Nexus: Enabling mass-adoption of UST payments

The core value of currency is derived from its function as a medium of exchange. Currently, Terra Stablecoins are not widely accepted by merchants, except for those within the CHAI network. Enabling and incentivising merchants to collect payments through Terra stablecoins is critical to enabling Terra’s mission to create the most attractive money to spend and hold.

This proposal will consist of 2 parts:

Part 1 - Merchant Setup:

This section will overview the opportunity for creating a robust ecosystem of merchants who will accept UST as a means of payment.

Part 2 - Setup Incentives:

This section will talk about the ability for a yield optimizer to take a small portion of fees and contribute to a community pool which can then be used to bootstrap part 1.The section will also provide detail on a means to create a sustainable ecosystem to provide sufficient incentives to make part 1 a reality.

Part 1 - Merchant Setup

Market Opportunity:

Currently, there is no merchant accepting UST or other stablecoin directly. CHAI is acting as a bridge to utilise KRT in the Korean payments market, but in a limited manner. By providing an easy funnel to use UST with large groups of affiliated merchants, Nexus protocol can naturally become a go-to platform for all UST holders.

Close focus on the merchant’s side, merchants generally have to pay interchange fees to credit card or payment gateway companies per transaction. And it normally takes 1 to 3 business days for pay-out. Utilising yield from Tefi, Nexus protocol can provide merchants with cheaper and faster pay-out solutions, or even a money making solution.

Key Challenges:

  • Limited uses of UST:
    • Because UST is not widely accepted as a medium of exchange beyond Tefi ecosystem and cryptocurrency exchanges, holding UST has no utility for merchants other than for investment purposes, which for most merchants, is a small fraction, if any, of their balance sheet.

Solutions:

  • Commission Free & Instant pay-out payment gateway module

    • Merchants are not charged any interchange fees since Nexus protocol’s business model is powered with the revenue generated from the yield optimizer
    • Merchants would receive the revenue instantly, powered by Anchor Borrow
  • Merchant’s Vault : Yield Optimizer for merchants

    • UST received by merchants will be collected at merchant’s personal vault, which merchants can withdraw anytime
    • High APY for UST in the vault, incentivizing the merchants to keep UST for a longer period of time. [powered by Nexus yield optimiser]

Part 2 - Setup Incentives

In order to bring part 1 of this proposal to life, there will need to be some funding necessary for the various operational needs.

A yield optimizer will be used to optimize and maximise yields with maximum principle preservation, as well as putting a small portion of the transaction fees towards $Psi stakers and the Nexus community pool which will empower and expand Nexus ecosystem.

Market Opportunity

Tefi provides various strategies to maximise yields, ranging from staking, various LP provisions, Anchor Borrow. By providing a low risk, high return yield strategy on a single asset, rather than a paired asset, Nexus can attract the retailers seeking for an investment tool to maximise their yield without risk of damaging their principal assets.

Key Challenges:

  • Liquidation Potential

    • Operating with collateral utilizing operation such as Anchor Borrow and Mirror Mint involves risk of liquidation which may deteriorate the principal assets
    • Manual management of the liquidation is risky, inefficient and labour intensive
  • Impermanent Loss risk while providing liquidity

    • LP staking involves heavy risk of IL if price drastically.

Solutions:

  • Nexus Vaults

    • The users may deposit their assets into Nexus vaults, which will provide low risk, high yield via functions listed below:
  • Automated Liquidation control

    • Nexus protocol will monitor the price of the collateral assets and automatically manage the Borrowed or collateralised UST at Anchor Borrow or Mirror Mint, maintaining the maximum efficiency of the collateral utilization
  • Mirror Mint Hedging

    • mAssets minted with Mirror mint will be used to be paired with UST to provide mAsset-LP staking
    • Mirror Mint hedged mAsset-LP staking yield will provide significantly higher APY than Anchor Earn at similar risk
  • Repositioning

    • Nexus will monitor APY per mAsset-UST LP staking, and will constantly reposition to the highest Mirror Mint LTV weighted APY mAsset to maximize the yield
  • Economies of scale

    • Greater size of the assets under management will empower Nexus protocol to reposition more often to maximise yield, as the marginal benefit of the repositioning will be greater than the marginal cost of repositioning

Synergies

Synergies of Part 1 & Part 2 empower credit for individual users.

  • cAsset & credit
    • The users will deposited assets to the Nexus Vault in exchange for cAssets
    • cAssets will entitle the users to credit, the money loan they can spend at affiliated merchants. Thus, whilst one may keep long position on the certain cryptocurrency, one may utilise cash flow to use
    • cUST will have 100% LTV
    • cLuna will have 50% LTV as per Anchor Borrow
    • Optimised liquidation sequence : cUST liquidated at no discount first

Tokenomics ($Psi)

Native token ($Psi) will have mainly two functions:

  • Governance

    • The following parameters should be dynamically decided by the governance throughout the protocol :

      • LTV of cAssets
      • Updating Yield Optimiser logic
    • Use of community pool

  • Profit Sharing to $Psi stakers

    • A share of the protocol’s revenue

The community pool of Nexus will be built with initial injection and constant build via a share of the protocol’s revenue. The Community pool will empower ecosystem teams to build necessary tools and infrastructure that helps Nexus Protocol to further mature. Projects that are value additive to Nexus and/or improve user experience are eligible for community grant funding.

Great examples of eligible grants include, but not limited to:

  • Acquiring additional affiliate merchants with a sound, scale-up potential strategy

  • The creation of new smart contract applications that enable greater access to Nexus.

Distribution of the native token is as follows:

  • Investors
    • Initial funding to bootstrap operating needs
  • 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 $Psi instead of UST)
  • $Psi LP
    • Initial Incentive to provide LP
  • Community fund
    • Initial stack of pool to be utilised for sales partnership

Tokenomics Diagram

Milestones:

  • Phase 1a
    • Consumer webapp for Yield Optimizer
    • Accept Terra ecosystem assets (Luna, UST, / + ANC, MIR, KRT)
    • Yield Optimizer v1
    • 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)
  • Phase 1b
    • Payment API module (Web/Mobile)
    • Consumer moblie app
    • Merchant dashboard + vault (Web)
    • Few symbolic merchants (MVP); woo commerce, big commerce, shopify module etc
  • Phase 2
    • Merchant dashboard (Mobile)
    • Add other PoS assets for Nexus Vault
    • Online Merchant sales expansion: Promotion via community pool
    • Localisation (fiat exchange per country)
  • Phase 3
    • Offline merchant sales expansion

Team :

  • Realshimmy : Research

    • BA Economics, Durham University
    • Project Lead @ Series B Luxury Fashion E-Commerce Startup, Cross Border Logistics Operation Optimisation
    • Project Lead @ Food Giant company based in Korea, International Procurement Strategy Optimisation
  • Motif : Operations

    • Strategy Consultant @ boutique consulting firm for F500 and Private Equity clients such as Bain Capital and L Catterton
    • Strategy & Operations @ the leading AI platform for real-time information discovery
    • Business Operations Lead @ Y Combinator-backed early stage fintech
  • Tundra : Sales/BD

    • BS Applied Economics, University of Minnesota
    • Strategic Sourcing Manager @ FAANG, responsible for negotiating with suppliers across multiple service categories
    • M&A Manager @ General Mills, merger and acquisition of Blue Buffalo, a prominent pet food company.

Positions for hire:

  • UI/UX Designer

  • Front-end Developer

    • React developer
  • Smart Contract Developer (Back-end Developer)

    • RUST developer
    • Ethereum (Solidity) based experience is also welcomed
    • Previous experience working with smart contracts
9 Likes

Hey fellow Lunatics, this is a cleaned-up & updated version from the previous post to deliver our project in more easy to read & logical manner to promote further engagement with the community.

If you have not yet read our previous post, do not feel obliged to, the new post contains all the central ideas in more readable format

4 Likes

To explain little more on the point of CHAI’s current limitation @ Part 1, Market opportunity:
The current process for CHAI is as follows: (consumer) KRW → (consumer) KRT → KRT (merchant) → KRW (merchant) or (consumer) KRT → KRT (merchant) → KRW (merchant). While CHAI provides merchants short term incentives to hold KRT, there’s no long-term incentive for merchants to hold KRT simply because there are not enough business use cases for KRT, yet.

5 Likes

This should def pass … how it didn’t pass the first time ??

4 Likes

Not sure, but this is an important project. This type of product could prevent the cascading loan liquidations which created this vicious downward cycle for the Luna PA.

2 Likes

Not sure ???
What does it have to do with me ? I’m being hacked and blocked by terra com