market price. This is different from a buy limit order where incremental amounts of $BTC would be sold only at $120,000 (meaning Alice may only have part of her $BTC sold). ## Continued Expansion With the continued growth of the Cosmos ecosystem, there continues to be an abundance of opportunities available to Nolus in growing the number of assets available on Nolus as well as the liquidity hubs that Nolus has integrated. This will include a focus on making new high-growth assets available on Nolus as well as a large focus on growing user interest in opening short positions on Nolus. More information will also be released in due course in introducing Nolus’ newest liquidity hubs that will be integrated to provide the cheapest rates for its users. ## Revamped User Experience Nolus’ webpage will also receive a refresh! The core team has learned many lessons over the past year about what works for users and what shortcomings the webpage has. We hope that the new webpage will be more intuitive and provide users with a better experience. ## Closing Thoughts Our community can expect continued growth in the product layer at the start of 2025. There will also be continued attention toward increasing demand for the $NLS token by way of new features that favor stakers. --- # Nolus in 2024: A Year in Review Published: 2025-01-08 URL: https://nolus.io/blog/nolus-in-2024-a-year-in-review Tags: Metrics, Announcements Excerpt: Looking back at 2024, it was a year when Nolus expanded, evolved, and positioned itself for an even greater 2025. ![Recap of Nolus progress in 2024 covering the Twilight upgrade, Neutron expansion, and tokenomics revamp](https://nolus.io/blog/assets/nolus-in-2024-a-year-in-review/cover.webp) ## Product The beginning of the year saw the Nolus Twilight upgrade. This saw the Nolus chain upgraded to Cosmos SDK v47. This included: - ABCI 1.0, which will transition into ABCI++ over time. This offers finer control over transactions in the mempool and introduces vote extensions, allowing consensus votes to include valuable use cases like Oracle data (which currently takes place off-chain); and - A fee abstraction mechanism that allows users to pay their gas fees in axlUSDC. This reduces the barrier to entry for potential users who will no longer need to acquire NLS before being able to use the Protocol. The largest product upgrade for users in 2024 was enabling volatile assets to be used as base lending currencies. This allows users to deposit volatile assets to the Liquidity Providers’ Pool and earn interest income from users that borrow those volatile assets for their DeFi Lease. The borrowing of volatile assets allows users to open short positions. This is an incredible upgrade that allows Nolus to serve both sides of the market, creating a one-stop shop for all users who wish to open a leveraged position. Nolus has continued to grow in its asset offerings in line with the latest high-quality assets being made available in the Cosmos ecosystem. This includes alloyed assets on Osmosis (which abstracts bridge fragmentation for the end user) and dATOM (a liquid staking derivative created by the Drop team). The core contributors continue to evaluate other assets within the ecosystem that can be listed to provide additional value to its users! ## Expansion This year saw the first expansion for Nolus’ DeFi Leases. At launch, Nolus solely used Osmosis’ liquidity to open DeFi Leases for its users. Integrating Neutron and the Astroport decentralized exchange means that each DeFi Lease will check price rates across two exchanges before opening a DeFi Lease on the cheaper exchange. Astroport uses a unique passive concentrated liquidity (“PCL”) model which is similar to Osmosis’ supercharged liquidity model but is an oracle-based solution that allows for “passive” LPing. By integrating two exchanges with different models and different user bases, we may create opportunities for users that result in assets being priced more favorably across the two different DEXs than any one of the Dexes alone. ## Tokenomics Over the year, Nolus bought back and burned over 4m $NLS using revenue earned from the Protocol. This model is especially attractive for tokens as it provides an organic increase in demand while also creating supply-side advantages, reducing total supply (which means that less NLS can be sold assuming all else is constant). As Nolus continues to gain adoption and increased use, the total revenue available for buyback and burns will continue to grow, providing further strength to the $NLS token. Towards the latter part of the year, the Nolus community adopted a tokenomics revamp to provide the ecosystem with a more stable inflation mechanism to retain long-term alignment. The previous model used high emissions at launch which rapidly decreased over time. The new model emits fewer tokens in the short term, with emissions increasing progressively over the remaining duration. This will align inflation with the ecosystem’s growth, allowing more tokens to enter circulation as the network matures. Most recently, Protocol Governance has adopted a raft of changes to various assets to adjust the ratio between revenue attributable to liquidity providers and that attributable to the Protocol (to go towards buyback and burns). Nolus has successfully provided stablecoin depositors with organic yields far above those consistently available on the market. Therefore, Governance has adopted a position that can adjust these rates to be more aggressive in growing the $NLS token without materially deteriorating liquidity depositor yields. ## Enhancing User Experience In late 2024, we worked to make the Nolus experience seamless. This arose through scalability enhancements that enabled 80% faster lease transactions and near-instant on-chain actions. Changes that will help bridge the gap between the Web2 experience and the current Nolus experience will be those that we wish to close over time, reducing the barrier to entry for new users to the crypto space. We also created Kai, an AI-powered assistant that leveraged a Large Language Model to support users of the Protocol. Kai can provide timely updates to users concerning the timings of maintenance windows and upgrades, deprecation notices or new token listings, and personalized onboarding tips or guides. There were also several improvements to record management to help users better understand their activity on Nolus. This included detailed fee breakdowns to understand the breakdown of dex fees versus slippage, improved realized P&L accuracy, real-time closing metrics, and an actions log showing a user’s DeFi Lease history. Each of these changes aims to make it easier for users to understand the outcome of each of their DeFi Leases which may help them with future leases. ## Charitable Events Nolus’ core contributors sponsored a “Lease to Give” event. This saw several of Nolus’ power users receive a portion of $10,000 which they would use on Nolus to grow the amount received. Both the initial capital and any gains received over the duration would then be donated to a charity of the community’s choice. As at November 2024, these users were collectively up 41%, and the scheme has been extended to 31 January 2025 to give some more time to these users to maximize their returns. We are greatly appreciative of the time invested by these contributors and their efforts to maximize the help we can give to those in need. ## Closing Thoughts As Nolus’ first full year, 2024 was a vibrant year that saw Nolus begin to make a name for itself. It has a dedicated user base and 2025 will be an important year in making additive enhancements to grow this user base further in a way that benefits depositors, borrowers, and tokenholders alike. --- # Six Margin Strategies: Long, Short, Delta-Neutral Published: 2024-12-23 Updated: 2026-08-07 URL: https://nolus.io/blog/strategies-on-nolus-protocol-v2 Tags: Strategies Excerpt: Leveraged longs and shorts, liquid-staking collateral, a delta-neutral hedge, and lending to the pool, with the capital each strategy requires. ![Updated strategy guide cover recapping leveraged long, short and delta-neutral plays available on Nolus](https://nolus.io/blog/assets/strategies-on-nolus-protocol-v2/cover.webp) ## Strategy 1: Opening a leveraged long position This will be a recap for most, and an update to the [original strategies on Nolus Protocol](/blog/strategies-on-nolus-protocol) guide. Nolus allows users to open a long position. This strategy is profitable for those expecting an upward movement in the price of an asset (or would like to hedge against this movement). An increase in the value of the borrowed asset will enable the user to make a greater profit than simply holding their asset. For example, if Alice holds $2,000 in ATOM and is convinced that the price will increase, she could open a DeFi Lease to borrow up to $3,000 in ATOM with her ATOM as collateral. If the price of ATOM was to increase by 10%, Alice would have made a profit of $200 by simply holding her ATOM. By using a DeFi Lease, Alice’s profit increases to $500 less any interest costs. Furthermore, users can make this strategy more efficient by using an LST such as stATOM as their collateral to earn staking rewards while they are exercising their leveraged long position. The effectiveness of this optimization can be seen below: ![Line chart comparing yearly returns of holding ATOM versus leveraged long positions with ATOM and stATOM collateral](https://nolus.io/blog/assets/strategies-on-nolus-protocol-v2/figure-1.webp) The above chart assumes a constant percentage growth in the price of $ATOM per month resulting in an overall 10% price gain over the year. It also assumes a 15% annual staking yield that is compounded monthly (though Stride and other derivative providers will compound far more frequently than that). The red and blue lines in the chart show a user simply holding $ATOM and having a leveraged long position on $ATOM through Nolus. This results in an extra 150% profit to the user (net of interest costs)! However, the green line shows the powerful impact of combining Nolus with LSTs. By opening a lease with $stATOM as collateral and borrowing $stATOM, the extra profit skyrockets to 592% over the year! ## Strategy 2: Opening a leveraged short position Conversely, the same concepts apply to opening a leveraged short position for an asset. This strategy is profitable for those expecting a downward movement in the price of an asset (or would like to hedge against this movement). A decrease in the value of the borrowed asset will enable the user to make a greater profit than simply engineering a spot short (by selling their asset to re-buy at a future date). For example, if Bob holds $5,000 in BTC and is convinced that the price will decrease, he could open a DeFi Lease to borrow up to $7,500 in BTC with his BTC as collateral. If the price of BTC were to decrease by 10%, Bob would have made a profit of $500 by simply selling his BTC and rebuying it at a later date. By using a DeFi Lease, Bob’s profit increases to $1,250 less any interest costs. ![Line chart comparing spot-sell BTC against a Nolus leveraged short showing amplified profit on a 10 percent decline](https://nolus.io/blog/assets/strategies-on-nolus-protocol-v2/figure-2.webp) Similar to Strategy 1, the red and blue lines in the chart show a user simply spot-selling $BTC and having a leveraged short position on $BTC through Nolus. This also results in an extra 150% profit to the user (net of interest costs)! ## Strategy 3: Adding value to a Money Market position Users may use a money market for a variety of reasons (i.e., incentivized deposits and borrowing that subsidize interest costs). The “traditional” mechanism for creating a short, or a long, on a lending protocol can be amplified by combining it with Nolus. For example, if Charles holds $1,000 in USDC and believes that the price of ATOM will decrease, he could leverage a money market to borrow ATOM (which is then sold for USDC) by using his USDC as collateral. Charles could re-deposit the borrowed USDC on a money market to take out more ATOM. However, this would increase his leverage and risk, which he may not be comfortable with. Alternatively, Charles could deposit this USDC in the Liquidity Providers’ Pool (see Strategy 5 below) to earn some additional income while executing this strategy (that could partially offset his interest costs). This strategy can also be executed with an artificial long position from a money market. For example, if Damien held $500 in SOL and believed that the price of SOL would increase, he could borrow USDC using his SOL as collateral and purchase SOL using his USDC. This SOL can also then be deposited into the Liquidity Providers’ Pool on Nolus where it can earn income that can pay off its interest costs from the money market. This strategy is useful for risk-averse market participants who are not seeking high-leverage positions. ## Strategy 4: The “Power Hedgooor” Delta-neutral strategies are those that earn yield while removing the risk associated with any price movement in the underlying asset used. They typically earn lower yields than risk-on strategies on the upside but are protected against the downside (unlike more risk-based strategies). A typical example of this would be to have a long position against stATOM while having a short position against ATOM. Should the price of ATOM increase, the long would become more profitable, while the short would become loss-making, and vice versa. With the ATOM price movements being offset, the user can earn staking income with minimal concern for price risk. While users could previously create this strategy by combining Nolus (to create a long position), and a money market (to create a short position), this was less capital efficient than what is now possible due to the requirement of overcollateralisation on a traditional money market. This can be demonstrated as follows: - To create a $10,000 leveraged long position using Nolus, Erika would require $4,000 in capital. To create a $10,000 short position using a money market, Erika would require $13,000 in capital (assuming 130% collateralization requirements) This totals $17,000 in capital compared to the $8,000 capital required if both positions (long and short) were created using Nolus. Consequently, Nolus allows users to execute this delta-neutral strategy with 53% less capital required. ## Strategy 5: The “Power Leveragooor” This strategy looks to build on both Strategy 1 and Strategy 2, but seeks to allow users to amplify their leveraged position even further! This combines a money market and Nolus to grow a user’s leverage further than that which either primitive could do alone. As an example, let’s assume that Frank has $13,000 in ATOM and wishes to leverage his position. However, he is aware of the risks associated with perpetual protocols and wishes to not use them. - Frank has the option of depositing his ATOM in a money market to borrow a stablecoin. Assuming a healthy collateralization ratio of 130%, he could borrow $10,000 and purchase more ATOM using these proceeds. This would give him a total of 1.77x leverage - Alternatively, Frank could simply open a lease on Nolus which would give him a 2.50x leverage However, this strategy sees Frank deposit his ATOM in a money market, purchase more ATOM with the borrowed USDC, and then deposit this ATOM in Nolus to open a lease. This would increase his exposure to ATOM to $38,000 giving him a total exposure to ATOM of 2.92x. This strategy could be executed both as described above (to long a specific asset) or to short an asset. ## Strategy 6: Depositing to the Liquidity Providers’ Pool This is a neutral strategy that does not rely on the market to move in a specific direction. Users can deposit an assortment of assets that Nolus will use when opening Leases for users. This includes variants of USDC that Nolus uses when opening long positions. It now also includes stATOM, BTC, SOL, and AKT, which Nolus uses when opening short positions. By depositing these assets to the Liquidity Providers’ Pool, users can earn passive income from the interest borrowers pay on their leases. ## Closing Thoughts Nolus’ core product provides mechanisms for all market participants to earn yield. From depositing in the Liquidity Providers’ Pool to opening leveraged positions that are long or short a specific asset. As Nolus continues to grow with newer products deployed on it, new strategies will be found for users, and yield will continue to grow to make Nolus even more attractive for market participants. --- # Changelog W49/24 Published: 2024-12-06 URL: https://nolus.io/blog/w49-24-changelog Tags: Announcements, Changelog Excerpt: Weekly development log across Money Market, Nolus-Core, Webapp, and AI Agent. ## Money Market The v0.7.5 release has been successfully deployed to production. This release introduces several key updates and optimizations. The **market price module** now stores observations more efficiently, enhancing overall performance. The **oracle module** has successfully migrated from v2 to v3, improving functionality and scalability. In the **currencies module**, a significant cleanup has been carried out, with the removal of the following assets from specific liquidity pools: StTia and Strd were removed from `osmosis-osmosis-usdc_axelar`, while Pica, Juno, Cudos, Stars, Stride, QAtom, and Dym were removed from `osmosis-osmosis-usdc_noble`. Additionally, this update includes a **refactor** to streamline existing codebases and several miscellaneous tasks, such as bumping contract versions and performing a cargo update to maintain compatibility and ensure a smoother development process ## Nolus-Core Nolus-Core version `v0.6.8` is now live discontinuing support for the `interchainqueries` module. This release addresses several **bug fixes**, including resolving proto linting errors, unit test issues, stale TODOs, and improvements to `wasmbinding` tests. Enhancements include adopting the **latest CometBFT version** and updating **artifact actions**. Additionally, **code refactoring** leverages the `KVStoreService` for modules such as `contractmanager`, `feerefunder`, and `interchaintxs`, improving overall maintainability. Other updates include fixing **gas multiplier scripts**, resolving **protobuf linting errors**, and upgrading to the **latest Go version**, contributing to **greater stability, enhanced performance**, and a **more streamlined development process** ## Webapp We’ve rolled out a significant **Quality of Service update** for the Nolus web app, introducing key enhancements and new features. **Open lease downpayments** are now displayed in full without affecting PnL calculations, improving transparency. **PnL accuracy** has been enhanced by excluding repayments that could distort the metric, with updates refreshing every 20 seconds. **Realized PnL calculations** for long positions have been corrected to ensure precise amounts, and **real-time closing metrics** now provide detailed calculations for the price per asset and DEX fees when closing a position. The **health bar** has been updated to accurately reflect the state of short positions, and the **lease view** now includes a detailed fee breakdown, showing DEX fees and price impact for added clarity. In addition, we’ve introduced new features to further enhance the user experience. The **Realized PnL Overview** is now available directly on your dashboard, allowing you to track realized PnL effortlessly. The **Actions Log** provides a detailed history of past events triggered by the protocol or user for each position. With the new **Dynamic Downpayment** feature, manual repayments now dynamically adjust your downpayment amount. ## AI Agent We’re excited to introduce the new **chat bubble** in the Nolus app, designed to be the central communication hub for users. This feature embeds the **Kai bot** and includes additional functionalities like a **status page**, **news updates**, **segmented messages**, and highlights of **new features**. The chat form will now serve as the primary communication point for events that concern users, with targeted messages sent only to wallets affected. Examples include **upcoming maintenance notifications** for upgrades on DEX or Nolus chains, **deprecation notices** such as actions required for **USDC.axl**, and personalized messages like **welcome notes** or **onboarding guidance** for new users. This update ensures timely, relevant information is always at your fingertips, enhancing your experience with Nolus --- # Why Mindset Matters Even More in Crypto Published: 2024-11-29 URL: https://nolus.io/blog/why-mindset-matters-even-more-in-crypto Tags: Explainers Excerpt: In the world of crypto, mindset is not just a nice-to-have, it’s essential. ![Reflective hero evoking emotional discipline and long-term focus in volatile crypto markets](https://nolus.io/blog/assets/why-mindset-matters-even-more-in-crypto/cover.webp) ## The Unique Challenges of Crypto and Why They Test Mindset Crypto is unlike other asset classes. With 24/7 access to markets, unpredictable price swings, and strong community-driven sentiment, crypto trading is a test of patience and emotional stability. A strong mindset can mean the difference between acting on a well-thought-out plan and making hasty decisions that can lead to losses. Here’s why mindset matters even more in this space: - **Constant Availability** Traditional stock markets have set trading hours, providing natural breaks. Crypto, however, is live 24/7. This round-the-clock access can make it challenging to step away and maintain perspective. For traders without mental discipline, this accessibility can lead to over-trading, exhaustion, and impulsive choices. - **Extreme Volatility** Crypto’s volatility is both a blessing and a curse. While it can provide lucrative opportunities, it also demands rapid decision-making. The dramatic ups and downs can easily trigger emotional responses like fear or greed. Without a calm mindset, it’s easy to panic-sell during a dip or buy impulsively when prices are surging. - **Influence of Market Sentiment** Social media plays an outsized role in crypto, driving trends and sentiment. Fear of missing out is common when influencers or the community hype up a token. On the other hand, fear, uncertainty, and doubt can lead to panic during downturns. A strong mindset helps traders resist the urge to follow the crowd and stick to their own strategy instead. ## How Mindset Shapes Successful Crypto Trading A well-grounded mindset helps traders stay focused, make rational decisions, and remain consistent with their strategy despite external pressures. Here are a few ways a mindset is a powerful tool in crypto: - **Long-Term Focus** In the fast-paced world of crypto, it’s tempting to chase short-term gains. However, seasoned traders understand that sustainable success lies in focusing on long-term growth. By maintaining a clear vision, they avoid overreacting to daily price fluctuations, endure market downturns, and patiently wait for opportunities aligned with their strategy. Nolus features align seamlessly with traders prioritizing long-term returns over short-term swing trades. - **Learning from Setbacks** Losses are an inherent part of volatile markets, but the response to them defines a trader’s journey. Rather than resorting to risky moves to recover losses, successful traders treat setbacks as opportunities to refine their strategies and prevent future errors. Nolus offers traders the flexibility and breathing space they need to transform unrealized losses into eventual profits - **Discipline to Follow a Plan** Emotional trading often stems from a lack of structure. A well-crafted trading plan with defined goals, risk management, and exit strategies provides clarity and reduces impulsive decisions. Disciplined traders stick to their plan, resisting the allure of quick wins or the temptation to abandon their approach during market turbulence. With Nolus, traders gain peace of mind, enabling them to stay focused on their roadmap and avoid impulsive actions. In the dynamic world of crypto trading, mindset forms the bedrock of success. The market’s rapid pace, 24/7 activity, and inherent volatility pose challenges that demand emotional resilience. A disciplined mindset empowers traders to make rational decisions, manage risk effectively, and approach the market’s ups and downs with confidence. Achieving success in crypto trading isn’t instantaneous, it requires time, practice, and a steady mental approach. By cultivating patience and focus, traders can navigate emotional traps, stay committed to their strategies, and work steadily toward long-term goals. **Disclaimer:** This content is for informational purposes only and does not constitute financial advice. Cryptocurrency trading and investing involve risk, conduct thorough research before making decisions. --- # Tiresome, vague, and lazy: Why TVL is not the be-all and end-all of metrics Published: 2024-11-25 URL: https://nolus.io/blog/tiresome-vague-and-lazy-why-tvl-is-not-the-be-all-and-end-all-of-metrics Tags: Metrics, Explainers Excerpt: The DeFi space has long used Total Value Locked (“TVL”) as the primary indicator of the success of a protocol (e.g. ![Editorial hero questioning Total Value Locked as a standalone measure of DeFi protocol success](https://nolus.io/blog/assets/tiresome-vague-and-lazy-why-tvl-is-not-the-be-all-and-end-all-of-metrics/cover.webp) ## Volume DeFi protocols do not tend to seek high TVL for the sake of high TVL itself; they seek higher TVL because it will be more efficient than a version of itself with lower TVL. This would allow a protocol to facilitate greater volume, either through higher swap volumes, higher borrowed amounts, or higher open interest. Therefore, it is valuable to assess the direct impact that higher TVL has on a protocol. If a protocol was able to achieve significant growth in TVL but stagnant volumes, it may suggest that there is a surplus of “idle” liquidity that is being underutilized. Similarly, this paradigm exists in money markets too. A higher utilization rate (being the total borrowed value as a ratio to total deposited value) creates a healthy ecosystem where lenders are fairly compensated for their liquidity which helps manage the long-term retention of depositors. This is important for borrowers as it reduces the volatility of open loans. While Nolus fixes the interest rate on leases, long-term retention of depositors is critical as it allows existing users to open new leases at comparable rates and is also a sign of strength that can help attract new borrowers. Consequently, many analysts use “Volume / Total Value Locked” as a metric for protocol growth. This allows individuals to compare liquidity utilization between protocols and/or relative growth (or regression) for a protocol in response to a change in TVL. ## Incentives It is very important to consider the impact of incentives on a protocol’s position. Incentives will result in a short-term boost in TVL that may overemphasize the protocol’s attention, traction, and competitiveness. However, these may be counterproductive to the protocol’s long-term future and sustainability. Therefore, it is important to assess the long-term trends in TVL (among other metrics) to obtain data that is normalized for “real” liquidity as opposed to inflated liquidity buoyed by incentive programs. ## Efficiency Assuming all other constants were equal, it is fair to say that a protocol with higher liquidity would be more efficient than a competitor. This would manifest as lower slippage when making a swap on a decentralized exchange or lower interest rates when borrowing on a money market. However, the DeFi space is large. Primitives such as decentralized exchanges have an extraordinary amount of innovation and variety among competitors. If we compare the two most basic pricing curves, we have the `X + Y = K` (constant sum market makers) and `X * Y = K` (constant product market makers) curves. Outside of these curves, we have a wide array of concentrated liquidity models that boast differing efficiencies. ![Table comparing swap pricing between a CSMM and a larger CPMM pool to illustrate curve efficiency](https://nolus.io/blog/assets/tiresome-vague-and-lazy-why-tvl-is-not-the-be-all-and-end-all-of-metrics/figure-1.webp) The table above presents two liquidity pools, the former is a CSMM curve while the latter is a CPMM curve with five times the liquidity of the former. However, due to the extreme efficiency of the CSMM curve (which also has its own issues), it can facilitate swaps at significantly better prices than the CPMM curve even with a fraction of the liquidity. While modern decentralized exchanges do not use CSMM curves, the concentrated liquidity models implemented by UniSwap v3, Curve v2, and Trader Joe all give rise to a scenario where efficient models can compete with less efficient models with a fraction of the liquidity. In this instance, it may be more valuable for individuals to compare protocols (to historical data, or to a competing protocol) by looking at pool depth and slippage. This would better allow individuals to understand which decentralized exchanges offer the best value for users. ## Conclusion TVL as a metric has taken over the DeFi space purely because it is easy to find and compare values between two competitors. However, there is an abundance of metrics that make sense to use when comparing protocols, and it could be argued that TVL is a better indicator of “trust” in a protocol rather than “success.” Several other metrics are valuable in assessing the growth of a protocol (or when comparing multiple protocols). These include: - **Volume / Total Value Locked (%):** As noted above, this metric helps assess the ability of a protocol to utilize the TVL that enters the protocol. Growth (or even stable returns) in this metric shows that the product is gaining traction and product, market, fit (“PMF”). - **Revenue:** The vast majority of DeFi protocols are not profit-making (after the cost impact of incentives). However, another method to assess gaining PMF is by seeing revenue growth over a defined period. - **Daily Active Users:** Monitoring DAU allows a protocol to evaluate its ability to grow its user base as well as retain its user base. While it is possible to grow a protocol solely with a small number of high-value users, it can be especially difficult for new protocols to achieve this. - **Churn:** This metric represents the percentage of users who stop engaging with the protocol over a defined period. High churn rates indicate difficulty in retaining users, while lower churn rates demonstrate strong user loyalty and satisfaction. - **Community Growth:** Similar to the above, community growth is especially valuable for a DeFi protocol. It shows confidence in the protocol if neutral members of the crypto space are able to speak positively about the protocol and ally themselves with it. Nolus finds these metrics especially critical in creating a platform for its long-term success. The core team monitors these metrics internally and strives to grow each of them. --- # Changelog W44/24 Published: 2024-11-01 URL: https://nolus.io/blog/w44-24-changelog Tags: Announcements, Changelog Excerpt: Weekly development log across Money Market, Nolus-Core, Webapp, Keplr, and Support Bot. ## Money Market The v0.7.4 release has been successfully deployed to production, bringing key updates including the CosmWasm upgrade to version 2.x, which enhances contract performance and compatibility. Additionally, the CoinDTO library now handles amounts as strings, ensuring greater precision in financial transactions ## Nolus-Core The Nolus Core v0.6.6 has been successfully deployed to the testnet, introducing key updates to core components, including an upgrade to CometBFT for improved consensus and network performance, a bump to WasmVM version 2.1.3 for enhanced smart contract execution, and update to IBC-Go to strengthen inter-blockchain communication. Additionally, this release addresses bug fixes for script naming, transaction proto files, and CI processes, along with documentation improvements and dependency updates ## Webapp In the latest quality-of-life update on the Nolus App, users can now enjoy real-time dynamic quotes when opening a lease position. This enhancement provides tailored details for position size, DEX fees, and price impact on both Osmosis and Astroport, adjusting based on the swap route and position amount. Additionally, an improved PnL Log feature now lets users conveniently view their historical PnL through the Realized PnL Log, making it easier to track past performance directly within the app ## Keplr Nolus is now natively integrated into Keplr Wallet, enhancing user experience with a feature-rich web dashboard. To add Nolus to your visible chains, open Keplr Wallet, click on "Manage Chain Visibility," and select Nolus from the list. This integration allows you to manage your NLS tokens seamlessly within the Keplr ecosystem ## Support Bot A new support bot, powered by the advanced LLaMA foundation model with 65 billion parameters large language model, has been released in beta at hub.nolus.io. This sophisticated support tool is designed to proactively assist clients within the webapp (at a later stage), laying the groundwork for a broader suite of client support features that will enhance user experience and responsiveness across the platform --- # Changelog W40/24 Published: 2024-10-04 URL: https://nolus.io/blog/w40-24-changelog Tags: Announcements, Changelog Excerpt: Weekly development log across Money Market, Nolus-Core, Webapp, and Infrastructure. ## Money Market The v0.7.3 release has been successfully deployed to production, introducing allBTC and allSOL (long) to the Osmosis market. Additionally, three new short protocols have been launched for allBTC, allSOL, and AKT. This release also includes a significant refactor, enabling support for up to 600 tokens per protocol, marking a 30x improvement over the previous version ## Nolus-Core Core v0.6.5 has been deployed to production, introducing a new minting formula following the approval of signaling proposal 163, which focuses on revamping the NLS Inflation Model ## Webapp Another major update is currently in the testing phase. Once deployed to production, it will introduce comprehensive historical PnL data and an enhanced transaction history, including detailed information on IBC transfers (covering both send and receive types), full lease history with data on liquidations, repayments, and open/close positions. These features are closely integrated with the new ETL interface capabilities ## Infrastructure Following significant infrastructure optimizations aimed at reducing latency, we have achieved up to a 0.5-second improvement in web app load times. This was accomplished while enhancing security by implementing a second layer of firewall and introducing a new set of endpoints that access Nolus network nodes --- # Leveraged Spot vs Perpetual Swaps: Cost and Risk Published: 2024-09-24 Updated: 2026-08-07 URL: https://nolus.io/blog/the-breakdown-nolus-vs-perpetual-swaps Tags: Strategies, Explainers Excerpt: Funding rates versus fixed interest, pooled counterparty risk versus a shared lending pool, and why open interest caps limit perpetual markets. ![Comparison hero contrasting Nolus DeFi Leases with on-chain perpetual swap trading](https://nolus.io/blog/assets/the-breakdown-nolus-vs-perpetual-swaps/cover.webp) ## Available Liquidity for Leverage ### Perpetual Protocols Perpetual protocols typically require a debt pool to allow traders to open positions. Most on-chain perpetual protocols implement this by allowing depositors to provide liquidity to the debt pool in exchange for trading fees (and incentives). Similar to decentralized exchanges and the risk of impermanent loss, depositors on perpetual protocols are exposed to asset risk. This occurs when the Open Interest (the amount of non-settled positions) in one direction is materially greater than the other. For example, if there was a greater amount of short positions than long positions, depositors would have to pay traders if the price of the underlying asset were to fall. To manage this risk, perpetual protocols typically use risk frameworks to place caps on the amount of Open Interest on different assets. This can be a limiting factor in creating large leveraged positions on exotic assets. While earlier implementations of perpetual protocols used a combined debt pool for all assets, newer implementations have fragmented debt pools to allow depositors to limit their risk to asset classes. ### Nolus Contrastingly, Nolus uses a global liquidity pool that operates similarly to a money market. Users borrow assets from the Liquidity Providers’ Pool which is used to purchase an additional amount of their desired asset (i.e., creating a leveraged position). The underlying model manages the purchases made and means that adverse movements can be quickly treated by partial liquidations (or liquidations) if necessary. Depositors are still exposed to some short-term risks under this model. However, rather than being exposed to a mismatch in Open Interest, Nolus is vulnerable to a fast decrease in price that surpasses liquidation points. If this were to happen, the value of the assets post-liquidation would be lower than the debt. To mitigate against this risk, Nolus uses an enshrined oracle system for rapid pricing updates and uses a collection of decentralized exchanges within the Cosmos ecosystem to perform necessary liquidations. Additionally, loans are exposed to liquidations at a 90% max LTV ratio. Therefore, if the liquidation is executed between 90% and 100% LTV, a liquidation can occur with lower risk to depositors. However, if the liquidation was to take place with an LTV over 100%, Nolus’ reserve contracts would be required to cover the potential bad debt to depositors. ## Fee Structure ### Perpetual Protocols These protocols will heavily rely on funding rates as a means of trying to equalize Open Interest in both directions for any asset. As noted above, as the skew increases, the risk to depositors also increases. If a market was long-heavy, traders with a long position must pay a funding rate to maintain their position. In the same market, traders would be incentivized to open a short position by being paid a funding rate. While this can be sufficient for maintaining an “even” market, it means that for some durations of time, traders can be “locked out” from opening positions due to the adverse impact of high funding rate costs. ### Nolus Nolus charges a fixed interest rate to borrowers. This is calculated relative to the total utilization of the Liquidity Providers’ Pool. As utilization increases, the total interest increases. It should be noted that this is capped at an optimal utilization threshold to prevent interest rates from skyrocketing to exorbitant amounts for borrowers, also providing them with some additional confidence and predictability. This is irrespective of the specific position (asset or direction). Borrowers on Nolus face significant exposure to on-chain liquidity and slippage levels. DeFi Leases purchase the required assets from integrated decentralized exchanges. This means that the cost of slippage is a material component of total fees. The greater the on-chain liquidity for an asset, the cheaper it would be to purchase the required assets which would reduce the total cost of the DeFi Lease. ## The Opportunity Nolus primarily operates in the Cosmos ecosystem where there is a significant abundance of new cryptocurrencies. As explained above, we can see why traditional on-chain perpetual protocols would struggle to provide efficient markets for assets with lower market caps. This is because opening moderate positions would provide significant volatility to a market and create a large skew (and an associated large funding rate increase). Nolus provides a significant advantage here as it maintains alignment with tokens as they gain effectiveness as liquidity depth increases (and thus slippage decreases). This synergy is demonstrable as this is a fundamental target for most tokens. ## Conclusion Nolus has many similarities with on-chain perpetual protocols. However, there are some fundamental differences between a liquidity provision perspective and a trading perspective that will make it more attractive for different sets of DeFi users. We think that Nolus will excel in the Cosmos ecosystem and provide a strong platform for traders of Cosmos tokens by being able to offer cheaper and safer leveraged positions than traditional on-chain perpetual protocols. --- # Revamping Nolus Chain Inflation for Long-Term Growth Published: 2024-09-19 URL: https://nolus.io/blog/revamping-nolus-chain-inflation-for-long-term-growth Tags: Tokenomics, Announcements Excerpt: The NLS token serves as the backbone of the Nolus ecosystem, driving key operations such as gas fee payments on the Nolus chain, network ![NLS inflation revamp cover highlighting a proposed smoother emission curve aligned with long-term ecosystem growth](https://nolus.io/blog/assets/revamping-nolus-chain-inflation-for-long-term-growth/cover.webp) At the inception of the network, the total supply of NLS tokens has been capped at 1 billion, with a strategic allocation across multiple pools to bolster ecosystem participants. These allocations encompass staking rewards, team reserves, investor distributions, community and lender incentives, strategic partnerships, liquidity provisioning, and bug bounty programs. In pursuit of refining Nolus’ tokenomics and fortifying its long-term sustainability, a pivotal initiative has been proposed: a recalibration of the inflation model. ## Adjusting the Inflation Model: Smoothing the Emission Curve Currently, the NLS inflation model follows a curve that starts with a high emission rate, which then decreases over a 10-year period. The first 8 years of the current model show a rapid decline in emissions, followed by a steady, low rate during the final 2 years. You can view the current curve on [WolframAlpha](https://www.wolframalpha.com/input?i=integral+-4.33275+x%5E3+%2B+952.82456+x%5E2+-+88567.49981+x+%2B+3.86381%C3%9710%5E6+dx+from+x+%3D+0.47+to+96). ![Chart of current NLS inflation curve with high early emissions tapering sharply over the first eight years](https://nolus.io/blog/assets/revamping-nolus-chain-inflation-for-long-term-growth/figure-1.webp) Our proposal suggests a more gradual curve, reversing the current model. This new model would emit fewer tokens in the short term, with emissions increasing progressively over the remaining 8.5 years. This adjustment aims to synchronize inflation with the ecosystem’s growth, allowing more tokens to enter circulation as the network matures. The revised curve is also available for exploration on [WolframAlpha](https://www.wolframalpha.com/input?i=integral+-0.11175+x%5E3+%2B+50.82456+x%5E2+-+1767.49981+x+%2B+0.83381%C3%9710%5E6+dx+from+x+%3D+17+to+120). ![Chart of proposed NLS emission curve with lower early inflation rising gradually over the remaining 8.5 years](https://nolus.io/blog/assets/revamping-nolus-chain-inflation-for-long-term-growth/figure-2.webp) **Under the proposed model:** - The same total amount of tokens (approximately 100 million remaining out of the 150 million total staking rewards) will still be distributed. - The projected inflation variance is expected to stabilize within a range of 3.1% to 4.3%, reflecting a more controlled and predictable emission curve. This adjustment not only mitigates excessive token dilution but also fosters long-term value appreciation as the ecosystem matures. The proposed adjustment refines the inflation model to better align with long-term objectives and bolster token value retention, enhance the sustainability of the network, and optimize the distribution of NLS over time for greater strategic impact. The Nolus team has put forward a signaling governance proposal, inviting all stakeholders to engage in the voting process. Should the proposal receive approval, a subsequent blockchain software upgrade will implement the revised inflation curve. --- # Nolus SWAG: Capturing DeFi Dynamics Published: 2024-09-12 URL: https://nolus.io/blog/nolus-swag-capturing-defi-dynamics Tags: Culture Excerpt: In crypto, SWAG is more than just merchandise, it’s an essential tool for shaping brand identity and building a sense of community. In crypto, SWAG is more than just merchandise, it’s an essential tool for shaping brand identity and building a sense of community. Nolus has effectively used its unique SWAG to generate excitement and foster engagement within the space. By partnering with contemporary artists to create limited-edition designs, Nolus is pushing the envelope, fusing creativity with cutting-edge technology. ![Nolus SWAG collection cover showcasing limited-edition artist-designed DeFi apparel and brand merchandise](https://nolus.io/blog/assets/nolus-swag-capturing-defi-dynamics/cover.webp) The latest SWAG collection, designed by the talented graphic designer Tsvetislava Koleva, captures the innovative spirit driving Nolus and highlights the brand’s commitment to advancing both art and decentralized finance. Each piece in the collection exemplifies the seamless fusion of design and technology, transforming it from a simple product into a powerful expression of Nolus’s vision and values. ## The Artistic Vision Tsvetislava Koleva, renowned for her ability to seamlessly blend graphic design, calligraphy, lettering, and handcrafted elements, brings her distinctive artistic vision to this collaboration. Her work often features intricate paper sculptures, murals, and a deep exploration of analog textures and typography. With a commitment to creative growth, Tsveti continually seeks to evolve her craft, transforming two-dimensional graphics into captivating three-dimensional forms. The collection features designs titled “Lease With Ease” and “Grow With The Flow,” both of which reflect the fluid and dynamic essence of DeFi. Through intricate calligraphy and expressive typography, these pieces vividly convey the continuous motion and evolving trends within the DeFi landscape, mirroring the natural ebbs and flows of the market. Tsveti’s artwork is more than just decorative; it serves as a visual narrative of the innovation and adaptability that define the Nolus ecosystem. Each design in this collection is a testament to the ever-shifting dynamics of the market, translating abstract ideas like volatility and growth into a visual language that deeply resonates with the Nolus community. Be sure to check out her profiles and give her a follow to show appreciation for her incredible work! **Instagram:** [Tsvetelina Koleva](https://www.instagram.com/tskoleva/?hl=en) **Behance:** [Tsvetislava Koleva](https://www.behance.net/TsvetislavaKoleva) ![Grow With The Flow tee design by Tsvetislava Koleva with flowing calligraphy expressing DeFi market motion](https://nolus.io/blog/assets/nolus-swag-capturing-defi-dynamics/figure-1.webp) _Grow With The Flow_ **Production Run:** 40 pcs white tees ![Lease With Ease tee design by Tsvetislava Koleva in handcrafted lettering over analog textures](https://nolus.io/blog/assets/nolus-swag-capturing-defi-dynamics/figure-2.webp) _Lease With Ease_ **Production Run:** 40 pcs white tees ## The Fusion of Creativity and Technology As Nolus continues to push the boundaries of what’s possible in the intersection of art and decentralized finance, this SWAG collection stands as the next great milestone. It’s not just about wearing a brand; it’s about embodying a vision, participating in a movement, and connecting with a community that values both innovation and creativity. Whether you’re a developer, investor, or simply a crypto enthusiast, these pieces offer a unique way to engage with the Nolus mission. With this collection, Nolus invites you to be a part of a story where art and technology move in harmony, driving the future of the crypto landscape. Explore [our previous artist collections](/blog/infusing-artistry-and-creativity-into-the-tech-driven-landscape). --- # Changelog W35/24 Published: 2024-08-30 URL: https://nolus.io/blog/w35-24-changelog Tags: Announcements, Changelog Excerpt: Weekly development log across Money Market, Nolus-Core, Webapp, and ETL. ## Money Market A major release (v0.7.2) has been pushed to production, enabling the first short protocol OSMOSIS-OSMOSIS-stATOM and whitelisting dATOM on the NEUTRON-ASTROPORT-USDC_NOBLE protocol. This release also includes a significant refactor of the currency library, which enhances smart contract performance, reduces size, and minimizes the overall codebase. Additionally, the introduction of the topology library will help decouple the protocol release cycle from the contracts update cycle ## Nolus-Core Core v0.6.3 is currently being tested on the testnet. It includes minor performance enhancements, an update to the CometBFT consensus engine, and a reduction in blocktime. ## Webapp A major update has been pushed to production to facilitate the upcoming listing of short protocols, along with various bug fixes and performance improvements. Another notable update is the complete decoupling from the CoinGecko API, which was previously used to source price data for all lease graphs, now enabling historical price data to be sourced from the Nolus Oracle contract ## ETL Additional data sets have been included to enhance transaction history, realized PnL, and other user-centric data. A major redesign has also been implemented, switching the communication protocol between Nolus Core and the ETL from RPC to gRPC, improving speed and reliability --- # Demystifying DeFi, risky business or not Published: 2024-08-14 URL: https://nolus.io/blog/demystifying-defi-risky-business-or-not Tags: Explainers Excerpt: The crypto community has become very familiar with super-high APRs on all primitives from spot exchanges to money markets to perpetual ![Conceptual cover illustrating risk assessment across DeFi primitives and protocols](https://nolus.io/blog/assets/demystifying-defi-risky-business-or-not/cover.webp) This article will educate readers on the risks associated with DeFi protocols by giving two examples of primitives that can create large value loss. It will reinforce the need for users to review and understand the protocols that they interact with. ## Spot Exchanges Fortunately, most are aware of the risk of impermanent loss when using automated market makers. This is where users observe an uncrystallized loss in value when the ratio of assets in the liquidity pool changes over time. Typically, incentivization of liquidity is sufficient to offset this risk. However, how does the type of AMM impact impermanent loss? Constant product market makers such as UniSwap v2 (and the early iteration of Osmosis) worked by evenly distributing liquidity across all possible price ranges. The next evolution of exchanges such as UniSwap v3 and Curve v2 both used different forms of concentrated liquidity resulting in more liquidity being distributed within a tighter range. As a consequence, traders can trade more efficiently with lower slippage. This is beneficial for liquidity providers as it allows them to earn more trading fees. However, it exposes them to a greater risk of impermanent loss too. Users need to consider this when using exchanges that use concentrated liquidity. The greater efficiency of modern exchanges means that protocols emit lower incentives to liquidity providers which makes them more sensitive to impermanent loss. ## Perpetuals Protocols Perpetual futures markets exist as an innovation that was driven within the DeFi space far beyond what was available previously. Some well-known protocols have used a model that allows users to deposit liquidity to act as a counterparty to traders in exchange for yield. However, many users unknowingly deposit their liquidity in this type of protocol without understanding what is at risk. At any one time, a market will have traders positioning long and short for an asset. Ideally, markets will want to have equal longs and shorts (thus having minimal skew). Where the skew is large in any direction, it exposes the liquidity providers to risk. While liquidity providers can make even more profit above fees when the price moves against the net traders, they can also lose value if the price moves in favor of the net traders. Consequently, users need to understand how the perpetual protocol manages skew and risk to understand how exposed their liquidity is to trader performance. ## Other General Risks Several other items can impact users of DeFi protocols that are not specific to any one type of primitive. These include: - **Smart Contract Risk:** Vulnerable smart contracts have given rise to some of the biggest value destruction in the DeFi space. The growth of the crypto space has resulted in large amounts of reusable open-source code. However, building bespoke and unique products risks being insecure. Many exploits have come as a result of reentrancy bugs, flash loans, and faulty logic. These can be partially mitigated by having open-source code in tandem with bug bounties and conducting audits of the code and its underlying logic. - **Multi-Sig Risk:** Many protocols implement multi-sigs as a last line of defense for the protocol. This is prevalent in Layer-Two blockchains which use multi-sigs to upgrade smart contracts without delays in response to potential security concerns. Many DeFi protocols also include multi-sigs as part of their design. However, these could be exploited by malicious actors to implement upgrades that could see liquidity drained from pools. - **Governance Risk:** Similar to risks associated with multi-sigs, protocols that require governance to approve upgrades could also be vulnerable to malicious token holders being able to vote through an upgrade. Moreover, malicious token holders may also be able to use their holdings to extract amounts from treasuries that are controlled by governance. ## Conclusion At this point of the article, you may be questioning whether you should be using DeFi at all, or whether Nolus is safe to use. We recommend and invite our users to go through this article step-by-step and understand what they are using. DeFi can be done safely, and when done properly, it is especially rewarding and demonstrates clear value above and beyond that which is available in the TradFi world. If you have any questions about the design and choices made by Nolus, we invite you to our Discord server where we can help bring you up to speed! --- # Nolus Eden v0.6.2: The Future of Decentralized Finance Published: 2024-07-30 URL: https://nolus.io/blog/nolus-eden-v0-6-2-the-future-of-decentralized-finance Tags: Announcements, Deep Dives Excerpt: The Nolus team is thrilled to announce the release of our latest major upgrade, the Nolus v0.6.2 software upgrade, named Eden. ![Overview of the Nolus Eden v0.6.2 upgrade bringing Cosmos SDK v50 and CosmWasm 2.0 to the protocol](https://nolus.io/blog/assets/nolus-eden-v0-6-2-the-future-of-decentralized-finance/cover.webp) ## The Pinnacle of Innovation: Cosmos SDK v50 The highlight of the Eden upgrade is the integration of Cosmos SDK v50. This version comes packed with several crucial features and optimizations designed to enhance the overall experience for users. Here’s a closer look at some of the standout improvements: ### ABCI 2.0 with Vote Extensions One of the most exciting additions is ABCI 2.0 with vote extensions. This feature provides an efficient way of including block-by-block oracle prices in a decentralized and permissionless manner where validators would be submitting price feeds during consensus. This ensures more accurate and reliable data for smart contracts and other blockchain applications. ### IAVL v1: Enhanced Performance The upgrade to IAVL v1 in Cosmos SDK v50 brings improvements to disk storage and overall performance. These optimizations are key in reducing the block time of the Nolus chain, which in turn would significantly boost transaction throughput. This is particularly beneficial for the opening and closing times of lease positions and all cross-chain transactions. The end goal is to have a secure, near-instant cross-chain experience. ### Modular SDK Cosmos SDK v50 introduces a modular architecture, where core modules are gradually extracted from the SDK. This reduction in code complexity makes it significantly easier to debug and fix potential issues, enhancing the reliability and maintainability of the Nolus protocol. ## CosmWasm 2.0: Seamless Integration The Nolus Eden upgrade also comes with a newer version of CosmWasm, the smart contract platform used for building the lending market deployed on the Nolus chain. CosmWasm 2.1.0 introduces IBC callbacks, allowing smart contracts to seamlessly integrate with the ICS-20 (IBC token transfers) and ICS-27 (Interchain Accounts) standards. Currently, the Nolus Protocol utilizes the Interchain Transactions (ICTXs) module from the Neutron SDK to facilitate interaction between Nolus lease smart contract instances and the ICS-27 implementation in the IBC go module of the base layer protocol. With CosmWasm v2.1.0, Nolus can migrate to using IBC callbacks, eliminating the need for the Neutron SDK as an extra dependency. This migration enables the proper utilization of the fee abstraction mechanism introduced in the previous update, removing the necessity for Nolus users to hold NLS tokens to pay for gas. ## Swagger API Documentation To further enhance the developer experience, the Eden upgrade includes the generation of Swagger API documentation. This improvement ensures a better user experience for developers by providing comprehensive and easy-to-navigate documentation. ## Looking Ahead The Eden upgrade represents a major step forward for the Nolus Protocol, setting the stage for even greater innovation and adoption in the decentralized finance space. By leveraging the powerful new features and optimizations of Cosmos SDK v50, Nolus is poised to deliver a faster, more efficient, and user-friendly experience. Stay tuned for more updates as we continue to build and improve the Nolus Protocol. Together, we are shaping the future of decentralized finance. --- # Changelog W30/24 Published: 2024-07-26 URL: https://nolus.io/blog/w30-24-changelog Tags: Announcements, Changelog Excerpt: Weekly development log across Money Market, Oracle, Nolus-Core Eden Update, ETL, and WebApp. ## Money Market The v0.7.1 release of the money market has been deployed to production, introducing the capability to deregister protocols that are no longer in use. For instance, the protocol for Osmosis USDC.axl is being sunset. Once all lease positions are closed and the USDC.axl pool is emptied, this protocol will be deregistered along with its associated set of smart contracts ## Oracle The new version v0.6.4 of the oracle price feeders and time alarms has been released, featuring several enhancement improvements. These include the ability to automatically query new protocols and feed prices for newly added denominations to the oracle contracts, pause feeds from stale nodes, and recover from transactions stuck in the mempool ## Nolus-Core Eden Update The Nolus-Core Eden Update (v0.6.2) is now on testnet - a significant milestone in the evolution of the Nolus base layer. This upgrade introduces powerful new features and a robust foundation for a faster and more efficient user experience. Key highlights include the integration of Cosmos SDK v50 and Comet BFT v0.38.10, featuring ABCI 2.0 with vote extensions, the upgrade to IAVL v1, enhancing disk storage and performance, reducing block time, and boosting transaction throughput. The modular architecture of Cosmos SDK v50 reduces code complexity, enhancing reliability and maintainability. The Eden upgrade also includes the generation of Swagger API documentation, ensuring a better user experience for developers with comprehensive and easy-to-navigate documentation ## ETL The ETL module has been updated to support data aggregation for send and receive transactions, as well as lease contract events, including repayments and liquidations ## WebApp New features for the web app are now in testing, including detailed data about historical PnL for lease and earn positions, an enhanced transaction history page that includes dynamic statuses for multi-hop or two-signature transactions, additional lease events, and filtering capabilities --- # The Evolution of Money Markets: Banks to DeFi Published: 2024-07-25 Updated: 2026-08-07 URL: https://nolus.io/blog/the-evolution-of-money-markets Tags: Explainers Excerpt: How lending moved from institutions to peer-to-peer platforms to on-chain money markets, and where leveraged spot positions fit in that line. ![Timeline-style visual representing lending's evolution from ancient money markets to DeFi](https://nolus.io/blog/assets/the-evolution-of-money-markets/cover.webp) Evidence of money markets (a financial market that facilitates lending and borrowing) has existed since ancient Mesopotamia in 3000 BC when farmers would secure loans to prepare for upcoming farming cycles and to pay for goods and services. Fortunately, regulations around lending no longer codify that a borrower must bind their family into servitude for three years should they default on a loan. This article looks at the history of modern-day lending and the natural evolution towards Nolus DeFi Leases as a purpose-made form of lending. While going through these periods, we note that Nolus offers borrowers a cost-efficient form of leverage that carries lower risk than perpetual protocols. ## Lending through Financial Institutions Financial institutions have offered loans to borrowers for over a thousand years. They have acted as an intermediary for depositors in abstracting the complexity of sourcing deals (borrowers) and conducting the necessary due diligence. They also support borrowers by ensuring sufficient capital is available for them to borrow from. In exchange for these services, institutions will charge a fee which means that depositors receive lower returns than the interest paid on their assets. Depositors and borrowers would both be required to KYC to enter into these arrangements. This mechanism also offers borrowers with undercollateralized loans and larger sources of collective liquidity that can offer competitive interest rates for large loans. If we consider the purpose of Nolus, obtaining loans through financial institutions would also be very capital-efficient. However, the existence of intermediaries may result in higher interest rates (assuming liquidity sources are equal). Furthermore, Nolus safely offers access to all users, including those who may be unable to use existing institutions (i.e., poor credit ratings). ## Modern P2P Platforms Peer-to-peer (P2P) Platforms sought to remove the middleman from existing lending arrangements. Removing the middleman (and their associated fees) would allow lenders to receive a higher return and borrowers to pay a lower interest rate. P2P lending was also a massive boon for large parts of the world where populations were unable to access financial institutions for loans. It also allows borrowers to access bespoke loans with variable sizes, maturity dates, and interest rates. This is not typically available with loans from financial institutions that would have more standardized arrangements. From the perspective of Nolus’ vision, P2P platforms are typically a one-to-one arrangement which can make it difficult to find a counterparty that meets all the desired requirements for a loan. Furthermore, the off-chain nature of any collateral is likely to result in additional complexity and cost for the lender. ## Traditional DeFi Money Markets The advent of public blockchains quickly resulted in the creation of permissionless money markets. Early iterations of money markets facilitated the pairing of lenders and borrowers to conclude collateral-based loans. The fundamental premise of smart contracts and public blockchains offer borrowers a trustless and secure alternative to their predecessors. These money markets used overcollateralized models that require borrowers to deposit more than they seek to borrow. This has been sufficient for several use cases such as “traditional” borrowing and opening a short position. Innovation within the DeFi space has seen many improvements in the model such as isolated lending (which allows borrowers to separate their collateral for each loan) and UX benefits from leveraged looping protocols to maximize yield earned from yield-bearing assets. When comparing this to Nolus’ potential for opening a leverage position on an asset, leveraged looping can offer users a similar level of leverage to Nolus’ DeFi Leases. However, the nature of traditional money markets relative to Nolus’ Liquidity Providers’ Pool means that they will usually have lower liquidity (and therefore higher interest rates) than Nolus Protocol. ## Leveraged Trading with Nolus Leases Similarly, Nolus Protocol also offers a venue for permissionless borrowing. However, it provides lenders with purpose-made loans that are comparatively advantageous for gaining exposure to assets. Conveniently, this target market is the vast majority of the crypto industry who use money markets or perpetual protocols to gain additional exposure to an asset. Nolus’ DeFi Leases allow borrowers to get loans of up to 150% of the collateral provided by borrowers. This works by locking the collateral and proceeds in a smart contract instance that the Protocol can control. This is more capital-efficient than traditional DeFi money markets, allowing traders to gain greater leverage. As shown in our 2024 Roadmap article, one of the major updates coming in Summer 2024 is the addition of volatile base currencies. To date, Nolus Protocol has accepted $USDC deposits which allow traders to open leveraged long positions against a volatile asset. However, this is only half of the usual trading experience. This smart contract update will enable borrowers to use volatile assets, unlocking the ability to open short lease positions across various assets and markets. ## Conclusion Advancements in technology have resulted in greater opportunities for borrowers. This has manifested in lower interest rates, increased access to funding, and faster approval times. Permissionless blockchains have further extended these benefits and provided borrowers with a trustless and secure mechanism to enter these loans. Nolus Protocol benefits from these technological advancements in offering a purpose-built lending mechanism to allow borrowers to enter a leveraged position on an asset. This will extend in 2024 to allow borrowers to enter leveraged positions against an asset. --- # Changelog W27/24 Published: 2024-07-05 URL: https://nolus.io/blog/w27-24-changelog Tags: Announcements, Changelog Excerpt: Weekly development log across Money Market, WebApp, and Defillama. ## Money Market A major release, version 0.7.0 of the smart contracts suite has been migrated to mainnet, bringing several significant updates. This release introduces event notifications for cover-loss and improved timeout settings, enhancing the user experience and system reliability. Borrowers can now use volatile assets as base lending currencies, enabling short lease positions across various markets. A new USDC protocol for Astroport on Neutron has been integrated, with plans to gradually deprecate USDCaxl in favor of native USDC after the protocol is tuned. Bug fixes include corrections for ATOM symbols and improved handling of repayment overflows. We have streamlined the system by removing outdated components and simplifying processes, and testing procedures have been enhanced for greater accuracy. Additionally, we updated to the latest Rust versions to boost performance and stability. SAGA has been integrated via Osmosis, improving leasing flexibility to better meet the diverse needs of our community ## WebApp The Lease UI has undergone significant improvements. Users can now easily recall the date they opened a lease at a glance, simplifying tracking and management. Additionally, a visual representation of each position’s health, specifically the loan-to-value ratio, has been introduced, allowing users to quickly assess if any actions are needed without engaging in complex calculations. We have made significant improvements to the speed at which the state of contracts is queried, resulting in faster lease transactions. This enhancement allows for quicker reactions to lease state changes and enhances the overall lease speed. Several other enhancements have been introduced to improve the user experience. A new checkbox has been added to the Assets section to show or hide small balances, contributing to a tidier and clearer view. Additionally, a unified button for sending and receiving assets has been implemented, making it much easier to navigate the assets table. Swaps now support more advanced routes, such as USDC bridged through Osmosis being directly swapped for USDCaxl bridged via Neutron in a single transaction. All token transfers are now executed with the help of the Skip API, allowing for more complex transfers across a wider range of tokens. For example, if a user has USDC on Secret Network, they can now bridge it directly to Nolus in a single transaction. In addition to $NLS, native $USDC can now be seamlessly bridged between Nolus, Ethereum, and Arbitrum directly within the Nolus dApp. This enhanced functionality is powered by the Skip API, enabling smooth and efficient transactions across these platforms ## Defillama We have added support for DeFillama to track natively on-chain data for all Nolus lending pools on their Yield Dashboard --- # A Game-Changer for DeFi Liquidity Fragmentation Published: 2024-07-02 URL: https://nolus.io/blog/a-game-changer-for-defi-liquidity-fragmentation Tags: Interop, Explainers Excerpt: Unifying Digital Assets to Enhance Liquidity and User Experience ![Abstract visualization of unified DeFi liquidity pools reducing fragmentation across assets](https://nolus.io/blog/assets/a-game-changer-for-defi-liquidity-fragmentation/cover.webp) The DeFi ecosystem is evolving rapidly, and Osmosis is on the brink of introducing alloyed assets, with Nolus being among the first protocols to integrate them. But what exactly are alloyed assets, and how do they address the persistent issue of liquidity fragmentation in DeFi? Imagine you’re new to the crypto world, accustomed to trading on centralized exchanges (CEXs). Your friend keeps emphasizing the mantra, “not your keys, not your crypto,” prompting you to explore decentralized exchanges (DEXs). You decide to give Osmosis a try due to its user-friendly interface, withdrawing some USDC to your Web3 wallet and then transferring it to the Osmosis network with the intention of swapping it for BTC on the native DEX. However, on the swap page, you encounter three different BTC options. Which one should you choose? Confused, you might be tempted to revert to the familiar territory of CEXs. This is where alloyed assets come into play. The concept behind alloyed assets is to provide a unified representation for multiple denominations of a given asset, similar to how CEXs handle various deposit sources for the same asset, presenting them as a single representation in the user interface. ## How Alloyed Assets Work Currently, Nolus Protocol users can only lease WBTC.axl due to its high liquidity and low fees. However, this leads to liquidity fragmentation, as other BTC representations with liquidity remain underutilized, causing higher slippage. Alloyed assets aim to unify these representations. The key to this unification is a liquidity pool (LP) receipt token. When users deposit liquidity in a transmuter pool for a specific asset, they receive this LP token. A transmuter pool, a CosmWasm pool, allows for 1:1 swaps with zero slippage, meaning you can swap 2 WBTC.axl for 2 WBTC, provided there are sufficient reserves. ## Benefits for Users and Protocols This LP token can be traded like any other token on the Osmosis market, simplifying integration for Nolus and other protocols. This unified approach mitigates liquidity fragmentation and enhances the user experience (UX), offering better trading conditions for all Osmosis users, including Nolus protocol users who will directly benefit from improved liquidity and reduced slippage. ## Potential Drawbacks and Risk Mitigation However, holding an alloyed version of an asset means holding a mix of various representations. For example, an alloyed BTC might consist of nBTC, WBTC, and WBTC.axl, each with an equal weight. If one representation loses its underlying peg, the overall price of the alloyed asset would be affected. To mitigate this risk, Osmosis employs strategies such as rate limits for the dominance of any single representation, and isolating damages to minimize a collapse in the alloyed asset’s price. Additionally, a SubDAO monitors and reacts to incidents, isolating or removing threats promptly. Alloyed assets come with their pros and cons. For Nolus, which requires deep liquidity pools to facilitate leases, alloyed assets represent a significant step towards a better UX, bringing DeFi closer to mainstream adoption. By offering a higher exposure with better liquidation terms, alloyed assets align perfectly with Nolus’s goal of providing an optimal Web3 experience. This integration truly seems like a match made in DeFi heaven. --- # Infusing Artistry and Creativity into the Tech-Driven Landscape Published: 2024-06-13 URL: https://nolus.io/blog/infusing-artistry-and-creativity-into-the-tech-driven-landscape Tags: Culture Excerpt: By committing to supporting talented individuals and elevating their profiles within the crypto community, we aim to foster creativity ![Artist-series Nolus swag bridging contemporary art and crypto community culture](https://nolus.io/blog/assets/infusing-artistry-and-creativity-into-the-tech-driven-landscape/cover.webp) ## The Impact of Swag on Crypto Culture Swag has become a powerful tool for projects to build their brand and engage with their community. It’s not just about merchandise; it’s about creating a sense of belonging and identity. When someone wears a project hoodie, cap, or tee, they’re making a statement about their beliefs and values. Swag helps humanize the often complex and abstract world of cryptocurrency, making it more accessible, relatable, and inclusive. Nolus swag is widely recognized for standing out in the crypto space and generating considerable excitement. To sustain and build on this momentum, we will introduce new iterations co-created with contemporary artists. By committing to supporting talented individuals and elevating their profiles within the crypto community, we aim to foster creativity alongside technological innovation. The limited edition artist series swag will be pivotal in shaping the identity and culture of the Nolus community. These unique designs foster brand loyalty while infusing artistry and creativity into the tech-driven landscape. Ultimately, Nolus swag transcends mere merchandise; it celebrates community, creativity, and the revolutionary spirit defining Nolus Protocol. ## Cohort 1 Since everything has a beginning, let’s recognize the artists behind the initial cohort designs. Don’t forget to hit the “Follow” button on their profiles to show your appreciation for their work. ### Arsek & Erase Instagram: [Arsek & Erase](https://www.instagram.com/arsek_erase) Behance: [Arsek](https://www.behance.net/arsek), [Erase](https://www.behance.net/Erase) Arsek & Erase have been a graffiti art duo since the early 2000s. Their drawings are primarily in the field of illustration and surrealism. Distinctive features of their works are fresh colors, fun and diverse characters inspired by nature and their surrounding environment. Their works can be seen in almost all European countries, China, Taiwan, United States and Central America. Both t-shirt designs represent the fusion of creativity and technology. Featuring a bold street art aesthetic intertwined with sleek blockchain elements, these shirts represent the cutting-edge convergence of artistic expression and digital innovation. Perfect for crypto enthusiasts and art lovers alike. ![Arsek and Erase graffiti-inspired Lets F*cking Lease hoodie and tee by Nolus](https://nolus.io/blog/assets/infusing-artistry-and-creativity-into-the-tech-driven-landscape/figure-1.webp) _Let’s F\*cking Lease_ **_Production Run:_** _40 pcs gray hoodies; 40 pcs white tees._ ![Arsek and Erase DeFi Summer 2024 tee design merging street art with blockchain motifs](https://nolus.io/blog/assets/infusing-artistry-and-creativity-into-the-tech-driven-landscape/figure-2.webp) _DeFi Summer 2024_ **_Production Run:_** _50 pcs white tees_ ### Vess Blackstone Instagram: [Vess Blackstone](https://www.instagram.com/vessblackstone/) Behance: [Vess Blackstone](https://www.behance.net/vessblackstone) Vess Blackstone is a graphic designer and illustrator based in Sofia, Bulgaria, with a passion for motion design. Vess’ work is characterized by constant experimentation and the use of new materials and techniques, allowing her to continually explore and redefine her style. Her designs often draw inspiration from cosmic themes and the drive to expand and explore. The first t-shirt design is inspired by the “cosmic” nature of Nolus, playing with dimensions and perspective to signify new possibilities. ![Vess Blackstone Cosmoverse 2023 tee playing with dimensions and cosmic perspective](https://nolus.io/blog/assets/infusing-artistry-and-creativity-into-the-tech-driven-landscape/figure-3.webp) _Cosmoverse 2023_ **_Production Run:_** _30 pcs white tees_ The second design captures the feeling of movement and dynamic growth, featuring a lava-like texture that hints at a cosmic essence and power. ![Vess Blackstone Melt tee with lava-like texture evoking cosmic movement and growth](https://nolus.io/blog/assets/infusing-artistry-and-creativity-into-the-tech-driven-landscape/figure-4.webp) _Melt_ **_Production Run:_** _50 pcs white tees_ --- # Changelog W21/24 Published: 2024-05-24 URL: https://nolus.io/blog/w21-24-changelog Tags: Announcements, Changelog Excerpt: Weekly development log across Money Market, WebApp, Web Components, Alarms Dispatcher and Price Feeder, and Interchain Accounts. ## Money Market The upcoming release will unlock the full potential of the Nolus Money Market. This smart contract update will allow borrowers to use volatile assets as base lending currencies, enabling them to open short lease positions across various assets and markets ## Money Market Two new tokens, stkATOM and ATOM, have been introduced to the Astroport market on Neutron and CUDOS to Osmosis. These additions enhance leasing flexibility, catering to a wider range of preferences and needs within our community ## Money Market The profit contract has been adjusted to buy back NLS tokens from the newly established NLS/USDC pool on Osmosis via a governance proposal ## WebApp The Nolus app has been enhanced with the introduction of a swap feature powered by the Skip API, allowing for seamless asset cross-chain exchanges within the apps UI and a native USDC protocol has been enabled marking the migration start from axlUSDC to USDC ## Web Components A new library is nearly ready, set to become the single source of truth for all visual styles, design language, and visual components for all Nolus-related UIs. This marks a significant step forward in optimizing and enhancing the Nolus codebase. Additionally, it will serve as a crucial foundation for the upcoming launch of version 2 of the Nolus application ## Alarms Dispatcher and Price Feeder The latest version of the Alarms Dispatcher and Price Feeder has been released and has been running in production for several weeks. This update brings numerous enhancements that greatly improve robustness, with a primary focus on monitoring the health of connected nodes ## Interchain Accounts A new feature was utilized that enables the creation of an Interchain Account (ICA) on Neutron, controlled by Nolus’s governance, ensuring secure and decentralized management. An immediate benefit of this integration is that it allows Nolus to enter into liquidity-sharing agreements with other protocols without the need for a trusted multisig to oversee the deal. This enhancement not only simplifies the process but also reinforces trust and security within the ecosystem --- # Nolus Protocol 2024 Roadmap Published: 2024-05-20 URL: https://nolus.io/blog/nolus-protocol-2024-roadmap Tags: Announcements Excerpt: Detailed Feature Releases for 2024 ![Nolus Protocol 2024 annual roadmap banner outlining quarterly feature releases and ecosystem milestones](https://nolus.io/blog/assets/nolus-protocol-2024-roadmap/cover.webp) The Nolus Protocol is gearing up for an exciting 2024, with a feature-packed product roadmap that includes at least two new major features and integrations every quarter. Alongside these, a host of updates will boost the efficiency, scalability, and performance of Nolus’ application. Here’s a detailed look at our ambitious plans for the coming year. ## Development In 2024, we are targeting 3-month major release cycles. This structured approach ensures a consistent flow of new features and updates. ![Quarterly release timeline showing Nolus 2024 development cycles with major features grouped by quarter](https://nolus.io/blog/assets/nolus-protocol-2024-roadmap/figure-1.webp) ## Volatile Base Currencies One of the major updates coming in Q2 is the addition of volatile base currencies. This smart contract update will enable borrowers to use volatile assets as base lending currencies, unlocking the ability to open short lease positions across various assets and markets. Lenders will have the option to opt in for lucrative yields on assets such as BTC, WETH, NTRN, OSMO LSDs and more. These short markets will be gradually introduced in the Nolus app over the course of the year. ## Project X Project X is a highly experimental scaling solution that our development team has been working on. This longstanding project aims to extend Nolus’ cross-chain capabilities, and when realized, it will bring a new era to the Nolus ecosystem and the broader DeFi landscape. ## Lease Strategies We are also introducing lease strategies to enhance automation within the platform. These strategies will handle tasks such as interest repayments and liquidation safeguards. Additionally, they will also offer whitelisted yield farming options over the leveraged assets, potentially offsetting interest and, in some cases, the principal for active lease positions. ## Feature Rich DeFi Suite Several much-requested and needed features are already in the works to further enhance the user experience on the Nolus application. These include detailed profit and loss analytics, revamped data in lease positions, on-chain push notifications, enhanced historical data, one-click asset bridging, support for WalletConnect, and compatibility with more wallet extensions. ## Nolus App V2 In conjunction with these new features, we will launch version 2 of the Nolus application. This update aims to address all user experience shortcomings pointed out by our users and community members, further smoothing the overall experience. ## Nolus Core v1 The Nolus blockchain is set to upgrade to its first major version, Nolus Core v1, introducing many new features and stability improvements. One of the key highlights is fee abstraction, which will allow users to pay network fees with assets other than NLS. Additionally, the CometBFT, Cosmos SDK, and IBC stack will be updated to its latest. These updates will enable the addition of arbitrary data to the consensus, significantly improving disk storage and overall performance. Lastly, the implementation of ICA v2 will enable us to develop near-instant cross-chain transactions that will immensely improve the user experience. With these ambitious plans, 2024 promises to be a transformative year for the Nolus Protocol. We are committed to driving innovation and enhancing the user experience further. Stay tuned for more updates, and thank you for being part of the Nolus journey as we continue to push the boundaries of decentralized finance. --- # Changelog W18/24 Published: 2024-05-03 URL: https://nolus.io/blog/w18-24-changelog Tags: Announcements, Changelog Excerpt: Weekly development log across Money Market, Webapp, and Oracle. ## Money Market The latest release of the Money Market, version 0.6.3, has been successfully deployed to production. A significant update in this release is the extension of the ICA packet timeouts. Previously at one minute, these timeouts have now been extended to three hours. This change aims to enhance the robustness of the network communications across different blockchain platforms, reducing the risk of packet drops due to short timeout intervals. This adjustment is expected to improve transaction reliability and efficiency in cross-chain operations ## Webapp The Nolus App has introduced an exciting new feature in its latest update—the Swap feature, now fully integrated and operational on the app’s user interface. This enhancement allows users to easily exchange one type of digital asset for another directly within the app, facilitating more dynamic and flexible transaction capabilities. By enabling this feature, the Nolus App aims to provide its users with a seamless and efficient trading experience, significantly enriching the overall functionality and user-friendliness of the platform ## Webapp In the latest update to the webapp a new sorting functionality for lease positions has been introduced, enhancing the user interface and experience. Users can now organize their lease positions based on several criteria: the date they were opened, profit and loss (PNL), and size. This added feature allows for more efficient management and review of lease positions, enabling users to quickly access and analyze their investments based on the most relevant metrics to their needs. The update is designed to aid users in making more informed decisions by providing them with a clearer, more organized view of their financial landscape ## Webapp The latest update to the webapp has also introduced Noble USDC as the primary stablecoin for managing leases on the Osmosis DEX. This significant enhancement ensures that Noble USDC is now the default stablecoin used for all leases, providing users with a native option for their trading activities. By adopting Noble USDC, the platform aims to offer greater stability in transaction processing and enhance the financial security for users engaging in leases on the Osmosis DEX ## Oracle The Nolus Oracle has undergone significant updates to enhance its price feeding mechanism. The first major change is the extension of the Exponential Moving Average (EMA) sample period from 10 seconds to 50 seconds. With each feeder on the mainnet currently programmed to push a price update every minute and five feeders active, this results in a price feed approximately every 12 seconds. This frequency closely aligns with the current block time, which occurs about once every two blocks. By increasing the sample period, the oracle can include more observations per sample, effectively smoothing out the effects of rapid price changes. This adjustment is crucial for mitigating the risk of liquidation events triggered by brief, abrupt price declines. Additionally, there has been a reduction in the discount factor from 75% to 65%. This modification gives more weight to earlier prices in the series, which helps to further diminish the influence of quick price drops on the overall price calculation. Together, these changes aim to stabilize the price measurements provided by the oracle, reducing the likelihood of sudden price disruptions and enhancing the overall reliability of the trading environment on the platform ## Oracle The Oracle swap tree for the Osmosis Noble USDC has been refined by revising the swap paths to prioritize pools that possess higher liquidity and offer more advantageous fee structures. This strategic adjustment is designed to enhance the operational efficiency and economic viability of transactions carried out through the Nolus Protocol on the Osmosis platform. By selecting swap paths that connect to more liquid pools and have lower fees, the protocol can facilitate smoother and more cost-effective transactions for users. This optimization not only promises to improve transaction speeds and reduce costs but also ensures a more robust and dependable trading experience, making it a significant upgrade to the current system --- # Post Mortem Report: Service Interruption of Nolus Protocol on April 12th Published: 2024-04-18 URL: https://nolus.io/blog/post-mortem-report-service-interruption-of-nolus-protocol-on-april-12th Tags: Post-Mortems Excerpt: Summary ## Summary On April 12th at 23:41 UTC, the Nolus Protocol experienced a significant service disruption triggered by an overwhelming number of requests to open or close lease positions. This influx, triggered by a substantial market correction, resulted in over 1,600 lease positions being sent for partial or full liquidations. The surge overwhelmed the relayers, which struggled with a backlog of pending packets across multiple **ICA (Interchain Accounts) ordered channels**. ## Context In IBC, **ICA ordered channels** maintain the integrity of transaction sequences across blockchains by ensuring that messages are delivered in the exact order they were sent. If **a channel times out:** usually due to a lapse in the delivery or acknowledgment of messages within a certain time frame, the protocol mandates a series of steps to re-establish the channel: 1. **Timeout Detection:** The system identifies a timeout when it fails to receive timely acknowledgments for sent packets. 2. **Channel Closure:** The channel is closed to halt any further transactions under the current session. 3. **Re-Establishment:** A new handshake process is initiated by the involved parties to renegotiate channel terms and align channel configurations and sequence expectations across both chains. 4. **Channel Reopening:** Post a successful handshake, the channel progresses from a ‘try’ state to an ‘open’ state, thereby resuming ordered communication. ## Root Cause The disruption stemmed from **an accumulation of ChanOpenTry and ChanOpenAck (channel reestablishment)** **messages in the relayers queue**. This backlog led to **repeated timeouts** and reinitializations of the channel opening process, trapping the relayer in a continuous loop and hindering the processing of other pending messages. ## Immediate Remedial Actions Between April 12th and 13th, the Nolus development team introduced a queue prioritization strategy and integrated a sleep function on the **ChanOpenTry and ChanOpenAck messages** within a forked version of the relayer software. This intervention effectively broke the loop, cleared the backlog of packets, and restored the protocol to optimal functionality. This patched relayer version **will remain in use until a complete migration of all ordered channels to unordered channels takes place**, which inherently lack timeouts and remain indefinitely open. Additionally, the [timeout window has been extended to three hours](https://explorer.kjnodes.com/nolus/gov/107) to afford relayers sufficient time to process packets before a timeout occurs. ## Future Steps The dev team is in the midst of upgrading Nolus core to the latest versions of Cosmos SDK (v0.50.0) and IBC-go (v8.1.2). This upgrade will facilitate the migration of all ICA channels to unordered versions. Following this, we plan to transition to a system architecture that exclusively utilizes a defined set of unordered channels, enhancing the responsiveness and resilience of the cross-chain communication. This strategic shift is aimed at fortifying our infrastructure against similar disruptions in the future and improving the overall robustness of the Nolus Protocol. --- # Changelog W15/24 Published: 2024-04-12 URL: https://nolus.io/blog/w15-24-changelog Tags: Announcements, Changelog Excerpt: Weekly development log across Money Market, Alarms Dispatcher, Webapp, Nolus-Core, and DeFiLlama. ## Money Market Version 0.6.2 Released: This update introduces the Reserve Contract, serving as a protocol insurance fund. It aims to cover various inefficiencies such as untimely liquidations caused by faulty price actions, derivatives price depeg, or technical shortcomings ## Alarms Dispatcher Enhanced the alarm dispatcher to dynamically adjust its scaling based on current demand. This solution is designed to maintain operational capacity during high alarm activity periods ## Webapp A significant update is currently in its final testing phase, which will introduce a new token swap feature powered by the Skip API. Additionally, this update will initiate the transition of the protocol from USDC.axl to native USDC ## Webapp A substantial number of bugs have been addressed and resolved, leading to a more reliable user experience. Additionally, we’ve introduced various performance improvements that contribute to faster and more efficient operation of the app ## Nolus-Core Version 0.5.3 has been released, featuring an upgrade to the latest ibc-go v7.4.0. This update eliminates the need for additional mechanics previously supported by Nolus, specifically the dispatch of time alarms to maintain liveness on all Interchain Accounts Channels. This functionality is now rendered obsolete, streamlining the operation within the updated framework. Additionally, this version introduces support for Cosmovisor, significantly enhancing the node operators’ experience by automating binary updates for the chain, further streamlining the management and operation of the network ## DeFiLlama We’ve streamlined the integration process, which now allows for the tracking of additional data points in DefiLlama. This enhancement not only broadens the scope of data available but also simplifies management --- # Post Mortem Report: Nolus Protocol Service Interruption on March 23rd Published: 2024-04-01 URL: https://nolus.io/blog/post-mortem-report-nolus-protocol-service-interruption-on-march-23th Tags: Post-Mortems Excerpt: Summary ## Summary The Nolus Protocol experienced service interruption starting at 21:11 UTC on March 23rd, due to an influx of requests to open or close lease positions by users and the protocol’s liquidation engine. This unexpected surge led to a bottleneck in the time alarms dispatcher, tasked with maintaining the liveness of ICA channels, as it was unable to process the excessive number of alarms required. This inefficiency quickly escalated, causing IBC relayers to generate a high volume of requests, resulting in consensus failures on both Nolus and Osmosis nodes operated by third parties as well as the Nolus core team. To mitigate the issue, access to the Nolus dApp was restricted, allowing the team to conduct an investigation and address the root cause of the disruption. By 16:00 UTC on March 26th, the system had been restored to full operational capacity, with all infrastructure revived and pending IBC packets processed. ## Root Cause Analysis The existing implementation of IBC’s ICS-27 standard presents a challenge in the operational dynamics of ordered ICS-27 channels, especially when they encounter timeouts. The IBC current design [triggers a callback to notify the relevant contract](https://github.com/cosmos/ibc-go/blob/bc741464d48ba636ac4a6f8627e8b3e753fec083/modules/core/keeper/msg_server.go#L529) that the channel is closed before the channel’s status officially transitions to closed. This premature notification results in a sequence where the channel’s state is updated to ‘state_closed’ only after this callback has been executed. This creates a timing issue that can adversely affect subsequent operations, notably channel registration. To mitigate this issue, the Nolus dev team implemented additional mechanics involving the dispatch of time alarms which are designed to ensure that Interchain Accounts Channels (ICA) can be promptly reopened by the lease contract, thereby preserving their activity and functionality at all costs. This approach is intended to address the timing discrepancies caused by the current ICS-27 implementation, ensuring that channel operations remain smooth and uninterrupted despite the inherent challenges presented by the existing protocol design. ![Time-alarm dispatcher overload schematic showing a request surge bottlenecking ICA channel liveness across IBC relayers](https://nolus.io/blog/assets/post-mortem-report-nolus-protocol-service-interruption-on-march-23th/cover.webp) A significant increase in user requests, combined with the protocol’s liquidation engine operating at high capacity, created a bottleneck in the time alarms dispatcher. This caused the dispatcher to be unable to process the overwhelming number of required alarms. ## Corrective and Preventive Measures In response to this incident, several measures have been implemented: - **Dynamic Scaling of Alarm Dispatcher:** The alarms dispatcher has been enhanced to dynamically scale based on demand. While this is a temporary solution, it ensures the dispatcher’s operational capacity during periods of excessive alarm activity. It’s important to note that this solution can increase the transaction occupancy in the blockchain’s block space, potentially taking up to 30% of the available space in certain blocks. - **IBC Implementation Update:** The core issue [has been acknowledged](https://github.com/cosmos/ibc-go/issues/6039), and the proposed solution will not require the involvement of any time alarms. Nolus plans to adopt this update following its official release, which will directly address the underlying issue. The Nolus team extends its gratitude to the IBC team for their swift response in acknowledging the issue. Moving forward, Nolus is committed to closely monitoring the system’s performance and continuously improving its infrastructure. This commitment is aimed at preventing similar incidents and ensuring a smooth cross-chain experience. --- # Changelog W12/24 Published: 2024-03-22 URL: https://nolus.io/blog/w12-24-changelog Tags: Announcements, Changelog Excerpt: Weekly development log across Money Market, Webapp, and Nolus Website. ## Money Market Four New Tokens Introduced: INJ, JKL, LVN, and PICA have been added. These additions enhance leasing flexibility, catering to a wider range of preferences and needs within our community ## Webapp Improved Visibility of Interest Due and Settlement Periods: Interest due amounts for lease positions will now be highlighted in yellow for better visibility. Additionally, the tooltip now displays the period for the next settlement ## Webapp Resolved Minor Discrepancy: Fixed an issue where the price per asset displayed on the sharing screen deviated from the actual price per asset in a lease position ## Nolus Website The latest update for the https://nolus.io website has just been rolled out to production! Make sure to check it out and discover the fresh new look --- # Changelog W10/24 Published: 2024-03-08 URL: https://nolus.io/blog/w10-24-changelog Tags: Announcements, Changelog Excerpt: Weekly development log across Money Market Update, Webapp, Webapp Refactoring, Website, and Infra. ## Money Market Update Version 0.5.2 Released: In this update, we’ve added support for new assets (TIA, stTIA, and stkATOM) to the Astroport protocol on Neutron, while also decreasing the buyback frequency to 12 hours from 7200 hours for improved efficiency and market responsiveness ## Money Market Update A Noble USDC protocol has been instantiated for Osmosis, marking the initiation of the transition of the Money Market from USDCaxl to native USDC ## Webapp Introduced three new tokens: stTIA, milkTIA, and DYM. These additions provide more flexibility and choice for leasing, catering to a broader range of preferences and needs within our community ## Webapp Refactoring A significant refactoring has been deployed, involving a major overhaul of large functions by breaking them down into smaller segments. This strategic change greatly enhances readability, streamlines maintenance efforts, and boosts overall support capabilities. By decomposing complex functions into more manageable parts, the codebase becomes more modular and easier to understand, facilitating smoother development processes and reducing the likelihood of errors ## Website Completed development of a new website for nolus.io, which is currently undergoing testing ## Infra Integrated Cosmovisor into our release pipelines to facilitate faster blockchain updates and enhance convenience for validators ## Infra Instantiated a second ETL module to cut downtime during updates and improve reliability --- # In-Depth Analysis #3: Unprecedented Growth Continues Published: 2024-03-07 URL: https://nolus.io/blog/in-depth-analysis-3-unprecedented-growth-continues Tags: Metrics Excerpt: Welcome back to the third installment of our series, ‘In-Depth Analysis. ![Cover for the third Nolus in-depth analysis tracking continued transactional and lease growth](https://nolus.io/blog/assets/in-depth-analysis-3-unprecedented-growth-continues/cover.webp) _The previous installment, covering the run of growth that preceded this one:_ [In-Depth Analysis #2: Nolus Protocol’s Explosive Growth](/blog/in-depth-analysis-2-nolus-protocol-s-explosive-growth) ## Unprecedented Growth in Transactional Volume Since our last summary, Nolus has seen a staggering $25 million in transactional value channeled through Leasе and Earn. This marks an impressive 72% increase since January, showcasing a robust and growing interest in the platform’s offerings. ## Surge in Loan Grants and Lease Positions Over the past eight months, Nolus has granted a total of 6,739 loans, with a near 70% surge in just the last two months. Notably, 40% of these loans were issued in the recent 55-day span, indicating a consistent pattern of growth and adoption. Lease positions have doubled since our last report, reaching $14.5 million, with an average position size per user of $2,300, up by 10%. This steady increase in the average amount, coupled with the exponential growth in the number of loans granted, points to a vibrant and expanding protocol. ## Asset Diversification and Leverage The composition of the DeFi leases showcases a diverse asset portfolio: 20% in ATOM (including all LSDs), 20% in OSMO (including all LSDs), followed by AKT, TIA, NTRN, WETH, BTC, and others. The platform used $6.1 million in down payments to open these $14.5 million lease positions, translating to an average leverage of 137% above the down payment. This indicates a healthy risk level for margin calls. USDC.axl emerged as the most popular down payment asset, evidencing strategic asset utilization by users. ## Record-Setting Performance and Loyalty NTRN loans have been particularly noteworthy, with 426 loans opened for a total of $1.2 million in leases, demonstrating the asset’s strong performance. Additionally, the protocol has seen a surge in the number of high-value leases, with 110 leases exceeding $10k each in the past two months. The best performing day was March 1, with an astonishing 170 leases opened for a total of $330k. Currently, there are over 1,400 open lease positions, funded by $1.5 million in down payments for leases valued at $3.5 million. Impressively, 84% of these leases are profitable, with an average return on investment (ROI) of 40%. Notably, wETH and wBTC leases have yielded an ROI of over 110%, highlighting the lucrative opportunities within the platform. We also extend our congratulations to the most loyal Nolus user, who has taken a remarkable 211 leases and achieved profitability in over 90% of them, especially with AKT and AXL leases. _This article aims to provide a comprehensive analysis of Nolus’s performance, underlining its significant growth and the dynamic changes in its operational landscape. The data reflects the increasing adoption of DeFi Leases and the evolving preferences and strategies of its user base. All data related to these statistics is available on-chain and represents normal operational flow that can be conveniently extracted using a Rust ETL client, accessible_ [_here_](https://etl.nolus.network)_._ --- # Changelog W08/24 Published: 2024-02-23 URL: https://nolus.io/blog/w08-24-changelog Tags: Announcements, Changelog Excerpt: Weekly development log across Money Market Update, Oracle Contract Update, Testnets Cleanup, ETL, and Webapp Code Refactoring. ## Money Market Update Version 0.5.1 Released: In the latest update, building upon version 0.5.0, we've introduced a suite of enhancements aimed at refining the development process. Notably, this includes significant improvements to our developer tooling, designed to make the deployment of protocols more efficient. Additionally, we've rolled out various quality of life updates, all focused on enhancing the overall usability and development experience ## Oracle Contract Update Updated the oracle swap tree with the latest assets that were whitelisted as lease and repay assets in the contracts version 0.5.1 ## Testnets Cleanup Removed several redundant protocols from the smart contract suite on both the Vitosha (development) and Rila (public) testnets, streamlining operations and improving efficiency ## ETL In the latest enhancements to our ETL, we've updated the production environment to fully support all the new assets introduced with the version 0.5.1 money market update. This ensures that our production systems are fully aligned with the latest asset offerings and functionalities. Additionally, we have taken a step further in our testing protocols by deploying a test instance that is directly connected with the Rila testnet ## Webapp Code Refactoring Completed a major overhaul of large functions, breaking them down into smaller segments. This change enhances readability, eases maintenance, and improves overall support capabilities --- # Changelog W07/24 Published: 2024-02-16 URL: https://nolus.io/blog/w07-24-changelog Tags: Announcements, Changelog Excerpt: Weekly development log across Money Market Update, Nolus Core Update, dApp Refactoring, User Interface, Infrastructure, and more. ## Money Market Update Version 0.5.0 Released: This update introduces significant efficiency improvements in the calculation of lease interest within our smart contracts suite, alongside whitelisting for many new assets and new protocols. Additionally, it includes a significant list of performance improvements ## Nolus Core Update A minor version bump to v0.5.2 for the Nolus blockchain has been introduced to address the limitation on the max size of a WASM contract ## dApp Refactoring Initiated major refactoring of large functions into smaller segments to improve readability, maintenance, and support. This enhancement aims to reduce the occurrence of bugs in future updates ## dApp Refactoring Eliminated all unnecessary and repetitive JavaScript code segments from the project to streamline functionality and enhance performance efficiency ## User Interface Added functionality for transferring USDC.axl tokens directly from the Axelar network to Nolus via both Osmosis and Neutron ## Infrastructure To enhance the performance and maintain the operational efficiency of the Nolus applications, a comprehensive pruning strategy has been implemented across all full-nodes within the system. This initiative is designed to ensure the database remains clean and uncluttered by removing obsolete or unnecessary data that can slow down node responsiveness and impede transaction processing speeds ## Oracle Updated the Price Feeders to integrate a new feeding engine, designed to maintain consistency and stability of feeds during periods of high market volatility and in scenarios where endpoints are inaccessible due to overloaded requests on foreign network nodes --- # Changelog W06/24 Published: 2024-02-09 URL: https://nolus.io/blog/w06-24-changelog Tags: Announcements, Changelog Excerpt: Weekly development log across New Server, +Four Full-Nodes Infra, Governance, Leased Asset Bug in New Lease Form, PnL Calculation for New Leases, and more. ## New Server (Infra) Implemented and configured a new enterprise-grade server to maintain optimal performance for all web-based services and provide flawless experience for the next 100k+ users ## +Four Full-Nodes Infra Four new full nodes have been enabled: This expands the node network to a total of six, enhancing the capacity to efficiently load balance requests from the dapp and third-party platforms ## Governance (UI) Governance Voting in Nolus DApp: Implemented governance voting functionality within the Nolus DApp, simplifying the process for users to vote on new features and improvements ## Leased Asset Bug in New Lease Form (UI) Addressed and resolved an issue where the leased asset displayed in the new lease form would change under rare circumstances ## PnL Calculation for New Leases (UI) Improved the Profit and Loss calculation for new leases. The calculation now accurately starts from zero rather than an arbitrary figure ## Impact and Fees for New Leases (UI) Enhanced the accuracy of impact and fee calculations when opening a new lease position ## DeFiLama Updated all relevant data in the DeFiLlama aggregator ## Nolus Core Update This update adds new features like the fee grant module and icahost support, fixes bugs in deployment scripts and DEX configuration, updates wasmvm to v1.5.2, and refines tax module fees. It also enhances documentation with ADRs for cosmos-sdk and fees, improves code styling and refactoring, and strengthens continuous integration by pinning the builder base image version --- # Changelog W05/24 Published: 2024-02-02 URL: https://nolus.io/blog/w05-24-changelog Tags: Announcements, Changelog Excerpt: Weekly development log across Added DYDX and STRD, ML Bot, Ticketing System, Interest Rate Display Update, Enhancement for Lease Positions, and more. ## Added DYDX and STRD Added DYDX and STRD to the list of available leasing options ## ML Bot (Support) Introduced a cutting-edge chatbot utilizing machine learning, aimed at providing quick and efficient answers to the community's queries ## Ticketing System (Support) Implemented a new multi-platform ticketing system to enhance user assistance with queries and issues ## Interest Rate Display Update (UI) The interest rate for lease positions is now shown on a monthly basis. This change reflects the average lifespan of lease positions and simplifies cost calculations over shorter periods ## Enhancement for Lease Positions (UI) Improved the user interface for opening lease positions. Now, DEX swap fees are automatically deducted from the down payment, offering a clearer understanding of the total costs involved ## Explorer Transition (UI) Moved from explorer.nolus.io to ping.pub/nolus for enhanced functionality. The new platform is more current, provides more detailed information, and is compatible with the latest governance proposal formats ## Targeted News Banners (UI) Enhanced wallet segmentation has been implemented for news banners. This ensures that users receive only the information relevant to their specific needs and interests ## Swap Price Impact Calculation (UI) When opening a lease position, the Swap Price Impact is now calculated in conjunction with the swap fees. This integration is reflected directly in the user interface, providing a more comprehensive view of the costs involved ## PnL Consistency (UI) Resolved an inconsistency issue where the Profit and Loss (PnL) data did not align across lease position, share, and portfolio views. This ensures accurate and consistent PnL reporting across different sections ## Alarms Dispatcher (Oracle) Update to Alarms Dispatcher: Upgraded to version 0.62.0. This version introduces a more efficient engine that enhances the time-insensitive mode and improves handling of signature verification errors. Additionally, response decoding has been corrected to align with SDK 0.47's standards that was introduced with the Nolus Core Twilight ## Automations Repayment Bot Enhancement: The repayment bot has been updated to exclusively settle leases for the NTRN token only ## Hermes Relayers (IBC) The Nolus-run Hermes relayers have been upgraded to the latest version 1.8.0. This update introduces a range of new features and enhancements to improve the functionality of Hermes ## Enhancements (ETL) Added capabilities to support data aggregation from multiple decentralized exchanges (DEXs) and updated the queries to be compatible with the latest Nolus Core Twilight update --- # Nolus Twilight v0.5.0: Boosted performance for boosted adoption Published: 2024-01-29 URL: https://nolus.io/blog/nolus-twilight-v0-5-0-boosted-performance-for-boosted-adoption Tags: Announcements, Deep Dives Excerpt: Exploring the latest upgrade and its impact on users ![Nolus Twilight v0.5.0 upgrade banner highlighting CometBFT, ABCI 1.0 and fee abstraction enhancements](https://nolus.io/blog/assets/nolus-twilight-v0-5-0-boosted-performance-for-boosted-adoption/cover.webp) ## The Heart of the Upgrade: Cosmos SDK v47 At the core of Twilight is the integration of Cosmos SDK v47. This version brings a bouquet of features and optimizations, enhancing the overall blockchain experience. Let’s dive into the key milestones: ## CometBFT Integration: A New Era of Consensus CometBFT is now fully integrated into the Nolus blockchain. But what is CometBFT, and how does it differ from the previously used Tendermint? In simple terms, CometBFT is an advanced consensus mechanism. CometBFT is a Byzantine Fault Tolerant (BFT) middleware that takes a state transition machine, written in any programming language, and securely replicates it on many machines. It is a fork of Tendermint Core and implements the Tendermint consensus algorithm but with additional useful enhancements on top such as improving the ABCI layer or modifying the mempool. ## ABCI 1.0: Paving the Way for ABCI++ ABCI (Application Blockchain Interface) is a critical layer in Cosmos SDK-based blockchains. It allows developers to build applications on top of the Tendermint consensus algorithm. With ABCI 1.0, we’re moving closer to ABCI++, which promises even more control and flexibility. This version opens doors to finer control over transactions in the mempool. Mempool in the world of blockchains stems from a memory pool and is a list of pending transactions waiting for validation from a node before it is committed to a block on the blockchain. Additionally, ABCI++ introduces vote extensions, allowing consensus votes to include valuable use cases like Oracle data. Nolus currently uses a proprietary Oracle system for off-chain price feeding. With vote extensions, validators can apply a similar price-feeding mechanism, leading to more decentralized feeds and enhancing data reliability. ## User-Centric Innovations ### Proposal Validation Upon Submission A key decision by the Nolus development team was to retain the proposal validation process upon submission. Unlike Cosmos SDK 47, where the validation occurs at execution (leading to potential failures), Nolus ensures that every proposal is checked for viability right at submission. This means less frustration for users and a smoother governance process. ### Fee Abstraction Mechanism: Flexibility in Gas Payments The introduction of fee abstraction is a game-changer for user experience. Now, users can pay gas fees with tokens other than the native NLS. The first token to be introduced for this purpose is axlUSDC. This flexibility greatly enhances the user experience, allowing more freedom in how users interact with dApps. From a protocol’s revenue point of view, it is important to note that a 40% protocol tax on transactions remains, regardless of the payment token. This tax is a vital revenue stream for Nolus. It is used to buy back NLS and support the lenders’ incentives pool. ## Performance at the Forefront Twilight isn’t just about new features; it’s also about enhancing performance. With several optimizations, the base layer protocol is now more capable of handling the increasing user demand, ensuring a smoother and more efficient blockchain experience. In conclusion, Nolus Twilight v0.5.0 is more than an upgrade; it’s a transformation. With groundbreaking features like CometBFT integration, ABCI 1.0, proposal validation improvements, and the fee abstraction mechanism, Twilight sets a new epoch for Nolus.  The future looks bright, or should we say, Twilight bright! --- # In-Depth Analysis #2: Nolus Protocol’s Explosive Growth Published: 2024-01-11 URL: https://nolus.io/blog/in-depth-analysis-2-nolus-protocol-s-explosive-growth Tags: Metrics Excerpt: Welcome to the second episode of our series ‘In-Depth Analysis. ![Cover for the second Nolus in-depth analysis showing the protocol's explosive growth](https://nolus.io/blog/assets/in-depth-analysis-2-nolus-protocol-s-explosive-growth/cover.webp) ## Transactional Value Nolus has witnessed an astounding surge in transactional value, with a total of $14.5 million flowing through its Earn and Lease features. This represents a staggering 190% increase since mid-October. On average, users have completed approximately $250,000 in daily volume over the past 50 days. ## DeFi Leases Growth In the six months of its existence, Nolus has granted a total of 4,067 loans. Impressively, more than 60% of these loans were granted in the past 50 days alone, marking a 153% increase since the last reported date. The DeFi lease positions on the platform now total $8.6 million, with an average position per user amounting to $2,110. This growth is noteworthy because it emphasizes a significant rise in the number of loans granted rather than the average loan amount. While the average loan amount increased by 13.5%, the almost double surge in the number of loans indicates adoption growth and more users participating in the Nolus ecosystem. ## Asset Distribution Breaking down the $8.6 million in DeFi leases: 26% were in ATOM (including LSDs), 24% in OSMO (including LSDs), 15% in AKT, 11% in TIA, 7% in WETH, 7% in and WBTC, 2% in each STARS, AXL and CRO, while the remaining almost equally distributed between Juno, SCRT, EVMOS. ## Margin Levels Users have used $3.7 million in down payments to initiate the $8.6 million DeFi lease positions, resulting in an average leverage of 133.6%. This level of leverage demonstrates extremely healthy margin call risk levels.  Notably, the most commonly used downpayment asset is USDC making up 36% of all leases, followed by ST_ATOM at 16%, AKT at 13%, and equal distribution between OSMO, ATOM, and ST_OSMO at around 8% each. TIA was used as a downpayment in 5% of all leases, primarily to purchase more TIA. This reflects a shift towards using more USDC for down payments compared to using other assets, as was observed back in October. Interestingly, more than 54% of all loans used a different downpayment asset compared to the final leased asset. ## Gains and Leverage The largest individual loan on Nolus was in OSMO for almost 90,000 units, resulting in a solid 602% gain on investment, with an entry price below $0.5 and an exit above $1.3. Additionally, 162 DeFi Leases were opened for more than $10,000 each, representing 33% of all DeFi Leases based on value. The top 10 largest positions, predominantly in ATOM, OSMO, and wBTC, have shown substantial gains, with seven of them already closed at an average gain of 125% per loan. Three positions remain open, currently standing at an impressive 476% gain on their initial investments. ## Performing Days and Trends Nolus had its best performing day on December 16, 2023, with total DeFi leases reaching $280,000. December 12th and 15th also stood out, each exceeding value of $235,000 in DeFi leases.  In January 2024, the Protocol saw a rapid surge in activity, with a total of $1.36 million in DeFi Leases taken out in just 10 days. January 5th and 6th nearly reached historical highs with $225,000 and $260,000 in granted loans, respectively.  The standout assets in the early days of 2024 so far are AKT and TIA, accounting for 50% of all new loans. ## Profitability Currently, there are 1,032 leases on Nolus, double the number since the last report, funded by $1.1 million in down payments to secure $2.6 million in DeFi leases. These leases, on average, were opened 29 days ago and have achieved a remarkable 69% return on investment since opening, equivalent to 875% annualized. The most profitable position is in OSMO, currently standing at a 345% gain on investment, and an impressive 87% of all leases are currently in profit. Remarkably, around $6 million in leases have been closed, with three-quarters of them resulting in profit. In terms of numbers, the total profit from all closed positions averages to an impressive 81% ROI per loan. ## Liquidation Rates Nolus has experienced a solidly decreasing number of liquidations, with only 0.5% of the $8.6 million lease positions undergoing liquidation. Approximately half of these positions underwent partial liquidations, preserving users’ initial down payments, a significant advantage compared to other protocols where such positions are often fully closed, resulting in a total loss of equity. ## Conclusion The upward growth trend of Nolus highlights the rising adoption and confidence that users have in the Protocol. Notable advancements, minimal liquidation rates, and a varied portfolio of assets demonstrate a developing and strong DeFi ecosystem. With ongoing innovation and adaptation, Nolus is positioning itself as a key contender in the DeFi arena in 2024. _This article aims to provide a comprehensive analysis of Nolus’s performance, underlining its significant growth and the dynamic changes in its operational landscape. The data reflects the increasing adoption of DeFi Leases and the evolving preferences and strategies of its user base. All data related to these statistics is available on-chain and represents normal operational flow that can be conveniently extracted using a Rust ETL client, accessible_ [_here_](https://etl.nolus.network)_._ --- # Nolus Expands to Neutron Published: 2023-11-30 URL: https://nolus.io/blog/nolus-expands-to-neutron Tags: Announcements, Interop Excerpt: Nolus is progressing towards completing its integration of Astroport’s deployment on Neutron. ![Announcement of Nolus integrating Astroport on Neutron to broaden DeFi Lease liquidity beyond Osmosis](https://nolus.io/blog/assets/nolus-expands-to-neutron/cover.webp) ## What Does This Integration Mean? Until now, Nolus has leveraged the liquidity of Osmosis alone. This has been a great starting point for Nolus, as Osmosis has the greatest amount of liquidity in its liquidity pools within the Cosmos ecosystem. This has provided the most effective pricing for DeFi Leases. However, we are now seeing more and more Cosmos ecosystem DEXes innovating on their models to provide the most efficient swaps for users. Astroport’s unique passive concentrated liquidity (“PCL”) model offers better trade pricing than constant product pools. This is comparable to Osmosis’ supercharged liquidity model, which allows users to manually deposit their liquidity in ranges chosen by them. However, Astroport differentiates itself from Osmosis by implementing a “passive” LPing experience that doesn’t require ongoing active management of liquidity distribution. This is an oracle-based solution for concentrating liquidity and has its own advantages and disadvantages. This provides two different exchanges that may appeal to different sets of users, which may result in different assets being priced more favorably across the two different DEXs. ## How Will Nolus and Its Users Benefit From This Integration? The benefits of an integration with Astroport (in tandem with the existing Osmosis integration) offer Nolus and its stakeholders widespread benefits. This includes: - **Borrowers:** Users will now be able to gain exposure to a wider range of assets that have a threshold level of liquidity on Neutron’s decentralized exchanges, such as NTRN, Neutron’s native asset, for example. These are highly attractive assets that have been requested often by members of the Nolus community. - **Depositors:** By being able to provide more desirable assets for the borrowers, we hope to see greater amounts borrowed on the protocol which will both generate more interest income for depositors, but also support the continued growth of the Liquidity Providers’ Pool to be able to accept more deposits. - **NLS Stakers:** Greater efficiency in the Protocol may result in more usage of the Protocol. This will result in more transaction fees paid by users, which are distributed to stakers. A more efficient protocol will also attract more borrowers and depositors to become long-term NLS stakers (increasing demand for the token) being exposed to the various value-accrual revenue streams which the protocol has in place. ## How Will Astroport and Neutron Benefit From This Integration? There are many direct benefits to Astroport and its stakeholders through this integration. - Greater volume on Astroport will provide greater fees to Astroport’s liquidity providers and to ASTRO stakers; and - Greater fees for Astroport’s liquidity providers will reduce the amount of incentives required to compensate liquidity providers for the associated risks with liquidity provision. ## How Does It Work? Nolus will use Interchain Accounts and support Neutron as a host network. After enabling this through governance, it will be possible to create smart contract instances on Nolus that open an account on Neutron that can perform different actions such as swaps, lease liquidations, and repayments. ## Closing Thoughts The integration of Astroport will give birth to a mutually beneficial relationship between two organizations, similar to that which we see in the traditional world. It will allow Nolus to offer more assets to borrowers. Thus resulting in a greater volume of loans, leading to an increased demand for the NLS token. It will also offer Astroport a greater amount of volume through the exchange that will offer its liquidity providers and stakers a greater amount of income. We will continue to explore other opportunities to integrate exchanges to demonstrate the benefits of a unified ecosystem. --- # In-Depth Analysis: Nolus Money Market’s Early Months Published: 2023-11-23 URL: https://nolus.io/blog/in-depth-analysis-nolus-money-market-s-early-months Tags: Metrics Excerpt: In the evolving landscape of DeFi, Nolus is carving out a niche, not through conventional benchmarks but by pioneering a demand for its ![Early-months performance snapshot of the Nolus money market covering lender yield, DeFi Lease activity, and liquidation stats](https://nolus.io/blog/assets/in-depth-analysis-nolus-money-market-s-early-months/cover.webp) ## Lender Stablecoin Returns In less than a month, after the protocol’s genesis, the yield for lenders has matured, primarily due to an increased utilization rate of funds and Nolus’ unique mechanism to limit new deposits when utilization drops below specific thresholds. Consequently, this ensures that the yield consistently remains above 6.40% APY, exceeding the average across the industry. With the targeted [utilization level raised](https://explorer.kjnodes.com/nolus/gov/46), the yield is poised to climb toward the 10.00% APY mark. ## DeFi Leases There have been 1,605 DeFi lease positions initiated, amounting to an approximate value of $3 million. These leases were supported by down payments totaling $1.3 million, resulting in an average leverage that is 125.00% higher than the down payment. This reflects the robust health of the positions, as it would require a nearly 45.00% drop in asset price from the base to initiate the first partial liquidation. Notably, stATOM has emerged as the preferred asset for down payments, 31.00%, followed by USDC (22.00%), AKT (17.00%), and an equal distribution between ATOM, stOSMO, WBTC, and OSMO at around 5.00% each. 40.50% of the total positions were in ATOM (including LSDs), 16.30% in OSMO (including LSDs), with AKT comprising 15.10%, WETH at 13.00%, and WBTC at 11.90%. The remaining share is almost evenly split among JUNO, SCRT, EVMOS, AXL, and CRO. 66 DeFi leases each exceeding $10k were opened, totaling $1.25 million. Notably, the five largest leases, each from distinct wallets, predominantly opted for WBTC after using stATOM as the down payment, with one each in WETH and OSMO. These positions have since been closed, netting an average gain of 35.00%. The most active days for opening leases were September 9 and October 30. On September 9, loans totaling $79,000 led to $175,000 in DeFi leases, with 80.00% invested in AKT at approximately $1 per token, yielding a 60 – 80.00% return in under 50 days. On October 30, OSMO buyers invested $80,000 at $0.35 per token, securing about a 100.00% return in just 20 days. ## Profitability Presently, there are 509 active positions on Nolus, with a total of $575,000 in down payments to secure $1.275 million in leases. Each lease, on average, is worth about $2,500. Notably, AKT and stATOM are the most popular choices, each making up 25.00% of all leases, with WETH following at 15.50%. These leases were opened roughly 24 days ago and have seen an impressive average return of 52.00%, that’s more than $1,250 per lease in just 24 days, or an annual rate close to 8 times the original investment. OSMO and AKT have been particularly profitable, with average entry prices of $0.43 for OSMO and $0.95 for AKT. In terms of lease closures, around $1.6 million worth of leases have been closed, with a striking 80.45% ending in profit. The average profit per lease is 33.00%, with the highest profit reaching a 229.00% ROI from an initial $10.5k down payment in OSMO. ## Interest The annualized interest rate for DeFi leases averages slightly above 15.00%, following the industry mean when compared to other perpetual and margin products in the space. ## Liquidations Only 1.00% of the $3m lease positions have experienced liquidations. This can be attributed to the significantly more favorable liquidation terms offered by the protocol, compared to the average in the market. Approximately 0.50% of these positions underwent partial liquidations, which did not affect the users’ initial down payments, meaning they did not incur any losses. Conversely, in comparable scenarios with other protocols, such positions are usually closed completely, causing a total loss of equity. ## Conclusion Nolus’ journey in the DeFi space has been marked by significant achievements and unique contributions. Its approach to creating demand for previously unavailable products in DeFi demonstrates a deep understanding of market needs and a commitment to innovation. The impressive growth, diversity of assets, and profitability metrics underscore Nolus’s potential in the financial technology sector. As it continues to evolve and expand its offerings, Nolus is poised to play a pivotal role in shaping the future of DeFi. _All data related to these statistics is available on-chain and represents normal operational flow that can be conveniently extracted using a Rust ETL client, accessible_ [_here_](https://etl.nolus.network)_._ --- # Post-Mortem Analysis: Imperfect Price Feed Impacting Nolus Protocol Published: 2023-09-11 URL: https://nolus.io/blog/post-mortem-analysis-imperfect-price-feed-impacting-nolus-protocol Tags: Post-Mortems, Deep Dives Excerpt: Date and Time of Occurrence September 8th, 2023, 08:45 UTC **Date and Time of Occurrence:** September 8th, 2023, 08:45 UTC **Incident Overview:** An erroneous price feed culminated in the untimely liquidation of Lease Positions across 86 distinct wallets. ## Background In our bid to accommodate Osmosis’ Supercharged liquidity pool variations within the Nolus Protocol, it became evident that the extant GAMM module, integral to liquidity pool operations on the Osmosis DEX, lacked compatibility with the novel pool formats. Following our query routed via the GAMM module [_[1]_](https://lcd.osmotest5.osmosis.zone/osmosis/gamm/v1beta1/pools/146/prices?base_asset_denom=ibc/7861EA8BE6CF462F83DBF8514BA97D175E7BB946C8EAF507A59FC806A56445DB"e_asset_denom=uosmo) on their test-net, “osmo-test-5”, we encountered an error _[2]_. We sought guidance from the Osmosis team who provided us with an alternative URL [3] pointing us at the new PoolManager module. It’s pertinent to note a couple of key observations at this juncture: The new URL _[3]_ presented parameters, “base_asset_denom” and “quote_asset_denom”, in their original order, suggesting identical behavior with the preceding API. We didn’t pursue further testing under the assumption that everything remained consistent, leading to the challenges that arose later. ## Core Issue Identification The pivotal discord arises from the PoolManager module’s inverse price representation relative to the GAMM module, given the same query parameters. For instance, a GAMM query for a pool containing 50 ABC to 100 XYZ (with ABC as the base and XYZ as the quote) returns a price of “0.5”. Conversely, the PoolManager module, under identical conditions, returns “2.0”. The PoolManager’s data, for instance, “0.000039”, when integrated into GAMM-tuned contracts, would inadvertently imply “0.000039 USDC is valued at 1 WBTC” or otherwise said “1 USDC is valued at 25784 WBTC”. ## Mitigative Steps 1. **Immediate Response:** The price feeds were promptly reverted to the GAMM module, arresting further unwarranted liquidations spurred by price disparities. 2. **Enhanced Validation Protocols:** Our software validation protocol has been significantly augmented. Beyond automated testing and peer reviews, it now encompasses multi-level **manual quality assurance checks within staged deployments**, guaranteeing the highest standards of performance and reliability prior to transitioning into the production environment. 3. **Robust Price Feed Mechanisms:** To bolster our system’s resilience, all price feeds will amalgamate data from additional sources and cross-check for accuracy before being supplied to the Nolus Protocol oracle contract. If the benchmark data significantly deviates from the figures returned by Osmosis, those feeds will be withheld from the protocol, concurrently activating a series of alerts. This empowers our core contributors to quickly address the discrepancies, ensuring uninterrupted system performance. At Nolus, our dedication to crafting high-quality code is paralleled only by our commitment to ensuring robust and reliable solutions. We understand the critical nature of every line we write, and we aim to set a gold standard in software excellence. While the digital landscape is ever-evolving and challenges are inevitable, we are steadfast in our promise to minimize incidents. Our past has taught us, our present motivates us, and our future is about continually raising the bar, striving for impeccable performance with fewer disruptions. **[2] GAMM module JSON return** ```json { "code": 2, "message": "rpc error: code = Internal desc = pool with ID 146 does not exist: unknown request", "details": [] } ``` **Sources** - [1] URL, GAMM query: Supercharged pool: [lcd.osmotest5.osmosis.zone/osmosis/gamm/v1beta1/pools/146/prices](https://lcd.osmotest5.osmosis.zone/osmosis/gamm/v1beta1/pools/146/prices?base_asset_denom=ibc/7861EA8BE6CF462F83DBF8514BA97D175E7BB946C8EAF507A59FC806A56445DB"e_asset_denom=uosmo) - [3] PoolManager module URL: [lcd.osmotest5.osmosis.zone/osmosis/poolmanager/pools/146/prices](https://lcd.osmotest5.osmosis.zone/osmosis/poolmanager/pools/146/prices?base_asset_denom=ibc/7861EA8BE6CF462F83DBF8514BA97D175E7BB946C8EAF507A59FC806A56445DB"e_asset_denom=uosmo) --- # Rug Pulls: Navigating the Pitfalls Published: 2023-09-04 URL: https://nolus.io/blog/rug-pulls-navigating-the-pitfalls Tags: Explainers Excerpt: Ensuring the security of your investments means understanding the nuances of rug pulls in the evolving world of crypto and DeFi. ![Conceptual cover warning about DeFi rug-pull scams, vanished token projects and investor loss](https://nolus.io/blog/assets/rug-pulls-navigating-the-pitfalls/cover.webp) ## Decoding Rug Pulls At its core, a rug pull is a scam within the DeFi ecosystem. A rug pull refers to a fraudulent act in which cryptocurrency project creators craft a seemingly groundbreaking cryptocurrency or token, lure investors with persuasive marketing, and then disappear once they’ve amassed a significant amount of funds. The aftermath? Investors are left with valueless tokens and empty pockets. ## Identifying Potential Threats Thorough due diligence is non-negotiable. Examine the track record of team members, assess their prior projects, and corroborate their qualifications. Engage with the crypto community, check project’s social media platforms, participate in discussions, and join reputable cryptocurrency forums to gain insights from experienced investors. This multi-faceted research approach will serve as your best defense against potential scams. ## Emphasis on Audits and Security Prioritize projects with robust security audits. Trustworthy endeavors will ensure their smart contracts undergo rigorous evaluation by impartial third-party entities. When reviewing audit reports, ensure they originate from firms renowned for their expertise in DeFi security. ## Diversify and Manage Risk Strategically Diversification is a powerful tool in your investment arsenal. By allocating funds across various projects, you diminish the potential fallout from a single scam. Always operate by a golden rule: only invest funds you’re prepared to lose, and never overcommit to high-stakes ventures. --- # Partial Liquidations Explained: How Nolus Unwinds Published: 2023-08-21 Updated: 2026-08-07 URL: https://nolus.io/blog/liquidations-on-nolus-protocol Tags: Deep Dives, Explainers Excerpt: Why Nolus sells only part of your collateral instead of closing the whole position, what triggers it, and how to work out your liquidation price. ![Explainer on how Nolus triggers partial liquidations when a DeFi Lease crosses its loan-to-value threshold](https://nolus.io/blog/assets/liquidations-on-nolus-protocol/cover.webp) ## How Can a Borrower on Nolus Protocol Get Liquidated? When a borrower opens a DeFi Lease, they must provide collateral to secure the facility. On Nolus Protocol, borrowers will borrow USDC from the Liquidity Provider’s Pool which is used to acquire the desired asset through Osmosis or any future integrated decentralized exchange. DeFi Leases will have a parameterized liquidation threshold. Currently, liquidations are triggered when the value of the debt is equal to 90% of the total position value. If the loan’s value grows beyond this threshold, the Protocol will automatically sell some of the collateral to repay the loan. Liquidations on Nolus Protocol are likely to occur due to a sudden, or prolonged, drop in the value of the borrower’s collateral. This would bring the Loan-to-Value (“LTV”) percentage closer to the liquidation threshold referred to above. Note that interest accumulated also increases the total borrowing and therefore increases the LTV of any given DeFi Lease. ## What Are Partial Liquidations and How Do They Benefit Users? Many lending protocols liquidate a borrower’s entire position immediately after it exceeds the maximum LTV percentage. This is especially damaging to borrowers who suffer more economic harm than necessary. When a position is liquidated, it is liquidated at a discount to incentivize third parties to liquidate a vault that is below the required health level. Liquidating all collateral means a more significant amount of value is sold at a discount. As a result, partial liquidations have been introduced in many lending protocols to offer borrowers a more attractive venue to borrow funds. Partial liquidation is the process in which collateral is taken in part and liquidated to maintain a healthy LTV percentage for a position. This will give a borrower a greater amount of time to recover their position to protect against future liquidations, thereby maintaining a higher amount of collateral and a lower amount of collateral lost to discounted liquidations. ## Illustrative Example: Getting Liquidated on Nolus Protocol For this example, we will assume that Alice opens a DeFi Lease and seeks 140% in financing on her collateral. The current price of $ATOM at $10.00. Alice deposits 1,000 $ATOM in collateral and receives 1,400 $ATOM in borrowings. At the point of inception, the value of Alice’s collateral is $10,000, and her borrowing is $14,000 (the value of the ATOM that she borrowed). This helps calculate an important metric: the fixed value of initial borrowing divided by the current value of assets in the DeFi Lease. At inception, this is 58.3% (calculated as $14,000 / $24,000). As the value of $ATOM falls, this metric increases slowly towards the liquidation thresholds. Partial liquidations occur when this metric reaches 90%. Knowing this, we can calculate ahead of time the price at which we would suffer a partial liquidation if we do not interfere ahead of time. For those of you not too keen on maths, don’t worry, we’ve got you! _Step 1: Calculate the value of assets in the DeFi Lease at the 90% metric:_ $14,000 [the value of the loan at inception] / 90% = $15,556 _Step 2: Calculate the price of one unit of the asset:_ $15,556 / (1,000 + 1,400) [the total number of ATOM in the DeFi Lease] = $6.48 _Step 3: Calculate the percentage decrease in price:_ ($6.48 - $10.00 [original price of ATOM]) / $10.00 = -35.2% If a DeFi Lease declines to this position, a partial liquidation occurs until the DeFi Lease returns to the healthy liability threshold. This parameter is currently set at 83%. ## Closing Thoughts Nolus Protocol aims to provide a safe environment for lenders. One of the ways in which this is done is through partial liquidations that reduce the amount of economic harm imposed on borrowers during an adverse market movement. This is important as lenders are the beating heart of the Protocol, and increases in borrowing help continue the flywheel that will make Nolus Protocol attractive for depositors and cheap for borrowers! --- # Leveraged Long, Hedge and Yield Strategies on Nolus Published: 2023-07-18 Updated: 2026-08-07 URL: https://nolus.io/blog/strategies-on-nolus-protocol Tags: Strategies Excerpt: Five ways to use leverage on Nolus: a leveraged long, lending to the pool, amplifying a short, a delta-neutral hedge, and stacking a money market. ![Strategy playbook cover illustrating leveraged long, short and delta-neutral positions across Nolus and Cosmos money markets](https://nolus.io/blog/assets/strategies-on-nolus-protocol/cover.webp) ## Strategy 1: Opening a Leveraged Long Position This strategy involves the user opening a DeFi Lease to borrow a specific asset they believe has the potential to increase in value. An increase in the value of the underlying asset will enable the user to make a greater profit compared to simply holding their asset. For example, if Alice holds $2,000 in $ATOM and is convinced that the price will increase, she could open a DeFi Lease to borrow up to $3,000 in $ATOM with her $ATOM as collateral. If the price of $ATOM was to increase by 10%, Alice would have made a profit of $200 by simply holding her $ATOM. By using a DeFi Lease, Alice’s profit increases to $500 less any interest costs. Furthermore, users can make this strategy more efficient by utilising liquid staked derivatives such as $stATOM or $stOSMO as their collateral to earn staking rewards while they are exercising their leveraged long position. The staking rewards that are earned can be used to repay the interest of the facility (and if the rewards are high enough, partially pay down the DeFi Lease as well). ## Strategy 2: Depositing to the Liquidity Providers’ Pool This is a neutral strategy that does not rely on the market to move in a specific direction. Users can deposit $axlUSDC to the Liquidity Providers’ Pool and earn passive income in the form of interest paid by borrowers and $NLS incentives. These $NLS incentives, in turn, can be staked on the Network to improve the security of Nolus Protocol and earn further rewards! ## Strategy 3: Adding Value to a Short Position The “traditional” mechanism for creating a short on lending protocols can be amplified by combining it with Nolus Protocol. [Deposit $USDC > Borrow $ATOM > Sell $ATOM for $USDC. Leveraging increases risk] For example, if Bob holds $2,000 in $axlUSDC and is convinced that the price of $ATOM will decrease, he could leverage Mars Protocol to borrow $ATOM (which is then sold for $axlUSDC) by using his $axlUSDC as collateral. If the price of $ATOM was to decrease by 10%, Bob would have gone from having no exposure to the price movement of $ATOM to making a profit of $120 (assuming an LTV of 60%). Note that you are able to use your borrowed $axlUSDC for many different purposes. While most people will be aware of the following two: - Re-deposit on Mars Protocol to borrow more $ATOM (increasing your leverage and risk); - Re-deposit on Mars Protocol, but do not borrow more $ATOM (reduce your LTV but increase your maximum liquidatable assets); It is worth knowing that borrowers can also separate their borrowings in the following way: - Deposit the $USDC on Nolus Protocol to earn incentives interest paid by borrowers and $NLS incentives. As opposed to re-depositing on Mars Protocol, this separation reduces the maximum liquidatable assets from the borrowing (at the expense of a slightly higher LTV for the loan). ## Strategy 4: The “Power Hedgooor” This strategy aims to combine volatile assets and their liquid staking derivative counterparts to create a delta-neutral strategy. This is done through the following steps: 1. Deposit $USDC on a traditional money market such as Mars Protocol or Umee. 2. Borrow $ATOM on the same money market (at a prudent LTV). 3. Sell this $ATOM for $USDC and hold it (similar to Strategy 3, you could also deposit this asset into Nolus Protocol’s Liquidity Providers’ Pool for extra yield). 4. Deposit $stATOM (this is a separately held balance, do not purchase $stATOM with the $USDC that you are now holding from step 3) into a DeFi Lease on Nolus Protocol to gain additional price exposure to $stATOM The net profit/(loss) of the strategy is equal to the sum of staking income and deposit income less interest costs. Users will have to bear an additional interest cost in Strategy 4 as they will have to pay interest costs on Nolus Protocol. In exchange, their delta-neutral strategy is 29% larger in size, meaning they will be able to earn that much greater staking rewards with minimal exposure to price risk! ![Diagram of the Power Hedgooor delta-neutral strategy combining Nolus DeFi Lease with money-market short exposure](https://nolus.io/blog/assets/strategies-on-nolus-protocol/figure-1.webp) Note that users will need to manage their LTVs on both protocols to ensure they are not liquidated. ## Strategy 5: The “Power Leveragooor” This strategy is an extension of Strategy 1 which looks to increase exposure to an asset. This can be further grown by depositing the asset (e.g., $ATOM) in a money market (e.g., Umee or Mars Protocol), borrowing a stablecoin, and then purchasing $ATOM with the stablecoins to open a DeFi Lease. ![Exposure comparison chart showing Power Leveragooor gains over Strategy 1 once money-market LTV exceeds 60 percent](https://nolus.io/blog/assets/strategies-on-nolus-protocol/figure-2.webp) As can be seen in the chart above, if the user is able to borrow at an LTV greater than 60.0% from a traditional money market, they will be able to increase their total exposure to an asset through this strategy compared to Strategy 1. As an example, the $ATOM lending pool on Umee has a maximum LTV of 76% and a liquidation threshold of 80%. Opening a loan on Umee with a 70% LTV to maintain a degree of safety would result in 9.1% greater exposure to $ATOM under Strategy 5. If the price of $ATOM significantly declines, this strategy has some additional downside as the full deposit on Umee would be liquidated while the deposit on Nolus Protocol would only be partially liquidated (till it reverts to a “healthy” status). ## Closing Thoughts Nolus Protocol aims to provide something for everyone! From those that are risk-averse all the way to those who stand on the edge of the precipice. We hope to continue growing the flexibility of the Nolus Protocol to make it home to many more strategies! --- # How to Manage Risk in Crypto Lending on Nolus Published: 2023-06-20 Updated: 2026-08-10 URL: https://nolus.io/blog/tips-to-mitigate-risk-in-crypto-lending-and-borrowing-how-nolus-provides-safety-and-security Tags: Explainers, Strategies Excerpt: Keeping your loan-to-value low, topping up collateral in time, and how partial liquidations and third-party audits limit the downside on Nolus. ![Protective shield motif representing risk mitigation in crypto lending and borrowing on Nolus](https://nolus.io/blog/assets/tips-to-mitigate-risk-in-crypto-lending-and-borrowing-how-nolus-provides-safety-and-security/cover.webp) ## Loan Liquidations and Price Drops One prominent risk in crypto lending is the potential for loan liquidations when asset prices experience significant drops. Cryptocurrency markets can be highly volatile, and sudden price fluctuations can lead to borrowers’ collateral values falling below the required thresholds. To address this risk, Nolus recommends a few proactive measures that empower borrowers to manage their positions effectively: First, users are encouraged to keep their Loan-to-Value (LTV) ratio low, which means maintaining a higher collateral value relative to the borrowed amount. By doing so, borrowers create a cushion against price drops and reduce the likelihood of triggering liquidations. Additionally, Nolus provides borrowers with real-time information about their LTV ratio, enabling them to monitor and adjust their collateralization levels as needed in an intuitive, easy-to-use UI. Moreover, in cases where asset prices do experience significant drops, Nolus emphasizes the importance of topping up collateral promptly. By promptly adding additional collateral, borrowers can bring their LTV ratio back to a safer level, reducing the risk of liquidation. Nolus offers a seamless process for borrowers to top up their collateral, ensuring accessibility and ease of use. ## Partial Liquidations However, if users cannot provide more collateral in time, Nolus offers partial liquidations that bring the LTV of loans back down to a safe ratio without liquidating the entire margin position. By initiating partial liquidations, Nolus aims to strike a balance between preserving the borrower’s position and mitigating the risk of insolvency for the platform and lenders. Instead of liquidating the entire margin position, Nolus selectively liquidates a portion of the collateral to bring the Loan-to-Value (LTV) ratio back to a safe level. This approach benefits borrowers in several ways: 1. Retaining Ownership: With partial liquidations, borrowers maintain ownership of a portion of their collateral, ensuring they still have exposure to potential price recoveries and future gains. 2. Minimizing Losses: By liquidating only a portion of the collateral, borrowers can potentially reduce the losses incurred during price drops. This is particularly advantageous if borrowers believe that the asset’s value may increase in the future, allowing them to recover part of their collateral. 3. Preserving Platform Access: By avoiding full liquidations, borrowers can continue to access the Nolus platform and utilize its services, including the ability to repay the loan or adjust their positions as market conditions change. Overall, the benefit of partial liquidations offered by Nolus is that it provides borrowers with a more forgiving approach during times of market volatility. This user-centric approach reinforces Nolus’ commitment to supporting borrowers and promoting a fair and sustainable lending ecosystem. ## Dodgy Smart Contracts One of the significant risks faced by lending platforms in the crypto space is the presence of vulnerable or malicious smart contracts. If not properly audited or secured, these contracts can lead to potential exploits, hacks, or loss of funds for users. Nolus recognizes the importance of addressing this concern and strongly emphasizes the security and integrity of its platform. To mitigate the risk of interacting with unauthorized or compromised platforms, we strongly advise users to engage exclusively with Nolus through its official web app. By bookmarking the Nolus website and using it as the sole access point for their lending and borrowing activities, users can significantly reduce the likelihood of falling victim to fraudulent or malicious platforms posing as Nolus. ## Unverified Teams In the crypto industry, it’s crucial that the teams behind lending platforms have a credible background. Nolus stands out by providing transparency and credibility. The Nolus team comprises professionals with a background in Traditional Finance (TradFi) and related sectors. This diverse expertise brings a wealth of knowledge and experience to the platform, instilling confidence among users that their lending and borrowing activities are managed by a team well-versed in financial markets and best practices. To further strengthen trust and demonstrate its commitment to security and reliability, Nolus has taken additional steps to establish transparency. The platform has undergone comprehensive audits by reputable third-party firms to validate the security of its smart contracts, infrastructure, and overall operations. These audits provide independent assessments of Nolus’ systems, ensuring they meet high industry standards and resist potential vulnerabilities or exploits. More detail is in the [Nolus audits report](/blog/nolus-audits-report). Moreover, Nolus has open-sourced its code, making it available for public scrutiny. Nolus fosters transparency and encourages collaboration in identifying and addressing potential issues or vulnerabilities by allowing the community to review the underlying codebase. This open approach to code enhances the overall security and reliability of the platform, as the community’s collective intelligence can contribute to identifying and mitigating risks effectively. ## High Interest Rates Managing interest rates is essential to create a balanced lending ecosystem. Nolus offers a unique solution by allowing users to stake $NLS tokens, granting borrowers reduced interest rates on their loans, making it more affordable and advantageous. This mechanism not only promotes participation in the platform but also empowers users to have greater control over their borrowing costs. ## Illiquidity Liquidity is a critical factor for both lenders and borrowers in a lending platform, and Nolus recognizes the importance of addressing the challenge of illiquidity in the crypto lending space. To ensure a healthy and vibrant lending ecosystem, Nolus employs a dynamic approach to adjust the Annual Percentage Rate (APR) based on the platform’s utilization rate. The utilization rate refers to the ratio of funds borrowed to the total funds available for lending on the Nolus platform. As the utilization rate increases, it indicates higher demand for borrowing and potentially a decrease in available liquidity. To incentivize lenders to provide liquidity and balance the platform’s supply and demand dynamics, Nolus employs a mechanism where the lending APR rises in response to increased utilization. By dynamically adjusting the lending APR, Nolus offers attractive yields to lenders as the utilization rate increases. This incentivizes lenders to supply additional funds to the platform, increasing liquidity and ensuring that borrowers have access to the desired loan amounts. The higher lending APR acts as a compensation mechanism for lenders, reflecting the increased risk associated with higher utilization rates. Simultaneously, Nolus also adjusts the interest rate for borrowers based on the utilization rate. As the utilization rate rises, the interest rate for borrowers also increases. This serves as a disincentive for excessive borrowing activity, helping to maintain a balanced lending ecosystem and preventing potential strains on liquidity. By implementing these dynamic APR adjustments, Nolus effectively manages the challenge of illiquidity. The platform encourages a healthy equilibrium between lenders and borrowers, ensuring that both parties are incentivized to participate and that sufficient liquidity is available for lending activities. Additionally, Nolus will tap into liquidity from multiple exchanges using ICA. This integration will allow the platform to inherit liquidity from exchanges such as Osmosis and pave the way for future collaborations with additional exchanges. By expanding the liquidity pool through interchain integration, Nolus enhances the availability of funds for lending, further addressing the illiquidity challenge. ## Conclusion Nolus stands as a reliable and secure platform for crypto lending and borrowing, prioritizing the safety of users’ funds. Through proactive risk mitigation measures, including managing loan liquidations, ensuring smart contract integrity, maintaining liquidity, and avoiding insolvency, Nolus establishes itself as a trusted partner in the crypto lending ecosystem. Users can confidently engage with the Nolus money market by following the advice given in this article and understanding the strategies we have adopted to mitigate risks. --- # The Future of IBC Published: 2023-06-06 URL: https://nolus.io/blog/the-future-of-ibc Tags: Interop, Explainers Excerpt: As a value-bridging protocol, IBC has been a massive boon to the Cosmos ecosystem. ![Interconnected network motif representing IBC bridging the Cosmos ecosystem and beyond](https://nolus.io/blog/assets/the-future-of-ibc/cover.webp) The Cosmos ecosystem has rapidly been growing over the past two years. The early years of the IBC ecosystem have seen blockchains with the Cosmos-SDK connecting to the trust-minimized bridging protocol. This has included blockchains of all flavors, including those with no virtual machine (such as Cosmos Hub), those with CosmWasm (such as Juno and Terra), and those with Ethermint (such as Evmos). This is expected to continue to proliferate with more innovations in the IBC ecosystem in the coming years, and we’re excited! As the IBC ecosystem grows, Nolus will have greater access to DEX liquidity and could enable even more efficient lending, which will, in turn, provide a higher yield for Nolus’ depositors. ## Expansion to the EVM Ecosystems An expansion into the crypto ecosystem’s largest DeFi economy is no small spectacle! Polymer Labs and Electron Labs have been working on bringing IBC to Ethereum and other EVM ecosystems. Enabling IBC on Ethereum has been a question that has been queried many times after the first IBC connections in the Cosmos ecosystem. This would require running the Tendermint light client on Ethereum as a solidity smart contract which is an extremely gas-expensive operation. By augmenting IBC with the use of zero-knowledge proofs (ZKPs), both projects aim to reduce the on-chain costs of header verification without introducing additional trust assumptions. This is then expected to further expand into other Layer-1 blockchains leveraging the EVM. It is also possible that IBC may become the default blockchain communication protocol between Layer-2 blockchains as the technology will be easily transferable at that point. Furthermore, Avalanche will see the launch of a CosmWasm-specific subnet that will be IBC-Compatible. This will form the basis of the harmonization of both ecosystems, with assets flowing throughout the ecosystem through both Inter-Blockchain Communication and Avalanche Warp Messaging. ## Expansion to Other Ecosystems Many other initiatives are ongoing to expand the reach of the IBC ecosystem to blockchains that are active today and unique blockchains that are still in development. This includes: - NEAR Protocol - Polkadot - Penumbra Penumbra will be part of a new generation of blockchains that do not use Cosmos-SDK yet retain IBC-Compatibility. These custom blockchains building to retain IBC-Compatibility shows the strength of the protocol and further solidifies IBC as the premium trust-minimized bridging protocol. ## Moving Beyond Fungible Token Transfers Up until now, IBC has largely offered a route to conduct trust-minimized bridging of fungible tokens. However, interconnectivity expands far beyond this, and ongoing initiatives to extend IBC to non-fungible tokens are a big step in creating a comprehensive value-bridging protocol. Furthermore, other developments, such as the greater adoption of Interchain Accounts (such as that between Nolus Protocol and Osmosis), provide better clarity to the ecosystem on the potential of IBC more broadly than just value transfer. Interchain Queries will further build upon that and grow IBC into a fully-fledged value and data-bridging protocol. The possibilities of a mature value and data-bridging protocol are endless. With the research done by many of the talented teams within the Cosmos ecosystem, such as Delphi’s slAMM, which proposes to share liquidity across various chains, the liquidity fragmentation initially created by IBC will re-unify and provide users with the best experience and the cheapest prices. For Nolus Protocol, we can see a Cosmos where Nolus will extend ICA to various other ecosystem chains and then be able to leverage ICQ to scour different DEXs to find the cheapest swap (which will be the most efficient for lenders). --- # Nolus’ Mainnet Launch! Published: 2023-05-23 URL: https://nolus.io/blog/nolus-mainnet-launch Tags: Announcements Excerpt: On 23.05.2023 at exactly 3:00 PM UTC, our genesis validators breathed life into the Nolus chain and paved the path to creating a vibrant ![Announcement of the Nolus mainnet genesis on 23 May 2023 kicking off DeFi Leases, staking, and lender deposits](https://nolus.io/blog/assets/nolus-mainnet-launch/cover.webp) On **23.05.2023 at exactly 3:00 PM UTC**, our genesis validators breathed life into the Nolus chain and paved the path to creating a vibrant money market. The immediate question that will come to the mind of our community is, what happens next? An integration with Osmosis will enable DeFi Leases shortly after genesis, allowing the network’s three main stakeholders to participate actively. Firstly, the stakers, the defenders of the blockchain! Users will be able to stake NLS tokens with validators in the active set to participate in consensus. Staking NLS with a validator will earn users a share of network inflation and paid transaction fees. Next, the depositors, the bankers of our fine society. As DeFi Leases will be live shortly after genesis, depositors will also be able to deposit their stablecoins to be used by borrowers to open DeFi Leases. Deposits will be taken in the form of USDC.axl as the stablecoin within the Cosmos ecosystem with the greatest liquidity. This may be evaluated in the future as penetration of different stablecoins changes over time, and subsequent to the launch of Noble, which will grant the Cosmos ecosystem native USDC. Finally, the borrowers, the entrepreneurs of Nolus Protocol who will drive daily usage through the opening of DeFi Leases. At launch, we expect users to be able to open DeFi Leases with some of Osmosis’ most liquid assets. If there are any specific assets you’d like to see, shout them out on our social channels! Being able to gauge the interest of our community in specific assets is extremely useful for us to support our decision-making. --- # Nolus Audits Report Published: 2023-05-11 URL: https://nolus.io/blog/nolus-audits-report Tags: Announcements, Deep Dives Excerpt: As the world of cryptocurrencies continues to evolve, security remains a top priority for anyone involved in the industry. ![Summary of two Oak Security audits covering the Nolus chain and money market smart contracts](https://nolus.io/blog/assets/nolus-audits-report/cover.webp) Nolus has undergone two comprehensive security audits, and we’re excited to share the results with our community. In this article, we’ll dive into the audit details and discuss the changes we’ve made to our code as a result. Our goal is to provide transparency and assurance to our users that we take their security seriously and are committed to improving our protocol’s resilience to potential threats. So without further ado, let’s take a closer look at our security audit and the improvements we’ve implemented. Oak Security, a leading provider of blockchain security audits, has recently published two reports for both the blockchain and the smart contract protocol. In each report, the findings were classified and ranked according to their severity, from critical to informational. In the [first report](https://github.com/oak-security/audit-reports/blob/master/Nolus/2022-12-12%20Audit%20Report%20-%20Nolus%20Core%20v1.1.pdf), which focused on the base layer protocol (Nolus chain code), there were no critical findings. However, the audit did reveal an issue in the implemented custom tax module. The original idea behind the module was to process an arbitrary range of provided fees, including not only $NLS tokens but many other tokens as well. This presented a problem, as the nodes running the code would have difficulty processing such a long list of fees, potentially causing block production to stop. To address this issue, we restricted the fee coins to only $NLS tokens and applied the tax only to those tokens. Additionally, minor warnings were identified regarding validation rules on some minter parameters related to the module that is responsible for the distribution rate of the staking rewards, which were promptly resolved. The informational findings in the first audit were related to inconsistent naming conventions of variables, packages, and unnecessary code. These issues can make it difficult for developers to understand the code and navigate through it, leading to potential errors and bugs in the protocol. Unnecessary code can also lead to increased complexity, which in turn can make the code more difficult to maintain and understand. Moreover, inconsistent naming conventions and unnecessary code can potentially introduce vulnerabilities that could be exploited by attackers. If the code is difficult to understand, it becomes more challenging to identify and fix such vulnerabilities, which could ultimately compromise the protocol’s security. Therefore, adhering to consistent naming conventions and keeping the codebase lean and optimized is crucial for ensuring the security and efficiency of cryptocurrency protocols. All of these issues were resolved, demonstrating our commitment to improving the protocol’s efficiency and usability. The [second report](https://github.com/oak-security/audit-reports/blob/master/Nolus/2023-01-27%20Audit%20Report%20-%20Nolus%20Money%20Market%20v1.1.pdf) focused on the money market audit and revealed several critical findings, most of which were addressed by the underlying blockchain. Our semi-permissioned blockchain prohibits the deployment of custom contracts without a governance proposal, thus minimizing the potential for malicious actors to exploit the system. One of the critical findings in the money market audit was related to the price-feeding mechanism. To optimize for additional security, we introduced a variant of the Exponential Moving Average algorithm. This approach takes several observed prices in a given period, applies weights, and returns a price, thereby increasing the security of the price feeds. A secure price feed is essential in a money market because it ensures that users receive accurate pricing information and liquidation prices, avoiding potential losses for both borrowers and lenders. Another critical finding was related to updating the parameters, which can now only be modified via a governance proposal. One of the main benefits of requiring governance proposals to update parameters is adding an additional layer of security and decentralization to the system. This mechanism ensures that proposed changes are carefully considered and approved by a majority of stakeholders rather than being implemented unilaterally by a single party or group. Finally, the audit identified some typical misspellings and other issues related to price-feeding optimizations and validations, which were promptly resolved. Overall, the security audit was a valuable exercise that helped us identify and address potential vulnerabilities in our protocol. By implementing the necessary changes, we are confident that our users’ assets are better protected, and we remain committed to maintaining the highest security standards in the cryptocurrency industry. We would like to thank Oak Security for their fantastic work and guidance throughout this time, providing necessary security tweaks in the run-up to the Mainnet launch. --- --- # The Role of Network Governance on Nolus Published: 2023-04-13 URL: https://nolus.io/blog/the-role-of-network-governance-on-nolus Tags: Explainers, Tokenomics Excerpt: The Cosmos ecosystem prides itself on sovereignty and the ability of appchains to govern themselves through on-chain governance. ![Abstract visualization of decentralized on-chain governance and community voting on Nolus](https://nolus.io/blog/assets/the-role-of-network-governance-on-nolus/cover.webp) ## How Does On-Chain Governance Work? Submitting a proposal on Nolus Protocol is permissionless. Any user can create a proposal that automatically enters a deposit period where a minimum bond is required to bring it to the voting period. In the voting period, validators and delegators are able to place their vote on the proposal. Delegators can vote with their total stake while validators can vote with the total delegations to their validator. This means that if a delegator has a different view from their validator, they can override the validator’s vote. To pass a proposal, three criteria must be met at the end of the voting period: - Quorum: A minimum amount of total staked tokens must vote on a proposal. For Nolus Protocol, this is 33.4% of staked $NLS - Threshold: More than 50% of all decisive voters (excluding voters that abstain) on the proposal voted to pass the proposal - Veto: Less than 33.4% of all decisive voters (excluding voters that abstain) on the proposal vetoed the proposal Through this process, the community can come together to agree on passing proposals to change parameters, for community pool spending, or even to signal a stance. Note that if a proposal is vetoed, the deposit is not returned to the proposer and any other party that contributed towards the deposit. Moreover, the parameters detailed above in regard to passing a proposal are also controlled by on-chain governance (as part of the Governance Module) and can be adjusted by the community as well. ## What Network parameters will the community control? Below, we explore a number of key modules (and some of their parameters) that Nolus Protocol will leverage. These are: ### [The Staking Module](https://docs.cosmos.network/sdk/latest/modules/staking) - `max_validators`: this parameter determines the size of the active set for consensus purposes. Increasing the size of the validator set is beneficial as it can support decentralization through a wider distribution of staked $NLS, increasing the number of entities required to collude for a successful attack. For Nolus Protocol, the validator set will commence with 40 validators. However, increasing the validator set can increase block latency as Tendermint uses an all-to-all gossip mechanism which means each additional validator creates significantly more messaging. - `unbonding_time`: this parameter determines the time required to unbond staked $NLS and return it to liquid $NLS which is not participating in consensus. This is to protect against a validator attacking the Network and immediately withdrawing their stake. For Nolus Protocol, the unbonding period will be initiated at 21 days. ### [The Slashing Module](https://docs.cosmos.network/sdk/latest/modules/slashing) - `slash_fraction_double_sign` and `slash_fraction_downtime`: these parameters determine the amount of stake that is slashed from a validator for either double signing or for prolonged downtime (note that prolonged downtime is also determined through on-chain parameters). Double signing occurs when a validator submits two signed messages for the same block and generally happens due to misconfiguration or during maintenance of their hardware. Downtime occurs when a validator misses a minimum threshold number of blocks to be signed in a period. This could happen for a whole host of reasons such as a loss of internet or loss of power. On Nolus Protocol, double signing will be punished with a 5.00% slash of a validator’s stake while downtime will be punished with a 0.01% slash of a validator’s stake. - `downtime_jail_duration`: this parameter determines how long a validator is “jailed” or unable to return to the validator set subsequent to prolonged downtime. When a validator is jailed, they no longer participate in consensus or earn rewards. However, it also means they are no longer at risk of further slashes for downtime. On Nolus Protocol, a validator will have to serve a period of 10 minutes “jailed” before they can become unjailed and participate in consensus again. ### [Interchain Accounts](https://ibc.cosmos.network/main/apps/interchain-accounts/overview.html) - `controller_enabled`: this parameter can either be set to `true` or `false` and determines whether an appchain can service controller-specific logic. A controller chain is that which registers and controls an account on a host chain. The controller chain sends IBC packets to the host chain to control the account. This is critical to Nolus Protocol as it will be how stablecoins are swapped to other assets for the purpose of a DeFi Lease meaning this will be set to `true` from Genesis. - `host_enabled` and `allow_messages`: the first parameter can either be set to `true` or `false` and determines whether an appchain can service host-specific logic. A host chain is a chain where the interchain account is registered. The host chain listens for IBC packets from a controller chain which should contain instructions (e.g. cosmos SDK messages) that the interchain account will execute. On Nolus Protocol, this will be set to `true`. Although the majority of Nolus’ usage of Interchain Accounts will be as a controller chain, this keeps the door open to allow other appchains to create DeFi Leases! ### The Tax Module A custom module designed by Nolus Protocol, as an aside, this is what is wonderful about the Cosmos SDK! The modular nature of it allows appchains to use existing modules as well as design their own for whatever they deem necessary! - `fee_rate` and `contract_address`: these parameters determine the size of the tax applied to transactions as well as the destination for the tax. This will be leveraged by Nolus Protocol to grow the lender’s incentive pool. By existing as a module governable by on-chain governance, the community has the ability to increase or reduce the tax as well as the ability to wind down this source of funding for the incentives pool by reducing the tax rate to 0%. Altogether, there are dozens of parameters that on-chain governance has the ability to adjust. A full list of modules available to Cosmos SDK chains to implement can be found at [https://docs.cosmos.network/sdk/latest/modules](https://docs.cosmos.network/sdk/latest/modules), and each module contains a “parameters” section detailing what can be changed through on-chain governance. ## Closing Remarks As you have seen, on-chain governance has the ability to control large parts of the blockchain without requiring an upgrade. It allows the community to fine-tune the Network to keep it in good health. As we edge closer to Mainnet, and as the Network continues to gain valuable contributors, in the form of potential validators and future delegators, we are optimistic that Nolus Protocol will be in the hands of a strong decentralized community that ensures its long-lasting future! We welcome you to our social channel if you have questions on Cosmos SDK and modules, or anything else related to Nolus Protocol! --- # How does Nolus solve the issue of liquidity? Published: 2023-04-03 Updated: 2026-08-06 URL: https://nolus.io/blog/how-does-nolus-solve-the-issue-of-liquidity Tags: Deep Dives, Interop, Explainers Excerpt: Nolus inherits liquidity from the chains it connects to via Interchain Accounts instead of running its own exchange, and pools lender deposits in one market. ![Stylized Nolus money market sourcing liquidity from Cosmos chains via Interchain Accounts](https://nolus.io/blog/assets/how-does-nolus-solve-the-issue-of-liquidity/cover.webp) Nolus does not try to bootstrap its own liquidity. It borrows it — inheriting the depth of the chains it connects to through Interchain Accounts, and concentrating lender deposits into a single money market rather than scattering them across networks. This article explains why that choice matters and how the two halves of it work. ## Why Liquidity Is the Hard Problem The ability to quickly and easily borrow and lend cryptocurrency is essential to the success of any financial system, but ensuring that there is always enough liquidity to go around can be incredibly difficult. In traditional financial systems, central banks are responsible for providing liquidity by printing money or adjusting interest rates. However, in the decentralized world of cryptocurrency, there is no central authority to step in and provide liquidity when it is needed. This can be particularly problematic in money markets, where borrowers rely on being able to quickly access the funds they need and lenders need a steady stream of borrowers to earn returns on their capital. When liquidity is low, borrowing costs can skyrocket and lenders may struggle to find enough borrowers to lend to, causing the money market to grind to a halt. At Nolus, we understand the importance of liquidity in a money market, which is why we have developed a few unique solutions to this problem. ## Inheriting Liquidity Through Interchain Accounts Through the use of ICA, Nolus can inherit liquidity from the source chain. IBC Accounts enable the creation of an account on one blockchain (the “host network”) from another blockchain (the “controller network”). Unlike regular wallet addresses, these accounts do not need private keys for a transaction. This allows a user to swap tokens, add liquidity, farm tokens e.t.c. on another network without manually signing a transaction there. With access to all the largest DEXs in Cosmos, we can tap into those with the most liquidity for our supported tokens. This means we can provide our users with a wide range of tokens to borrow and lend at competitive rates while maintaining a healthy money market with adequate liquidity. More liquidity results in increased trade efficiency due to lower slippage, and access to borrowing more tokens. ### Why Not Simply Build a DEX Moreover, Nolus itself does not have to consider building its own decentralized exchange and attempting to maintain liquidity. If we can simply utilize existing assets on Cosmos appchains, our developers do not need to focus on attracting users to move, and instead spend their time optimizing our products. This also means we do not need to provide inflationary $NLS tokens to reward liquidity providers on a native DEX so that our tokenomics can be designed to attract lenders. [Finding Liquidity in the Cosmos](/blog/finding-liquidity-in-the-cosmos) ## The Two Revenue Streams That Attract Deposits Inherited liquidity solves the borrowing side. The lending side needs deposits, and deposits follow yield. To begin with, Nolus will launch with the ability for lenders to supply stablecoins only. Due to current market conditions, liquidity within crypto is generally low and most market participants have a portion of their capital in stables. With stablecoins in abundance, users will want to put this capital to work and earn passive income through various revenue streams provided by Nolus. ![Diagram of Nolus lender revenue streams from swap fees, spreads and borrower interest](https://nolus.io/blog/assets/how-does-nolus-solve-the-issue-of-liquidity/figure-1.webp) Lenders are paid from two separate revenue streams: 1. The Incentives pool: Through swap fees and spreads, revenue generated within Nolus is funneled to lenders. 2. Borrowers interest: Nolus operates via a cash-basis model which improves cash flow throughout the money market, ensuring that borrowers pay their interest to lenders in regular installments. If lenders can achieve sustainable rewards for their stablecoin deposits, Nolus will acquire lots of liquidity and lenders’ deposits that can be accessed by borrowers. ## Concentrating Lenders in a Single Money Market In the future, Nolus plans to integrate with EVM-based chains to expand our cross-chain presence. Luckily, we can utilize Axelar’s revolutionary technology to integrate with EVM chains without needing to deploy our own codebase there. Without Axelar, Nolus would need to maintain stablecoin deposits on each individual EVM chain, threatening the resilience and scalability of our cross-chain products. By concentrating lenders under one money market, we can maintain a large stablecoin reserve for borrowers to access and be used in integrated DEXs on any network. ## What This Means in Practice In conclusion, maintaining liquidity is a critical challenge for money market protocols that deal with lending and borrowing. However, interchain accounts and various future DEX integrations will offer a powerful solution to this issue by allowing Nolus to inherit liquidity from the source chain itself. In fact, we expect the utilization rate to be high as Nolus can reliably provide capital to borrowers at a competitive rate. Although this means that all lenders may not withdraw their stables temporarily, the APR will increase sharply to ensure they are compensated. By prioritizing liquidity and efficiency, we are committed to providing our users with the best possible UI/UX in DeFi. --- # FOMO, FUD, and DYOR Published: 2023-03-27 URL: https://nolus.io/blog/fomo-fud-and-dyor Tags: Explainers Excerpt: Cryptocurrency investing can be an exciting and potentially lucrative endeavor. ![Conceptual visual of crypto investor psychology, covering FOMO, FUD and DYOR](https://nolus.io/blog/assets/fomo-fud-and-dyor/cover.webp) ## FOMO FOMO is the feeling of urgency or pressure to invest in a particular cryptocurrency because of a fear of missing out on potential gains. Things move incredibly quickly in crypto, and seeing the excitement of other investors when their assets increase in value can cause you to feel like you are “missing out”. This emotion can lead investors to make impulsive decisions without doing proper research or due diligence, often resulting in bad investment decisions. To avoid falling victim to FOMO, it’s important to approach cryptocurrency investing with a long-term mindset and a solid investment strategy. This strategy should include clear goals and objectives, as well as a disciplined approach to risk management. Additionally, it can be helpful to avoid making investment decisions based solely on hype or buzz and to instead focus on objective data and analysis. There are various reputable data and analytics providers in crypto, for example, [DeFi Llama](https://defillama.com/) and [Nansen](https://www.nansen.ai/), that can be used for free by the public. By sticking to a sound investment strategy, maintaining a long-term perspective, and avoiding impulsive decisions based on FOMO, investors can build a solid foundation for success in the cryptocurrency market. ## FUD On the other hand, FUD is the feeling of fear, uncertainty, and doubt about a particular cryptocurrency, often fueled by negative news or rumors. FUD can also lead investors to make irrational decisions, such as panic-selling or avoiding a promising project altogether. Avoiding FUD is an essential part of successful cryptocurrency investing. One effective strategy is to stay up-to-date with reliable sources of information and avoid relying on rumors or hearsay. It’s important to stay informed about the latest news and developments in the cryptocurrency space, but also to take the time to verify the accuracy and credibility of the information before making any investment decisions. Additionally, it can be helpful to seek out reputable experts and opinion leaders in the industry and to participate in active and engaged communities that provide a wealth of valuable insights and support. By staying informed, being discerning about sources of information, and engaging with trusted experts and communities, investors can avoid succumbing to FUD and make informed decisions that lead to long-term success in the cryptocurrency market. ## DYOR To avoid falling prey to FOMO and FUD, it is important to approach cryptocurrency investing with a clear head and a basic understanding of human psychology. Common sense dictates that investors should take a step back, do their own research (DYOR), and make informed decisions based on objective data. Some basic practices that can help investors do their own research include: 1. Research the project: Investigate the team behind the project, their credentials, and track record. Look for a well-defined roadmap and longer-term goals that solve genuine problems in the space. 2. Read the whitepaper (WP): The whitepaper is a technical document that best explains the project’s objectives, how it works, and how it will be executed. A thorough understanding of the whitepaper is essential for making informed investment decisions. These can often be found in the “Docs” section of most protocols, for example, the Nolus Whitepaper can be read [here](https://nolus.io/Nolus-Whitepaper.pdf). 3. Check the tokenomics: Understand how the cryptocurrency’s supply and demand work. This includes its circulation, total supply, inflation rate, and how it is distributed. These features of a token economy will all contribute to the overall value perceived by the market. We have provided an article that explains “[What makes Good Tokenomics](/blog/what-makes-good-tokenomics)?”. 4. Check the community: The community is a valuable source of information about a cryptocurrency. Look for active and engaged communities that provide helpful insights and support and don’t be afraid to ask them questions. An active community will always be happy to answer any queries and doubts you may have. ## Conclusion In conclusion, cryptocurrency investing can be exciting, but it is important to approach it with caution and avoid succumbing to emotions like FOMO and FUD. By doing their own research and following basic practices like researching the project, reading the WP, checking the tokenomics, and engaging with the community, investors can make informed decisions and avoid costly mistakes. Remember, investing is a long-term game, and a clear head and solid research are essential for success in the cryptocurrency market. Stay safe, and GetToNolus better! 👇 --- # What makes “Good Tokenomics” Published: 2023-03-13 URL: https://nolus.io/blog/what-makes-good-tokenomics Tags: Tokenomics, Explainers Excerpt: Tokenomics should be transparent and easy to understand. ![Abstract arrangement of tokens symbolizing healthy supply, demand, and utility in tokenomics design](https://nolus.io/blog/assets/what-makes-good-tokenomics/cover.webp) Tokenomics, the study of the economics behind cryptocurrencies, is a crucial aspect of the success of any blockchain project, and indeed investors. Tokenomics encompasses the entire ecosystem of a cryptocurrency, from its distribution and supply to its demand and utility. Good tokenomics can make or break a cryptocurrency, and both builders and investors must have a deep understanding of the principles behind it. So, what makes good tokenomics? ## Tokenomics Should Incentivize Holders One of the key elements of good tokenomics is to incentivize token holders to hold on to their tokens. This can be achieved through mechanisms such as staking, liquidity mining, or even simple rewards programs. The more incentives there are for holding a cryptocurrency, the more likely it is that holders will stick around for the long haul, which can lead to a more stable and valuable token over time. For example, $NLS tokens can be staked on Nolus to earn a portion of all the revenue generated, as well as allow users to vote on important governance parameters. More $NLS tokens mean more voting power, so larger market participants with a vested interest in the protocol will need to accumulate to help shape its future. Staked $NLS tokens also provide lenders and borrowers with benefits like better interest rates and down payment options. You can read more about this in our article [“What Makes Staking an Attractive Proposition On Nolus?”](/blog/what-makes-staking-an-attractive-proposition-on-nolus). ## Tokenomics Should Balance Supply and Demand Another important aspect of good tokenomics is ensuring that there is a balance between the supply and demand of a cryptocurrency. Projects need to be able to distribute coins to prospective users. If not, the network can exist but no one will be able to use it! If there are too many tokens in circulation, it can lead to dilution of value, and if there are too few, it can lead to scarcity and high prices. A well-designed tokenomics system should aim to strike a balance between the two, which can be achieved through mechanisms such as supply adjustment algorithms, token burns, or buybacks. On Nolus, we have implemented a custom tax module on top of each transaction within our ecosystem. This tax will be used to purchase $NLS tokens on the open market and used to refill the Incentives Pool that is distributed to lenders. We have also designed the Inflation Pool to emit staking rewards over the course of 10 years to allow an even and fair distribution of $NLS tokens among Nolus participants. In this way, we aim to provide sufficient demand for the token without overinflating the supply and diluting its value. ## Tokenomics Should Foster a Thriving Ecosystem Good tokenomics should also foster a thriving ecosystem around the cryptocurrency. This can be achieved by ensuring that the token has a strong use case and utility, which can incentivize developers to build applications and services around the token. Additionally, good tokenomics should aim to build a strong community around the cryptocurrency, which can help drive demand and adoption. The Nolus token has been designed with utility at its core. You may read our previous article on the [Nolus Token Model](/blog/nolus-token-model), but to summarize, the $NLS token: - Grants lower interest rates to borrowers; - Increased rewards for lenders; - Bought back from the open market; - Used for transactions on the network; - Stake and vote on governance. ## Tokenomics Should Be Transparent and Understandable Finally, good tokenomics should be transparent and easy to understand. The more transparent a cryptocurrency’s tokenomics are, the more likely it is that investors and users will have confidence in the project. Additionally, if the tokenomics are easy to understand, it can help to attract a broader audience of investors and users. You may find a link to [Nolus’ Whitepaper here](https://nolus.io/Nolus-Whitepaper.pdf). ## Conclusion In conclusion, good tokenomics are a critical component of any successful cryptocurrency project. By incentivizing holders, balancing supply and demand, fostering a thriving ecosystem, and being transparent and understandable, investors can identify cryptocurrencies with strong tokenomics that have the potential to deliver long-term value. However, as with any form of investing, there are always risks that must be considered before deciding to purchase an asset. --- # Lending Within the Cosmos Ecosystem Published: 2023-03-06 Updated: 2026-08-07 URL: https://nolus.io/blog/lending-within-the-cosmos-ecosystem Tags: Interop, Explainers Excerpt: Why Nolus uses a single shared pool, cash-basis interest, and its own appchain instead of the over-collateralized model most Cosmos lenders run. ![Comparison of Nolus lending design against other Cosmos money markets, highlighting capital efficiency and interest recognition](https://nolus.io/blog/assets/lending-within-the-cosmos-ecosystem/cover.webp) DeFi within the Cosmos ecosystem is readying for its golden age with the breadth of primitives currently in development that will offer a large and wide offering to users. There’s a lot to be excited about from DEXes to money markets, perpetuals to options! Lending markets in specific are seeing a large boom! Many new protocols have been launched, each with its own unique twist on things! Lending itself is far older than DeFi, a story traced in [the evolution of money markets](/blog/the-evolution-of-money-markets). Here is how Nolus Protocol does things differently! ## Increased Capital Efficiency Most lending protocols in the Cosmos ecosystem and the wider space leverage an over-collateralized model. This model sees borrowers receive a fraction of the collateral they deposit. However, Nolus Protocol’s unique model allows it to provide capitally efficient loans of up to 150% of the collateral provided by borrowers. When a DeFi Lease is opened, the collateral and proceeds of the loan are locked in a smart contract instance. While this reduces the flexibility of the loan, the greater capital efficiency allows borrowers to have more price exposure to any given asset. Soon, there will be more and more mechanisms developed over time to provide some additional flexibility to borrowers. This includes the ability to leverage Liquid Staking Derivatives when borrowing assets to earn some additional income that can be offset against interest payments. ## Method of Interest Recognition Almost all lending protocols in the space today leverage an accrual basis for interest payments. While interest payable by borrowers accrue over time, borrowers have no obligation to pay their outstanding interest (withstanding the risk of liquidation as the total debt of a facility combines both the initial debt and unpaid interest). This means that depositors are able to withdraw interest income up to the point where the money market is 100% utilized. This can potentially manifest into a circumstance where a period of low-interest payments and high accrued interest income receipts (by depositors) can place upward pressure on the utilization rate and increase the interest rates on future borrows. Contrastingly, Nolus Protocol leverages the cash basis for interest payments. Depositors receive interest income as and when interest payments are made by borrowers. Interest from DeFi Leases will be due for collection in specific periods which will provide a degree of consistency for depositor yields. If the interest amount is not paid promptly, it will be automatically deducted from the borrower’s active DeFi Lease positions. ## Stablecoin Denominations While most lending protocols structure their protocol with individual money markets for each type of collateral, Nolus Protocol uses one Liquidity Provider’s Pool consisting of stablecoins. In exchange for depositing stablecoins, depositors receive an interest-bearing receipt token to represent their share of the Pool. All DeFi Leases on Nolus Protocol leverage the stablecoin deposits regardless of the asset borrowed. These stablecoins are converted to the desired asset through a combination of Interchain Accounts and DEXes within the Cosmos ecosystem. Borrowed funds are locked within a smart contract. Upon execution, the interest rate for the DeFi Lease is fixed and is denominated in the asset borrowed. This means that individuals pay interest in the same asset they borrowed. Upon paying interest, the Protocol converts the proceeds to stablecoins using the same mechanism described above, and these funds are paid to depositors. As all borrowers leverage the stablecoin deposits, depositors earn a normalized yield that factors the borrowing demand of all assets rather than just being exposed to the borrowing demand of a single deposited asset. ## Flexibility and Other Advantages of a Standalone Appchain By deploying on its own independent appchain, Nolus Protocol is able to be more tightly bound with the underlying appchain relative to smart contract-based lending protocols. This could be used for many initiatives including a tax on transactions that are injected into the lending market to boost incentives. Moreover, Nolus does not have to share block space with other applications on the blockchain. If the Protocol was a set of smart contracts on another blockchain, spikes in demand for other applications could delay the execution of transactions for the lending protocol. This could be critical and even result in the liquidation of loans that would have otherwise been prevented. ## Closing Remarks As you will have seen, there are a number of carefully chosen differences in how Nolus has been designed relative to competitors in the space. With the upcoming launch of the DeFi Lease, we will be able to assess the advantages and disadvantages of this model in a live environment! The next clear step is to continue evaluating how Nolus can grow the DeFi Lease through greater flexibility for users! --- # Staying Safe in a Trustless Environment Published: 2023-02-27 URL: https://nolus.io/blog/staying-safe-in-a-trustless-environment Tags: Explainers Excerpt: With more projects spawning every day, staying safe within the cryptocurrency space should be a top priority! ![Crypto self-custody safety cover depicting cold wallets, seed-phrase storage and trustless security practices](https://nolus.io/blog/assets/staying-safe-in-a-trustless-environment/cover.webp) As we gear up towards Mainnet, we wanted to take this opportunity to share some tips and advice that we have learned along the way to keep you safe within cryptocurrency. As part of general prudent practices, these tips can help keep your funds safe and reduce the likelihood of investing in “rug pulls”. ## Keeping Your Funds Secure and Safe This section will explore how you keep your existing assets safe from risks from malicious actors and other parties. ### Using Cold Wallets Where Possible Cold wallets are those which are not connected to the internet. Hardware wallets such as Ledger and Trezor are examples of cold wallets. Users are able to sign a transaction using their private keys in an offline environment. This means the private key is never exposed to an online server, which protects private keys (and associated funds) from attack vectors such as cyber hacks. This was most recently seen in August 2022 when a number of major hot wallets in the Solana ecosystem were compromised due to software used by several providers (i.e., supply chain attacks). ### Using Multi-Factor Authentication on Exchanges Users should look to minimize their exposure to centralized exchanges. Little transparency and the possibility of a “bank run”, or worse fractional reserves make it an unattractive location to store assets. However, when users need to use a centralized exchange, they should make sure to enable multi-factor authentication to provide an additional layer of security. This will mean that even if a malicious actor gained access to your username and password for an exchange, they wouldn’t be able to access your funds (which also reminds me, don’t use the same username and password on all websites). ### Be aware of what you are using Crypto is full of malicious sites that replicate other sites with the aim of having a user connect their wallet and make a transaction that unknowingly drains their wallet. Bookmarking protocols that users frequently interact with are helpful to prevent interacting with “spoofs”. Cross-referencing links to those that are provided on official social channels can also provide a greater level of confidence. ### Store Your Seed Phrase Store your seed phrase (that string of words) in several secure locations. This can be as simple as a piece of paper placed in a safe. Alternatively, you could store pieces of your seed phrase in separate locations (along with a key in the order to recreate the full phrase). Many people also use alternative mediums such as engraving their phrase within a metal bar to be protected in case of fires or in an encrypted USB. ## Reviewing and Vetting Projects Lastly, we will share some tips that may help you dodge a potential rug pull project! None of these are definitive signs of a rug pull but are things you should consider. ### Is the Project Source-Available and Has It Been Audited? Source-available software is software whose source code is distributed along with it. While readily available, this software may not necessarily allow third parties to use, study, change, or, distribute the source code. Even if you are unable to read code, the benefit of source-available software is that any third party may be able to read and understand the code which gives neutral parties the ability to comment on any malicious actions the software could take. Furthermore, audited software provides the benefit that experts have provided their view on the safety of the code which provides an additional layer of confidence regarding the protocol. ### Do We Know the Team? While this will initially read as “are the team doxxed?”, this is not necessarily the case. A doxxed team makes vetting credentials and integrity easier as individuals can search the internet for their prior experience and reputation. However, this can similarly be done with “anon” developers that build a reputation across the protocols they work on. If you are unable to find information on the team, or if the team has members who have a poor reputation, these may be red flags that one should consider. Moreover, it is worth seeing if team members have individually aligned themselves with the project. If famous developers have been associated with projects but have never been seen supporting them in public, it is worth being cautious about such a project! ### Does the Project Make Promises or Expectations of Large Profits? Many projects within the cryptocurrency space offer unsustainable yields with high two-digit and three-digit yields. Users should be wary of large yields and consider what the source of the yield is. Users should also consider the risks associated with earning this yield (e.g., impermanent loss or effects of unbonding periods). Moreover, users should also consider how their yield is denominated. Historically, many protocols have given unsustainable yields in their native token in exchange for absorbing the yield from the assets provided by users (which tend to be staking income from more reputable projects). Large rewards of illiquid tokens can be a net loss for users. ### Is the Project Static or Is There Clear Progress and Improvements? If the project shows you long, lengthy roadmaps with best-in-class developments but the project itself has not seen a notable upgrade or improvement in a long time, it is prudent to consider whether there are actual execution delays or if there is no intention to deploy any upgrades. Crudely put, you could be the exit liquidity that malicious entities are looking for! Stay safe and follow our official channels! --- # Exploring the Advantages and Disadvantages of Developing a Custom Layer-1 Blockchain Published: 2023-02-14 URL: https://nolus.io/blog/exploring-the-advantages-and-disadvantages-of-developing-a-custom-layer-1-blockchain Tags: Interop, Deep Dives Excerpt: The simplified creation of a sovereign, horizontally scalable blockchain with its proprietary token economy, cheap and fast transactions ![Stylized representation of the Nolus sovereign Cosmos SDK Layer-1 blockchain](https://nolus.io/blog/assets/exploring-the-advantages-and-disadvantages-of-developing-a-custom-layer-1-blockchain/cover.webp) ## Introduction The technological backbone of the Nolus Protocol utilizes a lightning-fast Layer-1 blockchain based on Tendermint’s PoS algorithm and built with the Cosmos SDK. In layman’s terms, Layer-1 refers to the underlying blockchain technology that enables the creation and transfer of digital assets. It is the foundation on which other features and functionality, such as smart contracts, can be built. However, many Layer-1s exist already, why did we choose to deploy our own? ## Advantages ### Creation of the Nolus Blockchain First, a little bit about how the Nolus blockchain has been created. Nolus protocol was kickstarted using Starport, a command line tool developed by the Cosmos team. It provides all the tools to launch a new blockchain based on the Cosmos SDK and allowed us to skip some of the major obstacles involved in starting from scratch. Combining this user-friendly interface with the efficiency and low-level control of the Golang programming language, our developer team had everything they needed to produce a robust Layer-1 and set up our money market. The Cosmos SDK is a pleasure to build on, with modularity and interoperability ingrained into its core. Since we can develop applications using a modular design, features are easily added/removed to allow us to tailor the Layer-1 to the requirements of our products. By communicating with other chains in the Interchain, Nolus can tap into liquidity and communities throughout Cosmos, improving sustainability and scalability by distributing the risk between networks. The entire process is permissionless, with low hardware requirements for users to create a node that connects to our Layer-1. By utilizing products that are already built, Nolus inherits all the benefits they supply while allowing the team to dedicate time and resources to the actual products themselves. Now that the blockchain has been set up, what benefits does this bring to the protocol? ### Extracting Value From the L1 The Nolus blockchain is based on Tendermint’s PoS consensus mechanism, meaning $NLS tokens must be staked to secure the network. This provides a significant opportunity to retain users and sustain liquidity in the long run by offering incentives for 3 types of users: 1. Borrowers: Staked $NLS grants borrowers lower interest rates when leveraging through DeFi Leases, and the longer $NLS is staked, the lower the interest rate. This incentivizes users to lock up $NLS for longer to decrease the cost of their loan, sustaining borrowing demand for greater periods of time. 2. Lenders: Staked $NLS yields lenders with increased rewards on their stablecoins. In doing so, Nolus ensures liquidity for borrowers is readily available at all times by offering higher APRs to stablecoin deposits. Participants who stake $NLS are more likely to be long-term users given the two-week unstaking period. 3. $NLS stakers: Stakers themselves accrue all transaction fees that occur on the network alongside token emissions. Due to the nature of money markets, there is likely to be a larger number of transactions per user, with the fees funneled to $NLS stakers. Evidently, the network fees and incentives that Nolus offers are structured so that they bring value back to the protocol itself. The various revenue streams are extracted from the Layer-1 blockchain and used to incentivize participants to provide liquidity for extended periods of time. ![Diagram of Nolus revenue streams flowing from transaction fees into $NLS buybacks and the incentives pool](https://nolus.io/blog/assets/exploring-the-advantages-and-disadvantages-of-developing-a-custom-layer-1-blockchain/figure-1.webp) Sustained liquidity in a money market is pivotal to its long-term success, especially under the current market conditions where liquidity is few and far between. The ability to funnel value through our ecosystem offers a major advantage over our competitors, but it also provides us with customizable infrastructure that we can tailor to maximize protocol efficiency. ### Custom Blockchain Parameters As Nolus protocol grows, we must be able to finetune the blockchain parameters and tailor them to the demands of the application at the time. By building our own Layer-1, we are in complete ownership over these decisions and can remain flexible with the ability to react to changes rapidly. There are a few examples that demonstrate how important this has been during the developmental and growth stages: To begin with, we were able to introduce a custom tax module that charges a marginally higher transaction fee that is used to buy back $NLS tokens from the open market. These $NLS tokens are used to refill the incentives pool and directed to lenders on the protocol to encourage liquidity providers to participate on Nolus. In this way, increased activity and Total Value Locked (TVL) results in larger $NLS token buybacks and therefore higher rewards for lenders. The custom tax module creates a positive feedback loop that helps Nolus scale and sustains stablecoin deposits as it grows. Moreover, Nolus does not have to share block space with other applications on the blockchain. We are not exposed to any contagion risks if applications on the same network are exploited, yet we inherit the same security provided by the Tendermint PoS consensus mechanism. Supplying all the block space for one application can also lead to greater scalability in terms of the number of transactions Nolus can support at any one time. This is because we don’t need to compete with other protocols to include transactions in a block, allowing Nolus to fulfill thousands of transactions simultaneously. The Cosmos SDK delivers a robust mint module that allows developers to define the properties of the tokens they want to create, such as the total supply, the rate at which new tokens will be minted, and the rules for how they can be transferred and traded. Our developers completely reworked this to align the inflationary minting with a time span of 10 years as noted in [our Whitepaper](https://nolus.io/Nolus-Whitepaper.pdf). 15% of the total $NLS supply serves as staking rewards to incentivize validators of the blockchain, with nearly 50% of these entering circulation in the first 2 years. As you can see below, we have engineered the mint module to slowly decrease the number of tokens minted as time goes on to maximize the efficiency of the release schedule. ![Chart of the Nolus $NLS mint schedule decaying over a ten-year release horizon](https://nolus.io/blog/assets/exploring-the-advantages-and-disadvantages-of-developing-a-custom-layer-1-blockchain/figure-2.webp) As you can imagine, it is difficult for a Layer-1 to tailor its infrastructure to fit the needs of “every” application that runs on it, so smart contract developers usually have to compromise on some aspects such as security or transaction speed. With full ownership of our Layer-1, we can modify very specific details at the core of the technology to maximize its efficiency for our products, as illustrated in the examples above. Yet, these changes can only be made through the power of decentralized decision-making, also known as governance. ### Governance Governance refers to the mechanism in which stakeholders (users who have staked $NLS) can vote on proposals to change details about the protocol, facilitating democratic decision-making. For example, a user can put up a proposal to distribute 10,000 vested $NLS tokens from the community pool to the lender’s incentives pool to encourage more deposits. Each individual stakeholder can then vote on whether they agree or not, with voting power proportional to the number of $NLS tokens staked. The main advantage that this offers is the ability of the protocol to adapt and evolve to market conditions. If liquidity is low, the community can engage in healthy debates to discuss how the protocol can encourage user deposits before creating a proposal themselves. Governance provides an efficient management system where the users have the final say and can shape the future of Nolus via active participation. Moreover, these decisions are truly decentralized, with no single entity dictating the outcome of a governance proposal. To pass, a proposal will need 50% of the total votes to be “YES”, and 33.4% of the active stake to pass quorum, meaning an individual/entity would need to own a massive fraction of the staked $NLS supply to force votes in their favor. As everything is on-chain and completely transparent, bad actors are dissuaded from manipulating votes and the community can verify each action taking place in real-time. Finally, governance cultivates innovation and fosters a strong community camaraderie due to its permissionless nature. Since anybody can put up a proposal, the brightest minds within our ranks can develop strategies and policies that will help propel Nolus to new heights. New ideas will be continually encouraged and supported, laying out the framework for successful experimentation on our blockchain. This is often the result of “Temperature Checks”, where discussions occur to gauge community sentiment and level of support before governance proposals are submitted. Governance also highlights a crucial point, Nolus is not reliant on support desks of other protocols to fix urgent issues. ### Independence and Autonomy An independent cryptocurrency protocol can take actions that are in the best interest of the protocol and its users, without being influenced by external factors. Instead of relying on support teams from other protocols whose priorities may not be aligned, our developer team can act instantly in developing situations. Any active governance participant will understand how challenging it can be to propose and pass governance through another community! This helps to mitigate risks more efficiently, but also promotes self-independence and sovereignty, core values that resonate throughout DeFi. However, independence should not prevent collaboration. Nolus grows off the foundations built by the Cosmos core team before us, and with their revolutionary work to facilitate interchain cooperation, we can utilize the fantastic applications built on Cosmos. ### Interchain Interoperability By taking advantage of interchain interoperability technology, Nolus continues the vision of the Cosmos Ecosystem, a network of intertwined dApps. Without Interchain Accounts, Nolus could not exist in the capacity it does today. Also known as IBC accounts, these enable the creation of an account on one blockchain (the “host network”) that can interact with another blockchain (the “controller network”) without needing private keys for a transaction. This allows a user to swap tokens, add liquidity, farm tokens, etc. on another network without manually signing a transaction there. For example, once Nolus is live, our smart contract will be able to swap tokens on Osmosis directly from the Nolus user interface without manually signing a transaction on Osmosis. In this way, Nolus can utilize existing reputable applications that have proven their value already, enhancing the user experience dramatically. As the code is open-sourced, the developer team has been able to make a lot of refinements to the Interchain Accounts module that is explicitly tailored to the needs of a Money Market. The ability to perform token swaps, liquidations, and minting derivatives on the host network itself allows Nolus to be truly “platform neutral”. It also opens the door to multiple DEX integrations to leverage the individual functionalities and advantages of various permissionless chains, stimulating further collaboration. Nolus will be IBC-enabled straight out of the box, allowing easy and simple transfer of assets to Nolus from other IBC-enabled networks within Cosmos. Furthermore, the team is developing the multihop handler for IBC transfers and custom routings to significantly reduce the complexity of bridging for the end-user. To do so, we will allow users to open a lease position with the down payment located on another network without needing to bridge this to Nolus beforehand. ### Summary - Utilize products already built; - Extract value from transactions on the Layer-1; - Custom blockchain parameters; - Custom governance parameters; - Independence and autonomy; - Interchain Interoperability. As you can see, the ability to build on the code developed before us and manipulate it to increase performance on our own blockchain has allowed us to create the perfect infrastructure for a money market on Cosmos. To quote our whitepaper: “The simplified creation of a sovereign, horizontally scalable blockchain with its proprietary token economy, cheap and fast transactions, and access to a thriving ecosystem of interconnected dApps and services are some of the many advantages that the Nolus Protocol benefits from.“ ## Risks We share continued faith in the Cosmos ecosystem and the technology being produced on it, and we believe our own sovereign Layer-1 allows us to extract the most value from the network. Nevertheless, there are some risks associated with this decision that we think users should be aware of. ### Adoption Risk Attracting liquidity is one of the main challenges for a new Layer-1 blockchain. On the assumption that users prefer to interact on blockchains they are familiar with, it is important Nolus provides something unique to tempt liquidity away. Users that do want to use our products will need to bridge their assets, so they will need a large enough incentive to take that risk, and spend time familiarising themselves with our products. We have written several articles to convince users of our value, but to really mitigate this risk, Nolus must reduce the friction of onboarding. As we mentioned earlier, we will be developing the multihop handler for IBC transfers and custom routings to directly address this hurdle. It is imperative that the user onboarding process is as simple and frictionless as possible to encourage participation, by reducing the barrier to entry, we dramatically increase our potential user base. ### Validator Set #### Initial Startup and Infrastructure Costs Setting up a validator carries a cost-associated risk for the operator/s whether they run their machines locally, allocated on a data center, or on a service provider. This means validating on a blockchain needs to be sufficiently rewarded to offset these costs and incentivize people to set up a node. To earn revenue, validators charge a commission from the staking rewards earned by users who stake with the validator. Nolus must ensure the costs associated with hardware and storage are less than the profits made via commission so that validators can profit. If this fails, validators are likely to move their equipment to another Layer-1 where they can sustain profits. This can cause a few issues, for validators to leave, they need to unstake their $NLS tokens and sell them on the open market. For large validators, this offers the opportunity to purchase more $NLS, increasing their voting power within governance. Therefore, it is of vital importance that Nolus has a robust, dedicated validator set that shares the same core values that we do. To encourage these teams to validate on Nolus, we [announced the Nolus Delegation Program](/blog/announcing-the-nolus-delegation-program). Through this program, we can delegate locked tokens to 25 validators that fit specific criteria for two major benefits: 1. Promote decentralization by distributing voting power equally between the validators in the active set. 2. Maintain high standards for validators on Nolus, hand-picking those that fit our success criteria. These validators are rewarded by receiving an equal genesis validation, with the staking rewards sold to cover the costs and maintain uptime. Nolus, like many other Cosmos blockchains, will also launch with a low circulating supply relative to its total supply. Inflation is therefore high, to begin with, before tailing off over 10 years to reward early validators that assume the most risk. Without the Delegation Program, the high inflation t, to begin with, would mean a malicious entity would find it easier to amass a large number of tokens quickly. #### Centralization A single entity holding a large proportion of the total token supply is dangerous for many reasons: - The contradiction of a core belief held throughout crypto; - If they hold enough tokens, validators can censor transactions or cause an invalid state transition; - Risk of corruption in the voting process; - Ability to force governance proposals through. Some of these issues are addressed in the Delegation Program, however, the governance parameters have also been set to discourage malicious actors. As we mentioned, a large number of votes from the active set are required for a proposal to pass quorum, and over 50% of the votes must be “YES”, so a validator would need to purchase a lot of $NLS off the open market. The additional cost involved with acquiring a large proportion of $NLS tokens acts to discourage this behavior and increase the risk of attempting an attack. These custom governance parameters are useful for deterring this attack vector and are ubiquitous throughout Cosmos. ### Risks Associated With IBC #### Bridge Reputation Unfortunately, bridges have been associated with recent large nine-figure hacks that have caused irreparable damage to the affected blockchains. Naturally, the trust lost in bridges will spill over and affect the reputation of IBC, the method used to transfer assets and information across the Cosmos network. If IBC is exploited, it would be extremely detrimental to liquidity on Nolus, but more importantly to the reputation of Cosmos. Yet, unlike many trusted bridge solutions, IBC does not depend on an intermediary to verify the validity of cross-chain transactions. Instead, IBC is designed in a way that requires trust in the proof verification provided by the light client, and **not** in the relayers themselves. In a scenario where all the relayers are faulty or behaving maliciously, the availability of the network may be affected, but the value transfer and security of data would remain intact. Put simply, the IBC protocol has been designed to remain secure even in hostile conditions, where packets are not accepted if relayers become bad actors. #### Latency Latency refers to the amount of time it takes for a packet of data to be sent from one blockchain to another and processed. This is increased when using IBC for a few reasons: - Network congestion: If either network (source or destination) is congested, it can take longer for packets to be sent and received; - Proof verification: The light client needs to verify the packet commitment proofs, which can add additional latency to the process; - Consensus mechanism: The consensus mechanism used by the receiving blockchain may require additional time to process and confirm the received packet. The Tendermint consensus mechanism adopted by the Cosmos ecosystem is designed to reduce latency and can process thousands of transactions per second; - Block time: The block time of the receiving blockchain can also introduce latency if it’s high. Nolus has opted for a block time of 6 seconds, the standard for Tendermint, for faster transaction processing and confirmation times. High latency can slow down the network’s overall performance, making it less responsive and efficient for the end user. ### Security and Maintenance Since we have developed the Layer-1 independently, the security of our network is only as good as we make it. We have a highly skilled team of developers that have dedicated months to this project, however we cannot guarantee that we have not missed any bugs in the code. Therefore, when Nolus launches, we will not have a robust history of security and users will need to trust that the developer team has removed any possible attack vectors in the code. However, Nolus will be open-source from inception, meaning users can verify the security for themselves by scrutinizing the code. We have also received two security audits from Oak Security, a third-party company that specializes in cyber security and safety, and reviewed their suggestions to ensure that Nolus is designed with safety at the forefront. Building and maintaining a Layer-1 is also time-consuming, with many additional costs that can accumulate over time. The maintenance of the core Layer-1 infrastructure requires both time and money, potentially stalling the growth of Nolus as less time can be spent on product/innovation. We hope that after reading this research piece it is clear that the advantages an independent Layer-1 provides are integral to the Nolus product, and therefore time spent maintaining this is not wasted. In our opinion, the value obtained and funneled through our products far outweighs the costs associated with keeping things running! ## Conclusion By showing you the potential risks, we can demonstrate the steps Nolus has taken to reduce them individually. The ability to tailor a custom Layer-1 blockchain and mitigate risks helps to keep our money market secure and sustainable in the future too. We hope it is clear that time has been spent to ensure any possible attack vectors have been considered and dealt with. A user’s security while using our products is of utmost importance to us, and we have taken no shortcuts to compromise on user experience. For more on the future of DeFi, visit The Nolus Protocol socials: --- # Finding Liquidity in the Cosmos Published: 2023-02-07 URL: https://nolus.io/blog/finding-liquidity-in-the-cosmos Tags: Interop, Explainers Excerpt: The majority of cryptocurrencies are volatile assets whose prices fluctuate for a number of reasons. ![Abstract visualization of liquidity flowing across Cosmos ecosystem DEXes and appchains](https://nolus.io/blog/assets/finding-liquidity-in-the-cosmos/cover.webp) As many of you will know, access to high-quality decentralized exchanges is critical for Nolus Protocol. Depositors on Nolus Protocol provide stablecoins to pools which are subsequently swapped for the asset that a borrower desires (through Interchain Accounts). Making efficient trades is important as it allows a finite pool of stablecoins to provide more loans to borrowers. _How Nolus taps that liquidity through Interchain Accounts rather than running a DEX of its own:_ [How does Nolus solve the issue of liquidity?](/blog/how-does-nolus-solve-the-issue-of-liquidity) The cost of a swap on a decentralized exchange consists of a number of elements: - The rate for a swap (which is determined by the model of the DEX and its underlying liquidity); - Fees that accrue to Liquidity Providers (also including the Governance Token stakers); and - Transaction Fees for the swap. Within the Cosmos ecosystem, the first two elements are the most important as transaction fees on appchains are immaterial. However, in environments with higher gas costs, such as Ethereum, transaction fees have been a determining factor for the exchange a swap is conducted on. Below, we discuss what the issues with legacy models are and how the Cosmos ecosystem is evolving towards more efficient models! ## Difficulties Trading With Volatile Assets The majority of cryptocurrencies are volatile assets whose prices fluctuate for a number of reasons. Traders will want to swap these assets for stablecoins or even other volatile assets. The earliest implementations of decentralized exchanges were AMMs which used a curve with the simplified equation of `X * Y = K`, where X and Y are the reserves of each asset and K is a constant. The curve is plotted below for reference. ![Graph of the constant-product X times Y equals K curve used by legacy AMMs](https://nolus.io/blog/assets/finding-liquidity-in-the-cosmos/figure-1.webp) This model has been used by most legacy Cosmos ecosystem DEXes. It is the model used by most Osmosis pools and has been used by JunoSwap and SiennaSwap among others. This model evenly distributes liquidity across all price ranges (with prices approaching infinity on both sides of the spectrum) which means an asset can always be traded with its liquidity pair. However, this model is not suitable for large trades (relative to the size of the liquidity pool). While the even distribution of liquidity has benefits, it means that the majority of liquidity in a pool is not utilized which makes traders incur high slippage on large trades. ## Concentrated Liquidity The concentrated liquidity model was made popular by UniSwap with their UniSwap v3 implementation. This model allows liquidity providers to deploy liquidity within a specific price range. ![Concentrated liquidity distribution around market price as used by Uniswap v3-style DEXes](https://nolus.io/blog/assets/finding-liquidity-in-the-cosmos/figure-2.webp) Liquidity providers are incentivized to concentrate their liquidity around the market price to earn the most fees. This makes these DEXes significantly more efficient and less dependent on TVL. When UniSwap v3 launched, it was suggested that these new liquidity pools could be 4000x more efficient than their predecessors. Fortunately for the Cosmos ecosystem, there are many teams working on implementing this more efficient model. Joining Crescent DEX, Osmosis, and Astroport are both gaining inspiration from their counterparts in Ethereum (in Osmosis and Curve) to implement this model in slightly different ways! ## Order Books Centralized exchanges have long offered order books to traders. It allows traders to match their orders with one another on a “price-time-priority-basis.” In short, the highest bid and the lowest ask converge to represent the current market price, and users have the option to cross this bid-ask spread to execute the order immediately. Similar to concentrated liquidity, the order book model results in liquidity providers concentrating their liquidity around the market price which results in higher depth for trades (lower slippage). ![Diagram of a bid-ask order book with converging highest bid and lowest ask](https://nolus.io/blog/assets/finding-liquidity-in-the-cosmos/figure-3.webp) Order books also have a number of additional benefits: - Allow traders to place limit orders, bids, and offers; and - Allow liquidity providers to provide liquidity to a single side at their desired price. The Cosmos ecosystem has two notable order books in Kujira’s Fin and Injective Protocol’s Helix. While they are still in their infancy, their ability to attract volume demonstrates the value of an order book for efficient trades. Furthermore, exchanges such as Crescent DEX have taken this a step further to enable a liquidity pool in their AMM to act as a market participant within the accompanying order book. This allows liquidity providers who wish to provide liquidity on both sides of a pair to continue to do so and further amplifies capital efficiency to provide more depth (and lower slippage) to traders. ## Closing Remarks While DeFi in the Cosmos ecosystem is still in its early years, teams have begun to take huge leaps and strides into making DeFi much more efficient which has been demonstrated with improvements in trading. With current teams improving day by day and many new teams currently developing their models, we expect to see this be highly beneficial for depositors on Nolus Protocol who will see their yield grow over time! --- # The Importance of DeFi Published: 2023-01-25 URL: https://nolus.io/blog/the-importance-of-defi Tags: Explainers Excerpt: Decentralized finance offers an open and free alternative for consumers. ![Conceptual visual of open, permissionless finance as an alternative to traditional gatekeepers](https://nolus.io/blog/assets/the-importance-of-defi/cover.webp) When markets are booming, DeFi is treated as the best thing since sliced bread. Something that will take over the world at lightspeed and will have been seen as an obvious solution to the flaws of traditional finance. If only it was that easy! Now that the markets have taken a tumble, many people have begun asking what value DeFi actually provides. In an environment where centralized entities provide better UX and where DeFi applications are more expensive for users (both in Network fees and being less efficient), is there value in continuing down the DeFi road? Well, look no further and enjoy the read on what we believe the biggest benefits of DeFi are! ## A Market That Is Accessible To All While the majority of people in the cryptocurrency space may not have been inconvenienced by traditional providers, large groups of people are excluded (or provided limited services) from traditional finance. It may seem like a stretch to believe so, but consider those that: - Live in countries that have sanctions levied against them or are citizens of these countries. Sanctions tend to be broad-sweeping and impact all individuals and businesses. This ranges from suspending international transfers to limits on maximum deposits in overseas banks. This results in sanctions often impacting large groups of innocent individuals and businesses, restricting them from financial services that may be necessary for their livelihood. - Operate businesses primarily in the cryptocurrency industry or even purchase cryptocurrencies from their bank accounts. There are numerous stories of businesses that had their account closed because they interacted with cryptocurrency providers such as centralized exchanges and other on-ramps. This is not unique to any specific country. In October 2022, it was reported that 47% of the UK’s major banks do not support cryptocurrencies and place restrictions on transferring funds or making credit/debit card purchases to centralized exchanges. Similar sentiment has been seen across the world and restricts consumers from being able to access financial services that they wish to interact with. Decentralized finance offers an open and free alternative for consumers. By simply having access to an internet connection and a mobile wallet, anybody can interact with any on-chain financial service that they wish to use. ## A Market That Is Fair In traditional markets, the power imbalance between different centralized institutions and other stakeholders can result in some stakeholders being “protected” at the expense of others. This has been seen numerous times in recent years where institutions have closed markets and even cancel trades in response to the existing trading environment. In March 2022, the London Metal Exchange (“LME”) suspended nickel trading and canceled trades in a period that saw prices double to more than $100,000 per tonne. The LME reported that this was a necessary action due to the market becoming “disorderly”. Sources familiar with the events suggested that some of the LME’s members would have defaulted should the trades not have been canceled. Similar events took place in January 2021 when the New York Stock Exchange (“NYSE”) and many brokers suspended trading of GameStop’s stock during periods of volatility as a result of a “short squeeze”. The short squeezes placed many funds at material risk. The suspensions saw many politicians and financial commentators question the actions brokerages took to protect Wall Street insiders from outsized losses. DeFi protocols are simply a collection of smart contracts on an immutable blockchain. When your transaction is confirmed and finalized, users can have confidence that they are not at risk of having their trades reversed or even being able to trade them further. ## Not Your Wallet, Not Your Crypto Money The vast majority of people using financial services trust a third party with their money. This extends from money in a bank account, to assets held by a custodian. Leaving your money with a centralized provider can leave your funds at risk. While it is less likely with large banks that are heavily regulated, it has been displayed clearly with the insolvency of Celsius. In January 2023, a federal judge ruled that customers of Celsius Earn had transferred control of their assets to Celsius, meaning they are part of the company’s bankruptcy estate. For those that are unaware of how insolvencies work, the assets of Celsius will be realized to raise funds to return to creditors. These funds will be returned to creditors in order of their hierarchy. Without getting into the nitty gritty of insolvency law, those customers who had money in Celsius Earn are now “unsecured creditors”. These creditors are paid last which means they often receive a pro-rata distribution (cents on the dollar) if anything. Moreover, there have been many times in modern history when the business practices of banks have had a negative outcome for savers. In times of severe economic downturns, banks (who lend your deposits out to borrowers) have faced liquidity crises and been unable to serve withdrawal requests promptly. If your funds are yours but your ability to interact with them is restricted, are they really yours? DeFi protocols are non-custodial meaning you retain ownership of your assets at all times. This means that users are not exposed to the business practices of a third party! ## Closing Remarks While DeFi is still a work in progress, its benefits are clear and evident for people to see. So while we can make more efficient protocols and give users a better experience, DeFi is here to stay! We at Nolus plan to be part of the solution and hope you join us for the ride! --- # Announcing the Nolus Delegation Program Published: 2023-01-18 URL: https://nolus.io/blog/announcing-the-nolus-delegation-program Tags: Announcements, Tokenomics Excerpt: Through a delegation program, we can delegate locked tokens to both increase the total value securing the Network and to promote ![Promotional banner announcing the Nolus Delegation Program for validators and stakers](https://nolus.io/blog/assets/announcing-the-nolus-delegation-program/cover.webp) Validators are integral stakeholders in any Proof-of-Stake blockchain. They form part of the active set and are responsible for validating and relaying transactions as well as proposing, verifying, and finalizing blocks. The active set consists of a group of validators ranked highest by their total stake. Validators obtain stake by bonding (or having other entities bond) tokens with their validator. These tokens can be unbonded but have a waiting period before they are liquid again. For Nolus Protocol, the unbonding period is 21 days. Should a small number of validators accumulate a large amount of stake, this degree of centralization reduces the benefits arising from a decentralized network and can also place the blockchain in jeopardy. With that in mind, we are excited to announce the Nolus Delegation Program to help bootstrap Nolus Protocol and support decentralization! ## Why Is a Delegation Program Needed? Nolus Protocol, like many other Cosmos blockchains, will launch with a low circulating supply relative to its total supply and increase over time. This means that a malicious entity may find it easier to amass the number of tokens needed to either censor transactions or cause an invalid state transition. This is especially dangerous for Nolus Protocol, which relies on attracting and utilizing liquidity. Through a delegation program, we can delegate locked tokens to both increase the total value securing the Network and to promote decentralization by distributing voting power among many validators. ## How Has the Nolus Delegation Program Been Designed? The Nolus Delegation Program will delegate 100M $NLS (10% of the total supply) equally to 25 validators. These tokens will be delegated from the allocation to the team and other contributors. We have considered several criteria that we believe define high-value validators. These include, but are not limited to: - Strong record of running validators in the Cosmos ecosystem; - Strong performance metrics such as uptime; - Positive contributions across other networks such as running relayers or other infrastructure; - Participation in Network governance; - Benefitting decentralization such as avoiding data centers or concentrated geographies. There will also be a further 30M $NLS (3% of total supply) that is available to be delegated to any validator in the active set. The criteria for this are yet to be determined but will consider validators that have gone above and beyond to contribute to the success of Nolus Protocol. ## What Is Required to Maintain a Delegation? To maintain delegations, validators must meet the following requirements. - Uptime of at least 99% per year; - Active participation in governance proposals; - Maintain a commission rate between 1% and 10%; - Upgrade within 24 hours of the latest protocol releases; - No slashing events; - Providing support to the community: technical or non-technical. Core contributors to Nolus Protocol will periodically re-evaluate recipients to ensure that they remain compliant with the criteria set out above. ## How to Apply? If you are interested in applying for a delegation, please fill out and submit the following form: [Nolus Delegation Program Form](https://airtable.com/shrag7aDg46J3arlX) The deadline for submissions is January 31st, 2023. All submissions will be reviewed, and details of those that have been selected will be announced on Nolus’ Discord server. Please note that applications will be carefully evaluated on a case-by-case basis. Nolus Protocol will have 40 validators at its genesis and therefore there are no guarantees of being accepted into the delegation program. If you have any questions at all, please feel free to join our Telegram or Discord (linked below), and we would love to have a chat with you! We look forward to creating the next generation of Cosmos DeFi with you! --- # What Makes Staking an Attractive Proposition On Nolus? Published: 2023-01-13 URL: https://nolus.io/blog/what-makes-staking-an-attractive-proposition-on-nolus Tags: Tokenomics, Strategies Excerpt: Proof-of-Stake acts as a Sybil-protection mechanism. ![Staking-themed hero highlighting NLS rewards, network security, and validator participation](https://nolus.io/blog/assets/what-makes-staking-an-attractive-proposition-on-nolus/cover.webp) It isn’t surprising that 2021 saw large increases in searches for “staking” and “crypto staking”. The market had significantly heated up, and networks using Proof-of-Stake began to gain significant popularity. But what is staking? Why does a blockchain need staking? And why do people stake? We go into more detail below and also elaborate on the value gained from staking on Nolus Protocol. ## What Is Proof-Of-Stake, and What Is the Role Of Staking? Proof-of-Stake acts as a Sybil-protection mechanism. Simply put, it aims to reduce the negative impact that could be created by a single individual operating multiple validators by weighting validators by “stake”. If you want to imagine a blockchain without Proof-of-Stake, imagine a network where one validator receives one vote for consensus purposes. If there were 100 validators in total, and Alice operated 75 of them, she would have significant dominance over the network and how it is run. By using Proof-of-Stake, blockchains weigh the voting power of validators by the number of tokens that have been locked to it. This process of locking tokens is known as staking. To retrieve your tokens (e.g., to use elsewhere), there is an unstaking period that varies from blockchain to blockchain, on Nolus Protocol, the unstaking period will be initially set at 21 days. This means that Alice would not be able to gain extra influence over the network simply by running more validators, but rather she would have to have more value staked. This creates a significant financial disincentive for a malicious actor to attack a Proof-of-Stake network as they would have to invest a significant amount of capital to execute an attack, capital which would lose its value after an attack. Note that this means that the more tokens staked on a network, the greater the number of tokens required to successfully execute an attack. This also points to why distributing stake is paramount. If individuals all delegate to a small number of validators, it centralizes the stake around these validators and reduces the number of validators that would have to collude to attack a blockchain. For Nolus Protocol and other Cosmos blockchains: - The blockchain will stop making progress if ⅓ of its voting power goes offline; - Validators could perform censorship attacks if they command ⅓ of the blockchain’s voting power; - Validators could commit invalid states if they command ⅔ of the blockchain’s voting power. Staking also has the added benefit that malicious activity can be further disincentivized through “slashing”. This is where malicious validators lose a percentage of their stake for their malicious actions. ## How Does Nolus Protocol Incentivize Staking? Between being at risk of being slashed (albeit a small risk), and your tokens being illiquid for a period of time, one may think that staking is full of costs and no benefit. Staking $NLS provides individuals with a number of benefits: - Inflation is emitted to stakers as a way to incentivize staking; - The majority of transaction fees on the Network accrue towards stakers; - Additional perks when engaging with Nolus Protocol’s flagship DeFi Lease product. These perks are discussed in more detail later in the article! _The full breakdown of NLS supply, allocations and value-accrual mechanisms lives in the token model:_ [Nolus Token Model](/blog/nolus-token-model) With regard to the first point, Nolus Protocol has been designed with an inflationary schedule that operates over a ten-year period. Each month, the number of emitted tokens will decrease. A total of 150М $NLS will be emitted over the period with over half of these emitted in the first three years. ![Chart of NLS inflation emissions over ten years, tapering monthly with 150M total distributed](https://nolus.io/blog/assets/what-makes-staking-an-attractive-proposition-on-nolus/figure-1.webp) The keen-eyed among you will have noticed that Protocol revenue does not directly accrue to stakers. A percentage of protocol revenue (as well as a swap spread and small transaction fee) is used to buy back $NLS from the open market which is used to refill the incentives pool. ![Diagram showing protocol revenue funding NLS buybacks that refill the lender incentives pool](https://nolus.io/blog/assets/what-makes-staking-an-attractive-proposition-on-nolus/figure-2.webp) This is a part of Nolus Protocol’s vision to enable sustainable DeFi. This model provides an indirect benefit to all $NLS holders, including stakers. Purchases of $NLS on the open market will provide additional demand for the $NLS token! ## What Does This All Mean for Those Who #DareToNolus? As you will have gathered by now, staking $NLS has been designed to be attractive for all of the Network’s major stakeholders. - Borrowers will benefit from staking $NLS as it will allow them to obtain DeFi Leases at lower interest rates. They can also benefit from special down payment options; - Lenders will benefit from staking $NLS as it will give them higher rewards on deposited assets; - Investors will be able to capture inflationary rewards to grow their position in the Network as well as earn fees in line with Network growth (from transaction fees). If you have any questions, please feel free to join our Telegram or Discord (linked below) and we would love to have a chat with you! We look forward to creating the next generation of Cosmos DeFi with you! --- # NLS Token: Utility, Staking, Supply, and Market Data Published: 2023-01-04 Updated: 2026-08-07 URL: https://nolus.io/blog/nolus-token-model Tags: Tokenomics, Explainers Excerpt: What NLS does, how staking works, how the 1 billion token supply is structured, and where circulating supply and market cap stand as of August 2026. ![NLS token model cover illustrating staking utility, governance rights and value accrual mechanisms](https://nolus.io/blog/assets/nolus-token-model/cover.webp) NLS is the native token of the Nolus blockchain — a Proof-of-Stake Layer 1 built with the Cosmos SDK, on which the Nolus money market and its DeFi Lease product run. This page is the reference for what the token does, how staking works, how supply is structured, and where the market numbers stand. [How Does the Nolus Protocol Work?](/blog/how-does-the-nolus-protocol-work) ## What NLS Is Used For The token supports four functions on the network: 1. **Network fees.** NLS is the medium for transaction fees and other network usage fees, paid by users to the validators that run the chain. 2. **Staking and governance.** Holders stake NLS to secure the chain and to vote on proposals such as parameter changes and protocol upgrades. 3. **Consensus incentives.** NLS rewards validators and delegators for maintaining the integrity of the network. Rewards are distributed automatically according to parameters set by the network. 4. **Ecosystem rewards.** NLS is used to reward contributors and participants who support the growth of the network. ![Validator reward flow diagram showing NLS incentives distributed for securing the Proof-of-Stake network](https://nolus.io/blog/assets/nolus-token-model/figure-1.webp) ## Staking NLS Proof-of-Stake weighs a validator's influence by the value delegated to it rather than by the number of machines it runs, which makes an attack expensive rather than merely inconvenient. Delegating NLS to a validator contributes to that security budget and earns a share of emissions and transaction fees in return. Three chain parameters are worth knowing before delegating, all of them readable from the public Nolus node API: - **Unbonding period: 21 days.** Undelegated tokens are neither transferable nor reward-earning until the period elapses. - **Active set: 30 validators.** Delegating outside the largest few spreads stake and reduces the number of operators who would have to collude to attack the chain. - **Bonded denomination: `unls`**, the base unit of NLS at six decimal places. Staked tokens are also subject to slashing, the mechanism by which a validator that misbehaves loses a percentage of its stake — delegators share that loss, which is why validator selection matters. [What Makes Staking an Attractive Proposition On Nolus?](/blog/what-makes-staking-an-attractive-proposition-on-nolus) ## How Value Accrues to NLS Beyond fees and emissions, the token model defines three routes by which protocol activity is meant to reach the token. ### Adjusted DeFi Lease interest Staked NLS grants borrowers lower interest rates on DeFi Lease positions. The reduction is calculated from staking duration — the longer the stake, the lower the interest on subsequent leases. Undelegating resets the rate to the base rate regardless of the amount. ### Tiered lender APR Lenders buy and stake NLS to raise the rewards on the stablecoins and tokens they supply. As protocol usage grows, reaching a higher APR tier requires more NLS, tying token demand to the size of the money market. ### Lease revenue and buybacks Most protocol revenue comes from interest-bearing DeFi Lease contracts. Part of operating income is used to buy NLS on the open market, which is then added to the Nolus Incentives Pool and paid out as lender rewards. This is an indirect benefit rather than a direct distribution: revenue does not flow to stakers as revenue, it flows as open-market demand for the token. ## Supply Structure The maximum supply is capped at 1 billion NLS. 850 million were issued and allocated at the genesis block, most of them locked — locked tokens can be staked but cannot be spent or transferred until released by their schedule. | Allocation | Share | Release schedule | | ------------------------ | ----- | --------------------------------------------------------- | | Community (DAO treasury) | 24% | Linear vesting over 36 months from genesis | | Token sale | 20% | 9-month cliff, then 24 months linear | | Team and contributors | 19% | 15-month cliff, then 36 months linear | | Lender incentives | 12% | Liquid at genesis; distribution follows protocol activity | | Strategic partners | 5% | 9-month cliff, then 24 months linear | | Liquidity | 4% | Liquid after genesis | | Bug bounty | 1% | Liquid after genesis | ![NLS genesis allocation pie chart breaking down community, investors, team, incentives and partner shares](https://nolus.io/blog/assets/nolus-token-model/figure-2.webp) The remaining 150 million NLS — 15% of the total supply — are minted over ten years as staking rewards for validators and delegators. Under the schedule set at genesis, 2.5% of all tokens are minted at the end of the first month of operations, and the monthly rate then steps down by 0.05 percentage points per month through year one, by 0.04 pp in year two, 0.03 pp in year three, 0.02 pp in year four, 0.015 pp in years five through seven, and 0.0125 pp in year eight, remaining constant to the end of year ten. Circulating supply is therefore the released portion of the genesis allocation plus everything minted as staking rewards since. In September 2024 the team put a signaling proposal to governance to reshape that emission curve — emitting less in the near term and more later, so that supply enters circulation as the ecosystem grows. The proposal and both curves are described in full in the post below; check the on-chain governance record for the parameters currently in force. [Revamping Nolus Chain Inflation for Long-Term Growth](/blog/revamping-nolus-chain-inflation-for-long-term-growth) ## NLS Market Data The panel at the top of this page reads three headline figures live on every page load: circulating supply, total supply, and total value locked. The table below is a fuller snapshot taken on **6 August 2026** — it adds market pricing, the vesting reserve, burned supply and the 1 billion cap, and it does not move. Supply comes from the Nolus supply service, the protocol's own chain-supply endpoint and the source that feeds external aggregators. Market pricing comes from CoinGecko, staking figures from the Nolus chain, and protocol figures from the Nolus data API. Sources are listed at the end of this page. | Metric | Value (as of 6 August 2026) | | ----------------------- | --------------------------- | | Price | $0.0023766 | | Market capitalisation | $2,099,159 | | Fully diluted valuation | $2,189,260 | | 24-hour trading volume | $59,488 | | Circulating supply | 883,258,451 NLS | | Total supply | 921,171,101 NLS | | Reserves (unvested) | 37,912,649 NLS | | Burned | 0 NLS | | Maximum supply | 1,000,000,000 NLS | Two things follow from those numbers. Circulating supply is about 88% of the 1 billion cap, so roughly 12% of the maximum has yet to reach circulation — the reserve still in vesting, plus the remainder of the ten-year staking-reward mint that keeps total supply below the cap. And the fully diluted valuation quoted above is computed against current total supply, not against the cap: priced at the same rate, all 1 billion NLS would come to about $2.38 million, some 13% above market capitalisation. The gap between total and circulating supply is the reserve still locked in vesting, published as 37,912,649 NLS. The service derives it from the 36 continuous vesting accounts, treating the locked portion of each as `min(bank balance, original vesting amount × the fraction of the vesting period still to run)` and subtracting the sum from total supply. Each row is floored independently, so subtracting the published reserve from the published total lands one unit away from the published circulating figure. Nothing has been burned. On the staking side, 238,115,577 NLS were bonded at the time of reading — about 25.9% of total supply, and that share is the network's security budget. A further 45,138,387 NLS sat in the unbonding pool, the module account holding stake part-way through its 21-day exit. The rest, roughly 638 million NLS, is neither staked nor unbonding. For protocol context on the same date, total value locked stood at $348,805, and cumulative transaction value routed through Nolus Lease and Earn since launch stood at $179,954,913. These figures move continuously. Treat the table as a dated snapshot rather than a live ticker, and read the current values from the sources below. ## Why the Model Is Shaped This Way Building a token economy means gearing the economics toward specific outcomes from the ground up. For NLS those outcomes are security, longevity, decentralisation, and economic growth. Keeping the majority of NLS circulating among the community matters for all four: it sustains engagement, keeps investment flowing into the protocol's health, development and security, and provides sufficient liquidity for validators and users. Linear unlocking exists so the token economy does not have to absorb sudden supply shocks before it has had time to mature. None of these parameters are fixed forever. On-chain governance can adjust token economics — including inflation rates — and anyone who stakes NLS is eligible to vote on those changes. Agreed changes still require validator adoption to take effect. **Sources** - [Nolus supply service](https://supply.nolus.io/) — circulating, total, maximum and burned supply, the reserve figure, and the vesting-lock methodology. Read 6 August 2026. - [CoinGecko — Nolus (NLS)](https://www.coingecko.com/en/coins/nolus) — price, market capitalisation, fully diluted valuation and 24-hour volume, read 6 August 2026. - [Nolus chain API](https://lcd.nolus.network/cosmos/staking/v1beta1/pool) — bonded and unbonded stake; unbonding period and active-set size from `/cosmos/staking/v1beta1/params`. Read 6 August 2026. - [Nolus data API](https://etl.nolus.network/api/total-value-locked) — total value locked; cumulative transaction value from `/api/total-tx-value`. Read 6 August 2026. --- # Nolus Under the Hood: Appchain and Liquidations Published: 2022-12-27 Updated: 2026-08-10 URL: https://nolus.io/blog/the-nolus-protocol-under-the-hood Tags: Deep Dives Excerpt: Inside the Nolus appchain: Cosmos SDK and CosmWasm, Interchain Accounts for swaps, and partial liquidations that unwind only part of a position. ![Technical hero illustrating the inner architecture of the Nolus Protocol margin engine](https://nolus.io/blog/assets/the-nolus-protocol-under-the-hood/cover.webp) ## Introduction So far, the growth of Decentralized Finance (DeFi) has stemmed from the creation of new blockchains and protocols that are not interoperable. These large monolithic networks have caused liquidity within crypto to be fragmented across each ecosystem, resulting in the majority of protocols operating in a “silo”. In order for DeFi to reach the tipping point of mass adoption, these protocols must be able to communicate and transact, irrespective of what blockchain they are built on. At Nolus, we believe in a blockchain-agnostic DeFi future, and we are strongly positioned to advance forwards with the next major frontier of Web3 development. ## Nolus: Built on Cosmos SDK The Nolus Protocol runs on an independent, application-specific blockchain utilizing the Tendermint Core, a blazingly fast Proof-Of-Stake consensus algorithm with built-in multi-chain interoperability delivered by the Cosmos SDK. This provides 3 major benefits: - Transactions can be as cheap as $0.01; - A censorship-resistant experience with self-custody of funds; - Inherit the Cosmos blockchain’s robust infrastructure that is interoperable with other decentralized networks on IBC. The protocol logic is developed in Rust and executed within the isolated sandboxing model by CosmWASM. This enforces robust security and multi-chain compatibility, where each user can initiate a Lease contract. ## The Margin Position Moving onto our products, the margin position defines a money market between lenders looking to earn a yield on stablecoins, and borrowers aiming to borrow more digital assets than their current equity. To borrow assets, borrowers provide a down payment and can leverage their equity up to 150%. The borrower specifies the exact parameters of the agreement which includes: - The asset to receive; - The amount of the down payment. Once the margin position is initiated, a smart contract instance is created using the previously agreed-upon parameters. The smart contract factory, which produces all margin positions, will then deposit the down payment and the loaned amount into the instance. ## Interchain Accounts Nolus leverages interoperability through Interchain Accounts (ICA), which allows Cosmos sovereign chains to do more than just send assets via IBC to one another. The Nolus Protocol uses a customized version of this module which is better tailored to our products for a few reasons. For example, every smart contract instance has the ability to open an account on host networks where it can perform different actions like swaps, lease liquidations, staking, minting derivatives, etc., giving Nolus the ability to stay platform neutral (mitigating external risk) while leveraging functionalities from different permissionless chains. Initially, Nolus will support the Osmosis ICA host network, the leading decentralized exchange in the Interchain ecosystem which acts as an Automated Market Maker (AMM) hub. After launch, every single lease position will go through the liquidity pools on Osmosis and perform the swap to the desired asset. Naturally, liquidations would also happen there. ## Liquidation Mechanism To explain this effectively, it is appropriate to use an example. Let’s say you have 10 ATOM worth $100 and decide to deposit this into Nolus Protocol as down-payment. This allows you to take out a loan of up to 150% against your initial down payment, resulting in a margin position that contains 25 ATOM (or $250) in total. If the price of ATOM begins to fall, Nolus will send you reminders when your loan is approaching a margin call, giving you time to provide more collateral or pay off your loan. However, if the price continues to fall around 40%, the value of the ATOM within your margin position would slowly approach the value of the initial loan Nolus provided ($150). If the two were to have equal value, or worse, if the value of your collateral was worth less than the loan provided by Nolus, bad debt would begin to accrue on the platform. To avoid bad debt accruing to the money market, a **partial liquidation** will occur to return your LTV (loan-to-value) ratio to a safe level. This is usually around ⅓ to ¼ of your position, depending on the collateral type you provided. Additionally, any unpaid interest that accrued to your loan will be paid off in this partial liquidation too. Liquidations are automatically instantiated by the Nolus smart contracts that sell part of the collateral on Osmosis using Interchain Accounts. The capital received from selling this collateral within the margin position, including any interest accrued on the loan, is returned to the Liquidity Provider Pools from which the original loan came from. If the price of ATOM continues to decrease, Nolus will eventually liquidate your entire loan yet there should be ample opportunity to pay off your loan before this. ## Tailor-made L1 Nolus is built with interoperability at heart. For this reason, the protocol can operate on any compatible general-purpose blockchain without needing its own proprietary layer 1 solution. Yet, Nolus goes beyond this by adopting a more tailored approach that offers its users a greater value proposition. We achieve this by relying on the modular architecture of the Cosmos SDK that allows developers to design the underlying system in a flexible way. All functionalities on the platform are specifically adjusted to ensure a sustainable economic model for all stakeholders, from stakers to lenders and borrowers. For example, three revenue streams will automatically buy back NLS tokens on the open market and refill the Lender’s Incentive Pool, thus guaranteeing the long-term vision of attracting Lenders. With the adoption of the protocol and increased TVL, larger token buybacks will occur and more rewards will be distributed to lenders. ## Conclusion In summary, Nolus Protocol provides a safe and robust infrastructure that provides users with fixed-interest loans with up to 150% financing, over 3x the market average. These loans experience a lower liquidation risk, and the protocol will remind you when you are close to a margin call to promote a safe borrowing environment. Nolus takes this experience one step further by taking advantage of the revolutionary technology provided within the Cosmos ecosystem. Interchain accounts will allow Nolus to integrate with many different DEXs in the future on host networks, starting with Osmosis upon launch. Interoperability is extremely important to us, so hopefully you can see that Nolus has been built in a way that is conducive to two-way communication between our protocol and other networks. We look forward to you joining us soon! Check our main channels here: --- # Self-Repaying Loans With Liquid Staking Tokens Published: 2022-12-12 Updated: 2026-08-07 URL: https://nolus.io/blog/liquid-staking-derivatives-meet-self-repaying-loans Tags: Strategies, Deep Dives Excerpt: Staking rewards on your collateral accrue inside the position and pay down accrued interest, so the loan services itself while you hold exposure. ![Strategy overview pairing liquid staking derivatives with Nolus DeFi Leases to create self-repaying loans](https://nolus.io/blog/assets/liquid-staking-derivatives-meet-self-repaying-loans/cover.webp) ## Introduction Since the DeFi summer of 2020, the lending and borrowing industry has boomed. In the last two years, the amount of Total Value Locked (TVL) in money markets has soared as high as $180 billion, a staggering 10,000% increase since June 2020. However, current money markets experience a few inefficiencies that must be overcome before the sector reaches the conflicting point of mass adoption: - Over-collateralization: Ties up useful collateral to manage counter-party risk. - High costs: High interest rates for loans with no ownership of the underlying asset. - High risk of liquidation: Loans with a high Loan-To-Value (LTV) are at increased risk of liquidation, which could lead to a total loss of equity. To solve these problems, I’d like to welcome you to Nolus, a web3 financial suite that offers an innovative approach to money markets with a novel lease solution. ## The DeFi Lease The DeFi Lease defines a money market between lenders looking to earn yield on stablecoins and borrowers looking to borrow against their current equity. When a DeFi lease is opened, the borrower provides a down payment, and the protocol provides the loan. Both the loan and the borrower’s down payment are locked in a smart contract instance such that both act as collateral. ## Benefits The significance of both the down payment and the loan being used as collateral is that Nolus can provide financing of up to 150% on the initial investment. Comparing this to the market average, this reduces the level of collateralization by a factor of 3, providing much greater capital efficiency for participants. Combining this with a fixed interest rate on your loan, Nolus creates an efficient borrowing environment with predictable future cashflows. Nolus also utilizes the Tendermint Core and Cosmos SDK to inherit two of its most beneficial properties: - Security: Tendermint and Cosmos SDK are battle-tested and have been running securely for many years. - Costs: Transactions on Cosmos are both fast and cheap, creating a low-cost infrastructure for money markets to operate within. To finalize this premier product, Nolus offers 40% lower liquidation rates compared to the market average and executes partial liquidations so that your entire equity is not lost during small market downturns. The result? A low-cost loan with 200% more capital efficiency, fixed interest for predictable cash flow, and 40% lower liquidation rates than the market average. Yet, there is a slightly more nuanced improvement that Nolus provides, which opens the door to some very interesting strategies, ownership of the underlying tokens. ## The Liquid Staking Derivative Strategy ### What is Liquid Staking? Liquid staking is a fairly new phenomenon in which staked Proof-of-Stake (PoS) assets are issued a liquid derivative that can be traded. This has two main benefits: - Liquid assets: You no longer have to unstake assets and wait for the unbonding period to end before trading. Liquid staked derivatives can always be exchanged for their native token. - Use as collateral: Liquid staked assets can earn staking rewards while also allowing users to borrow against it to leverage their position. ### Self-repaying Loans When taking out loans on Nolus, borrowers have complete ownership of the underlying tokens, both the down payment and the loan provided. This self-custodianship means that, as a user, you can convert all tokens within the DeFi Lease to a liquid staked derivative such as stATOM or stOSMO. Borrowing strategies like these provide the user with up to 2.5x leverage on their initial capital, but the beauty of this strategy is seen within the staking rewards. ### Staking Rewards Since liquid staking derivatives accrue staking rewards, and you have ownership of all tokens within the DeFi Lease, as a borrower, you are entitled to all staking rewards received. These staking rewards will automatically accrue to your stATOM or stOSMO position and be used by Nolus to pay off any interest accrued on the loan, self-repaying loans! If the staking rewards are large enough to cover all interest payments that have to be paid, this strategy can be used to cover some of the initial principal on the loan too. ### Price Appreciation Furthermore, any price appreciation in the native token is translated to the liquid staked derivative too. Nolus will provide a feature to automatically sell some of your borrowed capital as it appreciates in price to cover your principal too. Thus, if timed well, a Nolus DeFi Lease can provide you with a self-repaying loan where interest is covered by staking rewards and token appreciation can be used to pay back the loan. All of this while being exposed to less risk via lower liquidation rates, incredible right? ### Auto-compound Finally, [Stride](https://stride.zone/) (a liquid staking derivatives protocol) will auto-compound any staking rewards accrued from their liquid-staked assets. Therefore, if a user decides to purchase stATOM, Stride would auto-compound their ATOM staking rewards and so the value of their stATOM would increase relative to native ATOM. This means that if ATOM were to appreciate in price, the value of a user’s stATOM would increase even further and therefore can be used to repay the costs of the loan. ## Risks Naturally, there are a few risks associated with this strategy, as there are with any DeFi strategy. The most obvious risk is your loan being liquidated due to adverse market conditions that reduce the value of your collateral. To mitigate this risk, Nolus provides partial liquidations where only a fraction of your equity is liquidated compared to losing your entire down payment. Nolus will also provide notifications when your loan is 30%, 20% and 10% price depreciation away from being liquidated to give you ample opportunity to pay off the loan or provide more collateral. The other risk this strategy inherits is the robustness of the liquid staked derivative <> native token peg. Protocols that offer liquid staking derivatives differ in mechanism, however there can be times when the derivative is worth less in underlying tokens compared to when it was initially obtained. In such cases users would receive less native tokens when swapping from the liquid staking derivative. Historically, this peg has been incredibly resilient, but it is worth noting as a possibility to consider when using in this strategy. ## Conclusion Nolus aims to increase financial inclusion and give easy-to-understand, secure access to digital currencies. Through their innovative DeFi Lease solution, they supply the infrastructure for retail users to safely use web3 money markets with as little risk as possible. The team aims to empower people to be more financially independent, delivering low-cost, capital efficient, self-repaying loans in which users maintain full custody of the assets to use as they please. All of this can be done in a much safer environment with lower liquidation risks, low cost transactions, and fixed interest rates. Almost too good to be true! Check our main channels here: --- # How Does the Nolus Protocol Work? Published: 2022-12-06 Updated: 2026-08-07 URL: https://nolus.io/blog/how-does-the-nolus-protocol-work Tags: Deep Dives, Explainers Excerpt: A plain explanation of how Nolus works: borrowers open leveraged spot positions with fixed-rate loans, and lenders fund them from a shared pool. ![Conceptual cover illustrating the Nolus DeFi Lease financial suite for lenders and borrowers](https://nolus.io/blog/assets/how-does-the-nolus-protocol-work/cover.webp) Introducing the world’s first DeFi Lease by Nolus, a financial suite that allows users with different objectives to find a home for their crypto activities. The protocol creates an innovative approach to credit markets by introducing a new interoperable blockchain lease that democratizes access to ownership and enhances trust and transparency. Within Nolus, stakeholders can find all their financial needs in one place: - Users can buy, sell, swap, and ramp in a lightning-fast and cheap way; - Lenders are the liquidity engine, feeding the protocol with stablecoins used for opening DeFi Leases; - Borrowers can gain 3x exposure, better liquidation rates, and retain ownership by receiving loans in stablecoins; - Stakers are the users who lock their $NLS tokens to secure the network and be rewarded with protocol-related benefits. The [Nolus protocol](https://nolus.io/) is a fully automated money market with no custody over the users funds. The code is open-sourced, and changes can only be applied after the community of stakeholders decides to do so through governance. All transactions are executed solely between Lenders, protocol, Borrowers, meaning that no external parties can operate the funds provided in the system. Let us dive deeper into how Lenders and Borrowers will interact: ![Diagram of the Nolus money market flow between lenders, protocol and borrowers](https://nolus.io/blog/assets/how-does-the-nolus-protocol-work/figure-1.webp) _Nolus Protocol Money Market_ ## DeFi Lease The DeFi Lease defines a money market between lenders looking to earn yield on stablecoins, and borrowers, looking to borrow more digital assets than their current equity. To borrow assets, borrowers provide a down payment and can leverage it up to 150%. When a DeFi Lease is opened, the down payment **and** the loan provided by Nolus protocol are locked in a smart contract instance, **with both acting as collateral**. As a result, the borrower boosts his exposure by 3x with a lower margin call risk to the average market rate. The interest rate for borrowers can vary between 11% and 18% APR depending on the utilization levels of the funds available in the system, the more liquidity the protocol holds, the lower the interest rate for the DeFi Lease and vice versa. However, once a DeFi Lease position has been opened, its interest rate is fixed and will never change, providing predictability for future cash flows and yield distributions toward lenders. The chain, contract factory, and Interchain Accounts behind that flow are covered in [the Nolus Protocol under the hood](/blog/the-nolus-protocol-under-the-hood). ## Lenders Lenders provide liquidity to the protocol in stablecoins. The protocol is designed to work on a cash (not accrual) basis where actual yield rewards lenders. Interest from DeFi Leases are due for collection after certain time periods and, if not paid, automatically get deducted from active DeFi Lease positions (collateral). The accumulated interest is immediately distributed to lenders by the smart contracts. The system also limits the number of new deposits that lenders can provide if the utilization of funds is below optimal, therefore securing controlled returns for lenders who have already committed funds. Lenders are additionally rewarded in $NLS tokens from the Lenders Incentives Pool containing 12% of all token supply. Rewards distribution from the incentives pool is linked to the protocol’s growth, starting from higher APR % and slowly decaying with the increase of total value locked in the system. Early adopters are exposed to the highest rewards, thus creating organic demand and adoption of the product. The rewards earned in $NLS can additionally be staked on the network and multiplied through the rewards distributed by the Inflation Pool. ![Chart of Nolus lender rewards decaying from the $NLS Incentives Pool as TVL grows](https://nolus.io/blog/assets/how-does-the-nolus-protocol-work/figure-2.webp) ## Automatic Buybacks Based on the above mechanics, at any point in time a DeFi Leases collects between 11% and 18% APY (for simplicity’s sake, 15% APR). Lenders will receive 12% APR on the spot, leaving the protocol with revenue of 3% (stream 1). Combining it with a swap spread (stream 2) and a small TX fee (stream 3), the three streams buy back $NLS tokens from the open market and actively refill the Incentives Pool to create a sustainable model that rewards lenders in the system in the long term. ## Conclusion Nolus is a decentralized strategy to take part in a product from the traditional finance world that is familiar to people who have little to no experience in crypto. Not only that, established crypto users can find an environment where they can easily park their liquidity and earn rewards for doing so. And for believers in this model, thanks to the three revenue streams, they can be certain that there is real yield supporting the value accrual of the native asset itself. Check our main channels here: --- # Six Problems With Crypto Lending Published: 2022-11-17 Updated: 2026-08-07 URL: https://nolus.io/blog/the-future-of-defi-with-nolus Tags: Explainers, Deep Dives Excerpt: Over-collateralization, full liquidations, lost ownership and high costs are the standing problems in crypto lending. Here is how Nolus answers. ![Forward-looking hero evoking the Nolus Protocol's vision for open, efficient DeFi money markets](https://nolus.io/blog/assets/the-future-of-defi-with-nolus/cover.webp) When used with various financial products, they can fulfill the needs of lenders and borrowers, facilitating the accumulation of capital and the production of goods and services. Money markets (in TradFi, CeFi, or DeFi) need innovative solutions to enhance trust and transparency. The Nolus Protocol comes into the picture offering an innovative approach through a novel lease solution. This article will dive deeper into the Nolus Protocol and how it addresses inefficiencies arising in DeFi money markets. ## The State Of The Market Over the past couple of years, a significant influx of retail investors has made their way into crypto. Most of this uptick was over and above the institutional interest. The growth of DeFi has been critical in generating user interest and has significantly improved the current state of the financial ecosystem by ensuring openness, transparency, and immutable infrastructure. Many attributed the inflow into the decentralized realm to the Covid-19 pandemic and the increase in money supply almost everywhere in the world; however, market watchers rightly pointed out a move away from legacy financial systems and a growing acceptance of crypto as an asset class irrespective of all else. The core contributors to the [Nolus](https://nolus.io/) Protocol believe that DeFi and its associated solutions will only increase in popularity over time, with more newcomers entering the space in the coming years. However, before this mass adoption takes place, several inefficiencies need to be solved. Financial exclusion is one important issue, while centralized solutions put too much power and influence in the hands of a single entity. The use of decentralized ledgers has solved this problem, but it also has glaring shortcomings. ## What Are The Major Shortcomings Of Crypto Lending Crypto lending faces the following critical problems. ### Over-Collateralization Currently, the industry suffers from steep over-collateralization requirements, which makes lending options extremely unfavorable. The collateral locked often varies between 2x-5x the value of the loan provided. High collateral requirements also tie up potentially useful capital in managing counterparty risk. ### Liquidations The risk from liquidation is high, with many DeFi and CeFi lending platforms liquidating collateral if their price drops between 20% to 40% of the original value. ### Ownership Users could use leverage and speculate with equity without requiring over-collateralized loans. However, most exchanges that allow products for margin or futures trading do not give users ownership of the underlying asset. Since you also don’t have ownership, you can’t do anything else with the underlying asset apart from waiting for the price to appreciate and close the position for a profit (if there is any). ### Complicated User Experiences Traditional CeFi and DeFi solutions consist of complex processes and onboarding, which could overwhelm the average user. ### Limited Liquidity New and retail users have limited liquidity at their disposal and cannot purchase assets. ### High Costs From CeFi to DeFi, costs are a factor to consider. ## How Does The Nolus Protocol Address These Problems? The Nolus Protocol is an open-source, Web 3 financial suite designed to address the problems of legacy financial systems. The protocol takes an innovative approach to money markets, utilizing a novel lease solution. Nolus Protocol’s DeFi Lease defines a money market between lenders looking to earn a yield on assets and borrowers looking to borrow liquidity. Nolus Protocol offers users efficient lending, lower liquidations, lower costs, and an easy and user-friendly experience. - To counter the problem of over-collateralization, the Nolus DeFi Lease provides users with up to 150% financing on their initial investment, significantly reducing the level of collateralization required compared to the rest of the market. - The DeFi Lease also offers users a 40% lower liquidation rate than the market average. - Nolus offers users significantly lower transaction and financing costs. The interest rate is fixed at the time of the creation of the contract, with no additional costs attached to transactions. Simple predictability of cash flows is present at all times. - With Nolus, the ownership of the underlying asset stays with the user and could be used during the contract duration. (Pro hint: liquid staking) - Most CeFi and DeFi platforms feature complex processes and solutions that can overwhelm the average user. Nolus, through simplified onboarding processes and an easy-to-use UI, can offer users a simple, quick, and seamless experience. - The Nolus Protocol locks the asset’s price at the time of the contract creation. The user can then use any appreciation in the asset’s future price to repay the initial cost of the investment. ## In Closing: How Nolus Will Impact DeFi The Nolus Protocol offers an innovative, alternative approach to money markets and addresses the numerous issues plaguing legacy systems. The protocol’s DeFi Lease helps democratize access to asset ownership while enhancing trust and transparency. Nolus wants to create a future where users can efficiently manage their wealth at lower risks and minimized costs. For more on the future of DeFi, visit The Nolus Protocol socials: --- # Introducing the Nolus Protocol Published: 2022-11-15 URL: https://nolus.io/blog/introducing-the-nolus-protocol Tags: Announcements, Culture Excerpt: DeFi is a revolutionary concept that provides alternative means of self-empowerment for folks who demand transparency, censorship DeFi is a revolutionary concept that provides alternative means of self-empowerment for folks who demand transparency, censorship resistance, and better accessibility to a new set of financial products inspired by the existing ones from the traditional world. The current iteration of DeFi has several inefficiencies that prevent it from fulfilling its true potential. ![Introduction to Nolus Protocol, a DeFi Lease offering up to 150 percent financing with lower liquidation risk](https://nolus.io/blog/assets/introducing-the-nolus-protocol/cover.webp) Nolus looks to address the inefficiencies of current money markets by offering an innovative lease solution. Nolus DeFi Lease comes with lower margin calls and up to 150% financing on your initial investment, wrapped in an intuitive UI. However, before going further, let’s address the main problems in the market. ## Why DeFi Is Needed and Why It Needs to Change In 2008, the world reeled from one of the worst financial crises as the housing market crashed. As countries collapsed, a pseudonymous developer named Satoshi Nakamoto created Bitcoin, a monetary system that didn’t depend on a central bank. However, having decentralized money wasn’t enough, and we needed decentralized financial instruments to empower individuals to sustain and grow their wealth. In 2020, we saw a storm of DeFi apps that allowed users to earn yield on their tokens. While we already had Maker and Bancor, 2020 saw the rise of Curve, Yearn, Aave, Compound, and other protocols that quickly built strong user bases. DeFi can pose as a more efficient alternative to traditional finance, but there is still a long road for the sector to reach users and gain global adoption. In the near future, we are prone to seeing financial products and markets that we are used to in traditional finance gain their own DeFi versions. Spot markets, future markets, and lending already exist in the crypto sector, and now another product has surged in the decentralized environment: leasing. The main challenge that several DeFi projects face is to reach an audience unfamiliar with the whole DeFi concept. The process is straightforward: understand users’ inefficiencies in traditional finance, work them out and make it easy. And that’s what Nolus is here for. ## Problem #1: Over-Collateralized Loans The market’s potential is restricted by the overabundance of locked-up collateral since it wastes capital that could be used to minimize counterparty risk. Nolus DeFi Lease reduces the level of collateralization by a factor of 3 by offering financing up to 150% on the initial investment. ## Problem #2: Risk of Liquidations Users that want to maximize their gains are exposed to a high risk of liquidation that could result in a total loss of equity. Compared to the market average, [Nolus](https://nolus.io/) DeFi Lease’s liquidation rates are 40% lower than the market average (all parameters equal). ## Problem #3: High Costs DeFi lending solutions feature variable interest rates that can spike up to 30%. With Nolus, total costs of financing and transactions are low, close to 10%. The never-changing interest rate is locked at contract creation, with little to no additional cost for transactions. ## How Nolus Enriches DeFi Lending With Its Lease Solution At Nolus, everyone should have the means to manage their wealth in DeFi efficiently. To make this possible, innovation has to be put at the forefront so that new individuals and institutions cannot only meet the needs of the existing DeFi user base but also find a safe haven to park their assets. Over-collateralization means you need to lock a hefty amount upfront as collateral which might be too costly for some borrowers who want to get more for their holdings. Nolus’s DeFi lease system provides users up to 150% financing on their initial investment, significantly reducing the collateralization required. The DeFi Lease also offers significantly lower transaction and financing costs, with a fixed interest rate locked at the time of the contract creation. Another big problem with lending on DeFi is the liquidations. As we have seen during the black swan events, people lost millions of dollars from cascaded liquidations as the markets crashed. Liquidation protection needs to be more robust, which is why the Nolus DeFi Lease offers a 40% lower liquidation rate than the market average, going as low as a 67% decrease in the asset price. ## Summing Up We have created the Nolus protocol to offer an alternative, innovative approach to the markets, enhancing trust and transparency while addressing the inefficiencies in the crypto lending segment. With no shortage of innovative DeFi projects over the years, 2022 through 2023 seems to be the period in which the sector will enjoy some limelight. The idea is that more and more financial services are accessible within DeFi, without the user needing vast expertise to use them. To make this possible, the product offering of the Nolus Protocol is wrapped up in an intuitive and easy-to-use UI. With this, more people within the crypto community will be able to increase their equity, and those who want to take advantage of this new class of financial products will find a facilitated and cost-effective entry.