Nolus, the cross-chain lending protocol that supports leveraged borrowing while reducing risk, has announced an expansion to its available assets. In the coming weeks, Nolus will introduce support for volatile base currencies, starting with BTC and ETH, that will enable users to go long and short on these assets and to earn additional yield from the respective liquidity pools.
The upgrades to Nolus arrive off the back of a fresh funding round that’s taken its total capital raised to $3.5M. Blockchain VCs appear to have been taken with Nolus’ fresh approach to generating DeFi yields while minimizing risk and prioritizing security. The platform’s TVL has been growing steadily in line with lifetime volume, which now exceeds $60M.
Nolus Rings in the Changes
Set to be phased in over the remainder of the year, the volatile base currencies Nolus intends to add will increase the ways in which users can profit from market movements. Because assets such as ETH will be available for both lending and borrowing, there’s an opportunity to swap them for stablecoins which, when combined with Nolus’ leveraged borrowing solution, provides an opportunity to create long or short positions.
Nolus has pledged that there will be no lock up for volatile assets, allowing users to close out positions whenever they like upon repayment of the loan. The ability for sustainable APRs of 8-15% to be earned through Nolus’ leveraged borrowing strategies has made it an attractive option for DeFi users seeking to boost their earnings without increasing risk.
Higher Earnings With Lower Risk
Most DeFi lending protocols cap the maximum amount that can be borrowed to around 75% to prevent liquidation should the value of the borrowed assets drop in value. This limit is in place to protect users, who in reality are advised to borrow no more than 50% of the collateral value. The drawback to this solution is that it is capital inefficient, effectively leaving half of a user’s assets unutilized.
Nolus has solved this by designing a system inspired by traditional financial leasing which has significantly lower capital requirements. This is achieved by combining both the collateral and the loan into a smart contract which can then be used to obtain financing of up to 150% of the initial deposit value. The yield itself comes from interest-bearing DeFi leases, with NLS tokens providing additional rewards.
The introduction of volatile base currencies such as ETH and BTC will give users greater flexibility in terms of the strategies they pursue. For instance, if they believe the market will go up, they can deposit ETH, borrow stablecoins and use them to purchase more ETH. If they believe the market will go down, they can reverse the process. This also provides an effective hedging strategy, to minimize downside risk should they have other positions, such as options, open elsewhere.
The rollout of Nolus’ new base currencies is set to be accompanied by additional platform upgrades in the months ahead as it seeks to grow its share of the multi-billion dollar DeFi lending sector.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
