As the interest surrounding the potential of decentralized finance continues to grow, both professional and everyday investors continue to explore the use cases of DeFi protocols. Participation has ballooned and from January to March 2021 the Total Value Locked (TVL) in DeFi protocols doubled to $50 Billion, according to DeFi Pulse statistics.
DeFi applies decentralised principles to important functions in money and has redefined how services like lending and exchange work, building better and more accessible incentive structures that banks and other financial institutions have typically reserved for themselves. With DeFi, now anyone, anywhere, can realise the true potential of their capital.
Access to this financial utility is incredibly valuable, but it means very little if users are unable to control and manage their capital successfully. Much of asset management is still a very manual process within DeFi and a great knowledge barrier exists for the many newcomers to the space. At the same time, many professionals in DeFi are ready to capitalize on their knowledge when it comes to creating profitable investment strategies for other users to deploy, but such a nascent industry still lacks an outlet of this nature.
Nova’s mission is to provide a range of automated tools and strategies within DeFi through programmable assets, providing users with the opportunities to mitigate downside and maximise returns and giving DeFi power users a platform to capitalize on their expertise.
What are nAssets?
nAssets are Nova Finance’s framework for programmable assets. With a hybrid token structure, nAssets can be backed by digital value like cryptocurrencies, NFT’s, securitized tokens or any other programmable asset. nAssets can thereby be used as a form of collateral through representing the underlying value it holds; other protocols within DeFi can also utilize nAssets.
The value in nAssets is that the underlying asset itself can be programmed to carry out certain functions; to highlight a use case scenario, a user may wish to swap 50% of their ETH exposure into a stablecoin once the total value of their nAsset reaches a price of $100; they could then deploy the aforementioned stablecoin into a yield farm, vault or other DeFi protocol. The programmatic functionality of nAssets creates a myriad of new and exciting opportunities to deploy fund management techniques, reduce downside and optimize for maximum returns.
Harnessing the power of nAssets
Nova’s first products using the nAsset framework are Portfolios. Experienced cryptocurrency investors can use Portfolio’s to design profitable and sustainable investment strategies. A portfolio creator can set exactly how the portfolio should behave by placing assets into yield strategies to generate additional diversified income and also by setting conditions for holding assets and when to exit.
Below are some of the initial nAsset types we’ve been designing and will be available for a portfolio creator to deploy within their portfolios:
- Reduced Volatility — “rvAsset”
These assets allow a user to have exposure to an asset but reduce some of the volatility by allocating a % into a more stable asset like USDC.
- Take Profit — “tpAsset”
This programmable asset regularly sells a % of an asset into USDC and places the profits into a yield strategy. It can be useful for building a good average exit price from a cryptocurrency that is close to completing a bull phase.
- Condition Distribution — “cdAsset”
These assets use triggers to determine an action. For example, if the price of the asset rises 30% in one day, you can apply a trigger to swap a percentage of the asset into another.
We have many more ideas for programmable assets and how we can give even greater control within portfolios. If there is an idea or technique you would like to be built then let us know!
The value for experienced traders
Portfolios provide automation and control on every detail of an investment strategy so that experienced crypto investors can build successful portfolios. They can also earn additional revenue by sharing these portfolios with newcomers and those with less knowledge and obtain a cut of the yield being generated.
Managing investments is demanding on an emotional and practical level, especially with cryptocurrency markets open 24/7, 365 days a year. nAssets allow experienced investors to automate strategies like hedging and diversification and take away some of the strain they face.
Newcomers often lack the knowledge to be successful in cryptocurrency investment and rely on advice from friends and people they connect with online. It can be draining for experienced investors to share insight repeatedly and many choose not to. With Portfolios they can share links to their investment structures and thesis and capture 10% of all yield generated from the portfolio while also providing value to newcomers.
Concerted efforts need to be made to work together on the future of secure, easily accessible DeFi protocols and platforms if the industry is to continue evolving. The blockchain industry has been built on open-source, collaborative foundations and, with composability being one of DeFi’s main value propositions, various projects are today collaborating and utilising the power of “money legos” to enhance functionality within their existing DeFi products.
At Nova we support collaboration and, as nAssets bring a further layer of programmability to an already highly malleable technology, we intend to utilise the wide range of utility that Programmable assets have outside of Nova Portfolios alone. We have already started to work with other promising DeFi teams to explore how nAssets can simplify the UX journey and optimize value for users within fellow protocols in the DeFi space.
We are a very open and collaborative team. If you are building a DeFi project and think nAssets could add value, come and speak to us!