Nexus: Credit Payments on Terra

Hi fellow Lunatics!

Being a fanatical lunatic myself, I am in pursuit for a project, which I believe will be a step towards Terra dominance. Being a Protoss player myself, I took a liberty of naming my project Nexus; being the most important and fundamental building for Protoss, which also means connection.

Project Nexus is a project to connect Terra to every corner of the world, making Terra stablecoin being accepted around the world. To realize such utility, online and offline merchants need to accept UST as a method of payment. For merchants to accept UST instead of legal tenders, it would require significant incentive or the deduction of opportunity cost. The simplest but the most powerful method to initiate such an effect would be to provide monetary incentive: providing commission free and instant pay-out payment gateway module (MULE module :wink: :wink:). Easy installation and application would further lower the barrier of entry to expedite the process. Having more and more places to use UST or other Terra stablecoin online or offline would certainly expand Terra’s horizon and lure more users into the ecosystem, which would act as even more incentives for other merchants to join the UST network.

Such commission free and instant pay-out can be realized utilizing

  1. Rewards from Luna staking rewards, Anchor Borrow, Mirror Mint hedge mAsset- UST LP
  2. UST cash flow from Anchor Borrow

As current level of Anchor Borrow and mAsset LP rewards are only expected until year 4 of the two protocols, it is vital that this opportunity is seized now. Nexus protocol will utilize above method to yield sufficient profit from the assets that the users deposited to operate MULE module based on UST.

Users will be incentivized to deposit assets to Nexus protocol for following reasons:

  1. Automated Yield Maximiser (Probe module :wink:) : providing significantly higher yield than manual asset management or Anchor Earn at similar level of risk. The strategy cannot be easily realized by individual retail investors as close monitoring and management is required to avoid liquidation. And economies of scale would apply in terms of repositioning. Please refer to Probe module proposal at Anchor community for more details.
  2. Having additional short-term cash flow, whilst maintaining the long position of the assets: utilizing UST cash flow from Anchor Borrow, Nexus protocol can provide User’s credit in accordance with the collateral asset they provide. The users than can pay with the credit to merchants and settle the bill once a month. Easy and familiar concept for users, just like credit cards. Concept of revolving, installation can also be realized.

For following reason, Probe module should be and can be produced as the first phase of the protocol:

  1. Affiliating with enough pool of merchants to accept UST may take some effort and time, and having a working protocol and clear product to offer would significantly help the sales effort
  2. Probe module itself is a sellable product with already existing demands
  3. Probe module is the profit-making part of the module which is the core engine to power free and instant pay-out payment gateway protocol.
  4. A share of the yield will be accumulated to create a community pool, which can be utilized to support the sales effort of merchant affiliation, which can be a costly process
    A. Community pool also can be utilized to establish or partner with local payment gateway companies to provide fiat conversion option, which will expedite the market penetration.

Thus, I will start with Probe module; the challenge would be to realize the above in decentralized manner, so that it will naturally fit into the picture, benefiting the Terra ecosystem as a whole, without a worry of a system failure.

At this point, I would love to hear your feedback on the concept. I am also searching for developers to realize this project together. If you are interested, please contact me via nexus.protocol21@gmail.com.

Thank you !

If you are interested to read more details about the project please continue to read on:

Appendix

[Project Nexus]

The core value of currency is derived from its function as a medium of exchanges. Fiat currencies are generally accepted as a medium of exchange as people believe that the currency can be utilised in future for further exchanges. For Terra Stablecoins to be truly accepted as the future currency in the market, the coin should be accepted widely at every level of the market. Once the majority of online and offline goods and services providers accept Terra Stablecoins, Terra would become the true monetary system that the world cannot live without.

Customer groups :

  • Retail Investor & Consumers
    • Individuals who hold cryptocurrency as part of their investment asset
  • Merchants
    • Goods and services provider

Problems :

  • No affiliated Merchants
    • Currently, there is no merchant accepting UST or other stablecoin directly. CHAI is acting as a bridge to utilise KRT to Korean market, but in a very limited manner.
      • Sales effort to acquire merchants accepting UST is vital. More places you can use UST, more Terraforming is done
  • Investment Opportunity cost & Inefficiency @ cashing out from cryptocurrency to use in real life
    • Currently, cryptocurrencies are considered to be a form of investment. However, in order to utilise the capital gain from the investment in everyday-life spending, the cryptocurrency needs to be liquidated and converted into fiat which can be a lengthy process with costs.
    • And many retail investors face the dilemma between opportunity cost and cash flow.
  • Transaction Cost per transaction
    • Although Terra’s ecosystem provides a far lower fee for each contract and transactions (0.1 ~0.5 UST) in comparison to the other active ecosystems such as Ethereum, even such low level transaction costs can be a burden if Terra’s stable coins are to be used in everyday activities. For example, if a consumer wishes to purchase a 3 USD costing coffee from Starbucks, the consumer would be paying additional 3.33% ~ 16.67% if one decides to pay with UST instead of USD. The fixed fee is an obstacle needed to be conquered in order for Terra’s ecosystem to be the alternative monetary system of the future. However, lowering the fee directly would yield far more potential problems to the mainnet and the ecosystem than the benefits it would bring. For example, a low fee would also reduce a barrier for those with ill intention to bring down the mainnet by overloading the nodes with empty contracts and transactions. Thus an alternative solution is required to accommodate the demand for the fee minimisation per transaction, whilst ensuring the network is strong and sound.

Demand :

  • Automate Asset Management
    • Extremely high yield opportunities are available with Anchor and Mirror protocol at the moment
    • However, due to the potential danger of liquidation, yielding at maximum level is rather difficult
    • Fan made automated programs are being built to cover some issues, but further optimization is possible.

Solutions :

  • Commission Free & Instant pay-out payment gateway module (MULE module)
    • In comparison to the credit card fee for merchants (0.9~4.5% or more), no fee needs to be charged (Assuming transaction cost is solved)
    • Only marginal fee on payout might be ideal to prevent transaction fee overwhelming the payout value.
  • Community pool to support sales effort
    • Share of profit from Automate Asset Management will be contributed to the community pool, which will support sales effort of the module & localisation of the payment gateways (to match and serve the short term demand for Terra stablecoin to fiat currency conversion, so that the adoption of the protocol is expedited on merchant side and the application of Terra stablecoin is expedited on customer side; more merchants, more usage)
  • Automated Yield Maximiser (Probe module) : cAssets & payment with credit
    • Collateralise cryptocurrency to provide credit: whilst one may keep long position on the certain cryptocurrency, one may utilise cash flow to use
    • Low-risk yield, such as Staking, LP provision to be automated to maximise yield.
    • Yield may decrease if the user utilise the credit, whilst the remainder of the collateralized asset which is not used as a credit will continue to yield to max
    • A share of reward for the protocol will serve as a community pool to cover Supply Chain Finance (covering the time difference between settlement and payout) & subsidy to promote sales effort in future. A share of the profit is to be shared between the native token stakers.
    • It’s practically a combination of wealth management, credit card, alipay in terms of user experience
  • Transaction Cost (or any other method to achieve zero, or very low transaction costs)
    • A method to achieve such a goal is perhaps to use a separate blockchain or database to record transactions details.
    • high frequency transactions such as credit recording & transaction authorisation to be recorded on private blockchain, low frequency transaction such as invoice and settlement, and payout to use mainnet
    • In such a way, the design can accommodate additional or alternative creditor and validators if needed in future; decentralisation!
    • blockchain need to be private; protect the credit and transaction details, prevent network attack, etc (Limited users on the block chain; creditors & validators)
      • function need to give out periodically change key value to whitelisted creditors & validators to access the private blockchain (like the plate on enigma machine)

Core value provided :

  • Retail Investor & Customers
    • Automated cryptocurrency asset management with minimised risk (Not trading management)
      • To operate cryptocurrency in the minimum risk model
        • Staking
        • Hedged LP provision
        • Money market
        • Arbitration
    • Increased short term cash flow from allocated credit in accordance with the asset under management as a collateral
  • Merchants
    • Financial Incentive
      • No transaction fee
    • Easier Installation
      • No contract is necessary, simple installment of module is sufficient
    • Real time payouts
      • real time payouts available utilising Anchor money market & rewards as a supply chain finance tool

Core modules :

In order to deliver such value four core actors are needed:

  • Credit provider (Probe module) : To collateralise the assets and provide cAssets, stake or bond assets

  • Anchor Validator

    • Anchor plays a vital role in Nexus as it is an established money market. It is highly likely that Luna will be taken via Anchor. As Nexus lunas are purely lured by Nexus, such Lunas should be validated by an affiliated validator so that the certain level of the rewards commission could also be utilised.
  • Automated Asset Management (Probe module)

    • To operate secondary assets (rewards yielded from staking or borrow/ UST borrowed); the original assets are only operated by staking (or Anchor bLuna minting) to minimise risk and protect principal assets.
    • Exception; UST - to be operated in Mirror Mint hedged mAsset-UST paired LP directly
  • Transaction validator (Mule module)

Native Token ($Pylon) :

  • Governance
    • The following parameters should be dynamically decided by the governance throughout the protocol :
      • LTV of cAssets
      • Updating Probe module logic
    • Use of community pool
      • Sales effort to acquire more affilated merchants
      • Partnership or establishment of local payment gateway companies
  • Profit Sharing
    • A share of cAssets yields

Tokenomics

  • Distribution :
    • Investors
      • Initial fund to operate
    • Team
      • mid-long term incentive for the team
    • Luna/MIR/ANC staking airdrop
      • In return of community pool usage if there is any + genesis promotion
    • cAsset staking rewards
      • Initial promotion to promote asset deposit into Nexus (provide in addition to their rewards if they choose to accept reward in pylon instead of UST)
    • Pylon LP
      • Initial Incentive to provide LP
    • Community fund
      • Initial stack of pool to be utilised for sales partnership
  • Operation :
    • cAsset staking rewards
      • Probe module yield rewards to be given out in either UST or Pylon
      • Promotional pylon to be given out in addition for Pylon reward payment to promote Pylon

Milestones / Phases :

  • Phase 1
    • Probe module
    • Customer app (Mobile)
    • Terra ecosystem assets (Luna, UST, / + ANC, MIR, KRT)
    • Focus on increasing staked cAssets <-this is where the money is coming from, and there is no automated asset management in Terra ecosystem yet (at least not dominant)
    • Payment module depiction on app (coming soon kind of)
  • Phase 2
    • MULE module
    • Payment module (Web/Mobile)
    • Merchant dashboard (Web)
    • Few symbolic merchants (MVP); woo commerce, shopify module etc : PoC
  • Phase 3
    • Customer app (Web)
    • Merchant dashboard (Mobile)
    • Online Merchant sales expansion
  • Phase 4
    • Localisation (fiat exchange)
    • Offline merchant sales expansion
7 Likes

Hey,

Nice one!

So this is really close to my heart and what I think would make a significant difference to customers, merchants, and crypto adoption. In particular it’s what I’ve been thinking about with regard to Terra’s system.

Lets talk to your example of a $3 coffee - small retailers would have something a Square reader or similar integration, which generally charges a % + a $ fee (for example 2.6% + 10c).

All transactional systems in the world today have always succeeded/gained adoption only by only charging money / fees to the person who receives the money.

For example, ebay - person buys, seller gets money + ebay takes their cut. Online merchants are the same - you pay with credit / debit card, you get charged the amount you expect, and the merchant receives that money LESS the gateway fees.

Similarly credit card companies reward the customer, but charge the merchant.

What I’m thinking is that where you need to win in order to provide a great solution, and mass adoption is by providing value++ to both sides.

A consumer - gets a card that gives them rewards, great UX, and ease.
They can deposit in any number of currencies, cryptos, whatever.
The currency conversion would be taken care of by Terra’s protocol, for quick currency conversion.
Deposits/holdings can be rewarded by other dapps (think: anchor).

A merchant - needs to be rewarded with lesser fees for supporting the payment method.
I run various small ecomm sites, and I know that having 2% of my revenue taken for no good reason gives me the sh*ts.
Give me a reliable way to pay only 0.5% max, and I’d really consider it.
And the bigger the merchant the more incentive they would have to use this.
Integrate with Shopify as an alternative payment method and the world’s at your feet.

Tokenomics etc is all solveable - I like to start with a problem, and think about how it can be solved.

The key is to reward the customer. Charge the merchant. But make them win too.

Anyway that’s how I’d tackle it.

P.S.
Zerg swarm ftw.

1 Like