Nolus Expands to Neutron
Nolus is progressing towards completing its integration of Astroport’s deployment on Neutron. This will allow Nolus to access liquidity on the highly innovative Astroport and benefit from Neutron’s adoption of replicated security which provides it with the economic security of Cosmos Hub.
What Does This Integration Mean?
Until now, Nolus has leveraged the liquidity of Osmosis alone. This has been a great starting point for Nolus, as Osmosis has the greatest amount of liquidity in its liquidity pools within the Cosmos ecosystem. This has provided the most effective pricing for DeFi Leases. However, we are now seeing more and more Cosmos ecosystem DEXes innovating on their models to provide the most efficient swaps for users.
Astroport’s unique passive concentrated liquidity (“PCL”) model offers better trade pricing than constant product pools. This is comparable to Osmosis’ supercharged liquidity model, which allows users to manually deposit their liquidity in ranges chosen by them. However, Astroport differentiates itself from Osmosis by implementing a “passive” LPing experience that doesn’t require ongoing active management of liquidity distribution. This is an oracle-based solution for concentrating liquidity and has its own advantages and disadvantages.
This provides two different exchanges that may appeal to different sets of users, which may result in different assets being priced more favorably across the two different DEXs.
How Will Nolus and Its Users Benefit From This Integration?
The benefits of an integration with Astroport (in tandem with the existing Osmosis integration) offer Nolus and its stakeholders widespread benefits. This includes:
Borrowers: Users will now be able to gain exposure to a wider range of assets that have a threshold level of liquidity on Neutron’s decentralized exchanges, such as NTRN, Neutron’s native asset, for example. These are highly attractive assets that have been requested often by members of the Nolus community.
Depositors: By being able to provide more desirable assets for the borrowers, we hope to see greater amounts borrowed on the protocol which will both generate more interest income for depositors, but also support the continued growth of the Liquidity Providers’ Pool to be able to accept more deposits.
NLS Stakers: Greater efficiency in the Protocol may result in more usage of the Protocol. This will result in more transaction fees paid by users, which are distributed to stakers. A more efficient protocol will also attract more borrowers and depositors to become long-term NLS stakers (increasing demand for the token) being exposed to the various value-accrual revenue streams which the protocol has in place.
How Will Astroport and Neutron Benefit From This Integration?
There are many direct benefits to Astroport and its stakeholders through this integration.
- Greater volume on Astroport will provide greater fees to Astroport’s liquidity providers and to ASTRO stakers; and
- Greater fees for Astroport’s liquidity providers will reduce the amount of incentives required to compensate liquidity providers for the associated risks with liquidity provision.
How Does It Work?
Nolus will use Interchain Accounts and support Neutron аs a host network. After enabling this through governance, it will be possible to create smart contract instances on Nolus that open an account on Neutron that can perform different actions such as swaps, lease liquidations, and repayments.
Closing Thoughts
The integration of Astroport will give birth to a mutually beneficial relationship between two organizations, similar to that which we see in the traditional world.
It will allow Nolus to offer more assets to borrowers. Thus resulting in a greater volume of loans, leading to an increased demand for the NLS token. It will also offer Astroport a greater amount of volume through the exchange that will offer its liquidity providers and stakers a greater amount of income.
We will continue to explore other opportunities to integrate exchanges to demonstrate the benefits of a unified ecosystem.
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