Thread by @dopeboyshanee

Let's talk about @NexusProtocol. Was a bit skeptical on the sustainability of its yield, but after some dd, I'm bullish af! 👇👇👇👇👇

What does Nexus do?

You deposit a basset like $bLuna or $bEth into a Nexus vault. In return, nexus gives you $nLuna or $nEth representing your share in the vault.

With your basset, nexus borrows $ust and manages LTV based on the activated mode

To know more about the different modes, read this

https://twitter.com/dopeboyshanee/status/1433429642044592138?s=20

Moving on 🏃🏻🏃🏻🏃🏻

The borrowed $ust is deposited back into anchor to get aUST.

Okay, now that you understand what nexus does, should you use it?

👇👇👇

- Want to farm anc borrow incentives(currently ~12%) efficiently without getting liquidated, USE NEXUS

- Want to deposit the borrowed $ust into anchor for a sweet ~20% apy on top of the anc incentives, USE NEXUS

Yes, you can do all of this by yourself but is it worth the time, effort, and continual inspection of ur LTV, when instead you could just pop it into a Nexus Vault and let them do all the hard work for you? (I used to do it, and believe me, not worth the constant stress of LTV)

Note that yield is distributed with $psi tokens.

Which brings me to the question, should you buy the psi token?

Let's see 👇

As stated earlier, yield is distributed in the form of $psi which introduces a constant buy pressure for the token.

If you stake $psi or hold nAsset, you're entitled to the yield. Part of the protocol fee will also be rewarded

Another interesting thing is how they've structured their LP pools.

Each nAsset is paired with $psi and remember, nAsset is yield-bearing.

So what's the significance?

Lemme explain...

The yield of nAssets is in the form of $psi right. So the yield increases the psi in the pool, thus making it imbalance.

As the pool becomes imbalanced the nAssets will be at a premium to the underlying bAsset, thus an opportunity for arbitrage(@WhiteWhaleTerra 👀)

To arbitrage, you need to mint new nAssets by depositing bAsset into the nexus vault.

This will cause 2 things 👇

1- Increase TVL for both Anchor and Nexus as nexus manages the bAssets

2- When more bAssets are deposited into nexus, it increases psi buyback (if you remember, original yield is used to buy $psi, which is distributed as yield to the user)

Current LPs for bAssets(bluna/luna) dont compound yield. Therefore, expect a great amount of liquidity to be sucked into these pools where yield is compounded and arbitrage opportunities exist.

$Psi incentives to nAsset-Psi LP pools which last for 4 years will only enhance it. The largest portion of the token distribution(25%) is allocated for it.

**More liquidity = More psi buybacks, thus creating a recursive buyback system**

Here's a spreadsheet made by @ErnestasDob explaining the process
docs.google.com/spreadsheets/d…

So are you bullish now?

@nicdors thanks for clarifying!

Oh, shit, forgot to mention @NexusProtocol's delta-neutral vault, EthNexus, and its plans to go cross-chain...

ngmi