Introducing NAOS Finance

NAOS Finance
NAOS Finance — Official Publications
11 min readDec 22, 2020


Financial services are primed for rapid and transformative changes. Our team foresees a more agile, transparent and decentralized alternative to traditional finance emerging to disrupt the current financial industry structure. A new world of friction-less finance where global supply/demand of capital and assets are managed in perfect equilibrium.

In this utopian world of finance, capital and assets are exchanged on-chain and off-chain seamlessly. A global community of lenders will instantaneously assess the risk of assets and the capital requirements will be fulfilled by lenders who understand the risk/return profile. In addition, lenders will be equipped with comprehensive analytical tools and complete sets of verifiable on-chain data to make informed investment decisions. Smart contracts will automate the entire funding and settlement process, fully emulating existing banking services at no additional cost or the need to be overcollateralized.

NAOS Finance is founded with the mission to accelerate the process of reaching this utopian state of finance. We strive to unlock the possibilities of further DeFi innovations by bringing real-world assets on-chain(at scale) and to eliminate inefficiencies of traditional finance by decentralizing the decision making process.


NAOS Finance is an interoperable marketplace for loans backed by offline income streams. We aspire to bridge the multi-trillion dollar global credit gap by allowing lenders and borrowers to interact in a permission-less manner. Our protocol, built on the Ethereum blockchain and Interplanetary File System (IPFS), automates the tokenization of real-world assets and the end-to-end lending process.

Our team is creating a decentralized financial network that:

Enables the origination and funding of loans without traditional intermediaries

Instills full transparency in the previously opaque risk assessment and loan application process

Breaks the geographic boundaries for lenders and borrowers to transact in a borderless fashion

Transfers financial value (interest spreads, service fees) from financial institutions to lenders and borrowers

Offers the best interest rate on any comparable loan of the same risk profile and terms

Transfers custodial ownership of accounts from financial institutions to individuals

Democratizes irrefutable and immutable loan performance data that was held closely by centralized institutions

Accelerates the growth of the overall DeFi ecosystem with real world applications

To accomplish these ambitious goals, we need more than participation from the DeFi community. The NAOS team has already established a large network of over 2,500 small and medium enterprises (SME). This SME network provides immediate access to over $250 million, income generating, real world assets.

With many DeFi projects lacking applicable real world usage, our asset base differentiates us and will propel our community to create more interesting DeFi applications. More importantly, we hope that the global credit gap problem can finally be properly addressed through our decentralized solution.

Background | The Growing Global Credit Gap

Banking has been an integral part of society since the dawn of human civilization. The practice of lending and taking deposits started as early as 2000 BC, and the world’s first modernized bank opened in Barcelona in 1401. Fast forward 600 years, the S&P 500 constitutes 21 bank stocks, with JP Morgan Chase & Co (NYSE: JPM) taking the #9 spot with market capitalization of $365 billion and annual revenue of $116 billion.

Shortly after JP Morgan Chase declared a $2.8 billion quarterly dividend payout in May 2020, the International Finance Corporation (IFC) revised its estimate of the global credit gap from $2.5 trillion to $3.5 trillion. SMEs, compared to their larger counterparts, have shorter operating histories and insufficient collateral to secure business loans. These handicaps effectively restrain SMEs’ growth in the most pivotal times of their existences. The global banking system that caters to the needs of mega-corporations have inevitably left SMEs stranded.

Numerous FinTech lending companies have flourished in the last 20 years simply by fulfilling the needs neglected by financial institutions. Market leaders Kabbage, LoanDepot and LendingClub served as enablers of financial inclusion, bridging the credit gap by billions of dollars.

In Asia, Alibaba Group’s Ant Financial simplified lending and became the largest loan originator in the nation. Their current impact is measured by their disbursement of over¥2.2 trillion in loans, more than doubling the amount lent by Industrial and Commercial Bank of China (ICBC), the world’s largest bank in terms of assets under management (AUM).

As alternative lending gained dominance, governments were quick to impose restrictions as knee-jerk reactions to regulatory oversights. These restrictions essentially forced FinTech companies to become the spitting image of the industry it was trying to replace — traditional banking systems.

Once the Asia hub for FinTech innovations, China has tightened its regulation of alternative lending over the last few years. By increasing the capitalization requirement and capping the maximum interest rate on loans, China has set the industry back by putting 99% of peer-to-peer lenders out of business.

In Indonesia, the minimum amount of paid-up capital required for FinTech companies has been recently increased by 6-fold. The government has dictated that partnerships with external parties will be subjected to formal written approval by the government itself. Furthermore, the new regulation also requires FinTech companies to secure foreign investments only from investors that are also in the financial services industry.

These governmental constraints hinder the development of new industries by limiting the amount of available credit that SMEs can receive. Thus exacerbating the widening credit gap even more. To us, this further underscores the need for a more open and permissionless financial system.

Enter DeFi: An emerging power in the global financial system

DeFi has created a killer use case for the blockchain and cryptocurrency technologies. Many experts believe the 20-fold increase in total value locked (TVL) from the start of 2020 is due to DeFi’s potential to provide open banking for everyone in a permissionless way. In fact, we can argue that the current iteration of DeFi is just the tip of the iceberg and indicative of the pending widespread adoption of blockchain use cases. With prominent projects such as MakerDAO, Compound, Aave and Uniswap taking the lion’s share of the current $14.58 billion in TVL, DeFi has secured a seat in the global financial market.

However, TVL is not an exact measure of DeFi success as its price is heavily reliant on the price of ETH. While the price of ETH has doubled since the start of 2020, the amount of locked-in ETH has only increased by 5%. Even at Uniswap the numbers are very skewed as ~251,000 number of wallets
contribute over $50 billion worth of trading volume. Yet, these ~251,000 number of wallets only comprise 10% of the entire DeFi TVL. The disproportion between the number of users and the contributed TVL
volume implies that DeFi still has a long road in front of it before it can be considered mainstream.

In addition, DeFi is now heavily collateralized by crypto-assets. The use of over collateralization to account for pricing volatility presents numerous drawbacks for all involved parties. The fact that one needs to be over-collateralized to borrow limits DeFi into a very niche vertical inaccessible. Just recently, collaterals reached upwards of 500% of borrowed value. Very few individuals can afford these extreme collateralization rates.

For DeFi to sustain its growth trajectory, we need to move towards a world where loans can be given to creditworthy SMEs without first requiring these businesses to post excessive upfront collateral. DeFi must allow off-chain companies to use RWA with real cash flows as collateral and lower the collateralization requirements drastically. The income generating nature of the RWA will serve as an anchor to instill trust and stability, which will in turn decrease collateralization requirements from 500% to the level of traditional banking at 15–20%.

MakerDAO and Aave are the trailblazers in connecting RWA with DeFi. We believe many DeFi protocols will follow the lead of MakerDao, who recently funded their first RWA back in June of 2020. With a heavyweight behind this movement, we believe this is the first domino to fall in making DeFi a feasible financing option for traditional companies. We are also confident that DeFi‘s permissionless and cryptographically protected mechanisms will attract a wider range of assets previously only served by financial institutions and FinTech companies.

We are convinced that the current boom in DeFi is focused only on the needs of the 1%. However, the most disruptive end-game is to reach the 99% within the rest of the industry. NAOS Finance is founded with the intention to accelerate the process and to lead the transformation of decentralized finance.

The NAOS Finance Protocol | A Decentralized Loan Marketplace

We envision a permission-less and transparent loan marketplace where borrowers can access funding quickly and painlessly while lenders can deploy capital freely and safely. To accomplish this, the NAOS Finance protocol will replicate most, if not all, of the functionality of centralized intermediaries on the Ethereum blockchain. Our goal is to create an environment that combines the operational familiarity of traditional financial institutions and the technological benefits of DeFi.

The NAOS Finance Protocol has two sub-protocols:

Formation: Liquidity protocol that provides yield farming for the synthetic token “nUSD” which represents fungible claim of deposited collateral

Galaxy: Lending protocol that emulates traditional banking process. Allowing borrowers to complete the loan application and asset tokenization processes. Lenders are also able to provide lending capital to the Alpha and beta pools. Galaxy connects with Formation and other lending protocols for source of lending capital

Established SME Network to Scale Asset Onboarding

We recognize that the most important piece of the puzzle is the scalability of RWA. Therefore our engineering team has already taken steps to operationally integrate NAOS with over 2,000 SMEs, eventually allowing them access to Galaxy through a web portal. Our application process is streamlined to allow countless numbers of SMEs to submit an entire loan application request within a matter of minutes. All information and documentations will be stored on-chain through IPFS to
ensure immutability and integrity of the data provided.

While we intend to disrupt the existing lending industry, we also believe progress is made step by step. The NAOS team has established strategic partnerships with proven FinTech companies to onboard quality assets in a centralized manner. All assets will be subjected to bank-grade risk assessment and be fully insured to ensure the safety of the funds. As the community matures over time, it is our goal to delegate the asset vetting process into the hands of the community. The NAOS team will still be heavily involved by developing the tools necessary to assist in the evaluation of asset risk profiles via our analytical algorithms.

As a lending protocol, we understand the safety of the funds is of the utmost importance, therefore, we have also taken the steps to work with insurance companies to design and launch policies to ensure the safety of the funds in the rare case of default.

Fully Compliant for Loan Origination with Financing Licenses

The key differentiation between NAOS Finance from other protocols is in our ability to originate loans in a fully compliant and legal manner. Through our exclusive partnerships, we are licensed in highly regulated markets such as China, Indonesia, Philippines, Vietnam, India and Nigeria. We are further
growing our partner ecosystem by actively working with licensed partners operating in South America and Eastern Europe. Collectively, we have the coverage and exposure to top quality asset providers globally that many others don’t.

Diversified Bank Grade Income Generating Assets

We define an income-generating asset as one that provides consistent and recurring cash flow over a set period of time. Dividend bearing bonds and ETFs are the most popular vehicles among retail investors.

However, the world’s best income generating assets in terms of yield and stability are corporate term loans. With over 86% of these high-yield corporate assets securitized, they are made accessible only to financial institutions and accredited investors.

Through NAOS Finance, retail investors can participate in the private capital markets without the limitation of their income or net worth. Investors will have access to bank grade assets from the NAOS Finance Corporate Network including:

Bridging Facilities: flexible financing to cover immediate funding needs

Term Loans: multi-purpose business loans range from 6 to 48 months

Revolving Credit Facilities: financing tool with repayment and re-borrowing accommodations

Loan Against Securities: facility pledged against financial securities


For centuries, corporate and consumer financing have propelled the economic growth of modern civilization. However, the financing activities have always been governed by centralized institutions that maintain their monopolies of data and service. With DeFi applications gaining momentum, there will be
an opportunity to bring the financial lending world back to its original intended state — permission-less, open and decentralized.

NAOS Finance is poised to bring back innovation to the global financing landscape. We are excited by the opportunity to eliminate fees, increase data transparency and decrease unnecessary regulation. Our vast network of 2000+ committed SMEs will provide over USD $250 million worth of assets, allowing us to stand out against the wave of DeFi projects. Our protocol’s focus on RWA from day one is what sets us apart and will allow us to generate immediate value for the community. In short, the team at NAOS Finance is building a real-world asset based ecosystem that will enable other DeFi projects to build applications and derivatives with us.

About NAOS Finance

NAOS Finance is a DeFi lending protocol allowing lenders and SME borrowers to facilitate permissionless and borderless loaning/borrowing transactions on the blockchain. Built on Ethereum, our platform lets users tokenize real-world assets and subsequent lending.

We operate compliantly and legally in top markets around the globe, maintaining safety as a top priority and fostering enhanced trust in the lending/borrowing process.

To remain informed on everything about our project, be sure to visit our website and join the family by following our social media platforms:

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