Nereus Market Insights w/c 14/03/22
The smart contracts of Nereus V1 have been deployed and the first deposits have been made. Over this time, the Nereus team and community members have been observing participant trends, market conditions and consumer behaviour within the Nereus ecosystem using external analytics tools like Nansen. In keeping with Nereus’ true principles, the Nereus team would like to share the high-level data with our community. Sharing knowledge of ongoing trends should help users make more reasoned investment decisions within the Nereus ecosystem.
Firstly, our team at Nereus has observed very high utilisation rates on Stablecoin assets within the protocol. A high utilization rate means that a significant proportion of an assets liquidity is being borrowed by protocol participants. For a given asset, when the utilization rate goes above a threshold the sensitivity of the borrow rate with respect to this utilization rate grows more than 12-fold. This higher borrowing rate applies to all the borrowers of this specific asset.
All Stablecoin markets within Nereus have been calibrated for an optimal utilisation rate of 50%. In other words, borrowing DAIs above the 50% utilisation rate threshold will negatively impact the borrowing APY for every DAI borrower. The WXT rewards have been calibrated to enable free borrowing within the first 4 weeks of the protocol if the utilisation rate remains below the threshold: borrowers are still profitable. Given the strong initial constraints set by the protocol’s parameters, the protocol’s state where every utilization rate is at its threshold is the optimal state of the Nereus economy. Following the end of Phase 1 of the WXT emission schedule, borrowing when the utilization rate is at or near the threshold may no longer be profitable, nor optimal.
WBTC.e & WETH.e have been the most popular asset markets within the protocol based on their Total Value Locked (TVL). They have also remained at optimal utilisation rates and seem to be the most attractive asset markets within the protocol. WAVAX has been the most popular asset based upon the total number of borrowers and lenders
The protocol health factor has remained fairly stable since launch, with the protocol health currently sitting at 1.765. The protocol health factor captures the average collateralisation ratio of all positions within the protocol and should remain over 1.25 at all times. The strong figure of 1.765 indicates that the protocol should be able to withstand the volatility inherent to the cryptocurrency markets and that the protocol has the potential to facilitate more borrowing from participants.
The total number of unique addresses which hold WXT on the Avalanche Blockchain currently sits at 108, with the majority of the current WXT supply being less than 30 days old. This clearly indicates that the majority of the avalanche WXT supply has originated from the Nereus Protocol. This is important as there is already supply of WXT on the Stellar & Ethereum Blockchains, although, this supply currently has not driven significant bridging/transfer to the Avalanche blockchain.
The total number of addresses that hold Nereus issued assets within the Avalanche blockchain currently sits at 350, with 212 accounts holding debt-bearing tokens (from borrowing) and 138 accounts holding interest-bearing tokens (from lending). It is important to outline that these numbers do not represent unique users, as users can hold positions in multiple asset markets within the Protocol.
Nereus V1 is only the beginning of the Nereus Protocol. Over the coming weeks, we will begin to introduce the Nereus V2 concepts and provide more insights into the consumer trends within Nereus V1. We have identified some Mercenary behaviour by participants within our protocol and in keeping with Nereus’ true principles, we are currently working on research that will be shared with our community outlining the actions of these wallets. In addition, we are completing the final stages of Nereus V2, which we hope to introduce to our community very soon.
