Nolus is revolutionizing the realm of crypto borrowing, inspired by the traditional finance leasing model. In conventional leasing, customers can secure assets by paying just a part of their total value upfront, utilize them for the lease's duration, and eventually acquire full ownership after settling the loan. Similarly, Nolus introduces a groundbreaking financing approach by offering up to 150% financing on the initial investment. This not only reduces the risk of margin calls, bolstering the security of investments, but also allows borrowers to access their leveraged assets via select, approved yield-bearing strategies. A significant pain point in the crypto lending sphere has been the stringent over-collateralization requirements. Nolus tackles this challenge head-on, paving the way for greater capital efficiency and providing borrowers with more accommodating lending options. In essence, by intertwining the best of both traditional leasing and innovative financial solutions, Nolus stands as a beacon for enhanced borrowing in the crypto money market.
TradFI Leasing: Pay a fraction, use the asset, own it after lease term.
Nolus DeFi Lease: Deposit crypto, leverage up to 150%, repay and amplify holdings.
Example: Using Nolus DeFi Lease
Meet John, an enthusiast of the Cosmos ecosystem. He believes strongly in the potential growth of ATOM and wants to leverage his position to benefit from any future appreciation.
Without services like Nolus, if John wanted to invest in ATOM, he would typically have to buy the tokens outright, meaning the number of tokens he gets is limited to his immediate investment amount.
How Nolus Helps
Enter Nolus DeFi Lease, which changes the game. Instead of simply buying tokens using just his available funds, John can effectively double his ATOM exposure.
Initiating the Lease: John begins by depositing 1,000 USDC into Nolus.
Leveraging the Investment: With Nolus's unique proposition, he borrows an equivalent amount, receiving another 1,000 USDC.
Converting to ATOM: Both his initial deposit and the borrowed amount are converted to ATOM tokens, effectively doubling his investment in ATOM.
Collateral Mechanism: The combined ATOM tokens are parked in a smart contract. This serves a dual purpose: it backs John's DeFi Lease and also secures the borrowed amount.
Benefiting from Appreciation: Over time, if ATOM's value rises as John anticipates, his investment's value grows too. He holds a larger position than he would've without Nolus.
Settling the Lease: When John decides it's time to settle his position, he has flexibility. He can repay the loan either by injecting more funds into Nolus or by opting to liquidate his DeFi Lease, using the ATOM tokens he acquired. If the value of ATOM has significantly appreciated, he stands to gain a tidy profit even after repaying the borrowed amount.
ℹ NB: The loan is denominated in stablecoins, meaning that John owes a flat amount of stablecoins plus any accrued interest.
Conclusion: By leveraging Nolus's innovative DeFi Lease, John managed to maximize his investment. The protocol provided him with an opportunity to have more significant exposure to ATOM than a traditional investment would have allowed.
Traditional liquidation methods can be harsh on borrowers, as their entire position is liquidated at a discount, leading to significant losses. To mitigate this, Nolus has introduced partial liquidations. This approach only liquidates a portion of the collateral, ensuring the LTV remains within a healthy range. It gives borrowers more time to recover their position, reducing the risk of future liquidations and minimizing collateral loss.