Everything you Need to Know About NXUSD

The second phase of the Nereus protocol has finally arrived; we’re happy to announce that we’ve rolled out NXUSD, Nereus’ fully collateralized Stablecoin. NXUSD possess market-leading utility and utilises the relationship between Wirex and Nereus to offer pioneering features at the forefront of innovation in the DeFi 2.0 era.

We’ve already written a few extensive articles about everything you need to know about NXUSD, including what the token is and its genesis event, but we thought we’d give you a quick summary of the most important bits!

What is a Stablecoin?

Stablecoins were created to help remove the volatility factor often associated with crypto. All the while, they’ll continue to offer crypto’s other benefits that make them a better medium of exchange than traditional assets, such as faster transaction speeds and lower costs. They’re also a great on/off-ramp for the crypto ecosystem. There are different types of stablecoins, with their price maintained using various mechanisms.Collateralization is key with stablecoins, which means the circulating supply of it is pegged to collateral. In the case of many cryptos, who’s price is highly volatile, this ensures that the stablecoin’s price remains relatively stable despite factors such as a confidence crisis. Notably, you might have seen Terra stablecoins hit the news recently; their demise was a result of the tokens not being backed by collateral, which shows the importance of collateralization!

One of the most popular is the fully collateralized algorithmic stablecoin, DAI , which is soft-pegged 1:1 to USD, a stable asset.

What is NXUSD?

NXUSD is a full-collateralized ERC-20 standard token on the Avalanche blockchain, pegged to USD, that is minted by the Nereus Finance decentralised platform. Nereus uses multiple tokens (WBTC, WETH, AVAX, DAI — with more coming soon) as collateral to mint NXUSD, and is fully collateralized, meaning the circulating supply is pegged more than 1:1 to the collateral asset. This over-collateralization makes it more secure and ensures the price remains stable. Notably, Nereus will offer 0% interest to protocol participants that borrow from the platform. NXUSD will be minted in smart contracts, and there’s an origination fee for borrowing as low as 0.5% with competitive loan-to-value (LTV) ratios.

The Nereus team have continually researched the most effective peg mechanisms, meaning NXUSD keeps its peg via arbitrage incentives within the Nereus ecosystem. When NXUSD trades under $1, arbitrageurs are incentivised to purchase NXUSD at a discounted price and pay off some of their debt at a cheaper price than if NXUSD were $1. If NXUSD trades above $1, arbitrageurs are incentivised to borrow NXUSD and sell it at a premium.

Nereus have also leveraged their relationship with Wirex by allowing NXUSD to be redeemed on the platform at $0.995 (after the 0.05% origination fee), creating a natural hard peg mechanism. This will incentivize users to buy NXUSD on the open market when the price falls below $0.995, and sell/exchange it within the Wirex app for other tokens.

The Nereus protocol will heavily incentivise liquidity providers who stake their liquidity pool tokens with WXT rewards. This will be important in ensuring that sufficient liquidity exists within the NXUSD liquidity pools to enable low slippage on NXUSD exchanges.

Importantly, Nereus will employ the market leading risk management framework of Isolated Markets within the protocol, meaning that the solvency risk of each asset market is not shared collectively across the platform. If one token market collapses, it only affects that market, and not the entire platform, which differs significantly from platforms such as Compound and Aave. This also adds an additional layer of security against malicious actors that have unfortunately become common in DeFi.

All of these features further solidify Nereus’ position as one of the most competitive lending protocols on the Avalanche blockchain.

Why Release NXUSD Now?

In a little over one month, Nereus became one of the fastest growing DeFi platforms to exist on the Avalanche blockchain. Now, we want to continue this momentum by producing a market-leading fully collateralized Stablecoin with genuine utility in the real world.

Here at Nereus, we strongly believe in the potential of DeFi 2.0. We’re aiming to bring the next generation of more user-friendly decentralised apps to the metaverse, by addressing legacy issues of the early innovators in the DeFi space. The launch of NXUSD will help realise that with its range of benefits and 0% interest.

What are NXUSD’s Key Benefits?

First and foremost, NXUSD will offer a best in class borrowing experience on the Avalanche blockchain, as well as:

• Maximum capital efficiency — Nereus allows users to borrow up to 90% LTV, unprecedented compared to other DeFi borrowing protocols. This makes borrowing highly capital efficient and allows for up to x10 leverage on investments
• 0% interest rate — you can borrow crypto without accruing interest
• One-time borrow fee — Nereus charges a one-time borrowing fee as low as 0.5%
• Liquidity pool token staking — Nereus will offer Liquidity Pool Token stakers WXT incentives for supporting NXUSD liquidity pools
• Loyalty orientated reward allocation — Nereus will allocate WXT incentives via an innovative FIFO (first-in, first-out) model which incentivises long-term participants above short-term mercenaries
• Spend, earn and redeem in the everyday — Nereus’ has leveraged its longstanding relationship with crypto payments platform, Wirex, to allow NXUSD to be spent at over 80 million vendors globally using their crypto-enabled debit card. With instant payments at point-of-sale, you’ll be able to utilise this in day-to-day life, which differs hugely from other stablecoins that often have limited use cases. This will be available in the coming weeks, making it one of the few fully collateralized Stablecoins that can be spent on a debit card. What’s more, is that users will be able to deposit their NXUSD into Wirex’s DeFi savings feature, X-Accounts, where they can easily earn up to 20% AER interest back, with no lock-up period, minimum holdings or monthly fees

The NXUSD Genesis Event

A genesis event of a Stablecoin is the minting of the initial token supply, endeavouring to inject liquidity into the stablecoins ecosystem and ensure it’s operational from the get-go. Past genesis’ of other stablecoins have been met with their fair share of criticism, so it was important that we got this right.

NXUSD’s genesis event was transparent and verifiable, where 4 billion WXT will be used as collateral, with 7 million NXUSDs minted so far. This means that 40% of the total supply of WXT will be locked within NXUSD and shows the commitment from the Nereus team to pushing NXUSD towards their principal goal of achieving a community oriented DeFi protocol. The minted NXUSDs will be used to fund the liquidity pools and liquidity bots that ensure that the price of NXUSD matches USD during periods of market volatility.

How to Buy, Use and Sell NXUSD?

1. Collaterals (WBTC, WETH, AVAX, DAI) are deposited on Nereus. The amount of NXUSD you can borrow depends on the LTV and maximum allocation, which varies for each collateral. These can be found here
2. A debt allocation, with 0 interest, is assigned to the borrower, and a 0.5% origination fee is charged
3. NXUSD tokens are deposited into the borrower’s wallet, which users can then do whatever they want with
4. To reverse the process and regain your collateral, users will need to repay their NXUSD debt to be allowed to withdraw their collateral

For more information about Nereus, read our whitepaper here.

To read more about WXT and using NXUSD within the Wirex app and card, read here.

To find out more about how you can access the world of DeFi with the Wirex Wallet, click here.