About
Last updated
Last updated
NexusFinance is a DeFi platform focused on transforming the liquid staking experience. We provide interoperable Liquid Staking Tokens (LSTs) that connect different blockchain ecosystems, allowing for cross-chain liquidity and optimized rewards. Enabling BTC liquid staking, enabling Bitcoin holders to stake their BTC while maintaining liquidity. With Distributed Validator Technology (DVT), NexusFi enhances security and decentralization across networks. Additionally, flash unstake feature offers users instant access to their staked assets, ensuring greater flexibility and efficiency in the staking process. NexusFi aims to help users make the most of their assets. we bridge the liquidity gap across diverse blockchain networks, including Ethereum, Bitcoin, Cosmos, and Nibiru. With the crypto market boasting an estimated $92 billion in untapped idle PoS assets, NexusFi aims to unlock this potential through innovative liquid staking solutions.
Cross-chain Staking Hubs provide a new approach to cryptocurrency staking, allowing users to stake their assets with Distributed Validator Technology (DVT) powered validators and mint Interoperable Liquid Staking Tokens (LSTs). LSTs have revolutionized the staking landscape by enabling users to maintain liquidity while earning staking rewards. Unlike traditional staking methods that render assets immobile, LSTs offer a liquid, tradable form of the staked asset, allowing participation in various DeFi activities such as lending, borrowing, or liquidity provision. This dual benefit of earning potential and maintained liquidity enhances capital efficiency and flexibility, making LSTs significant for individual investors and the broader DeFi ecosystem. The growth of liquid staking has made it the largest category in terms of Total Value Locked (TVL) within the DeFi space. Notably, Ethereum's staking participation, at around 20%, still lags behind other Proof-of-Stake (PoS) Layer 1 networks, suggesting potential growth for LSTs if Ethereum staking aligns with PoS majority trends in the future.
Liquid staking has rapidly gained the trust of retail investors, and its influence is spreading to institutional players. Projects like Liquid Colletive are working to bridge the gap between traditional finance and the exciting world of liquid staking.
Interoperable Liquid Staking Tokens (LSTs) offer a novel way to earn yields and provide liquidity across various blockchain ecosystems. This innovation is made possible by advancements in liquid staking protocols and cross-chain communication technologies, particularly the Inter-Blockchain Communication (IBC) protocol.
Developed in the Cosmos ecosystem, IBC enables secure and trust-minimized interoperability between distinct blockchains. It allows any chain to connect to another in a permissionless and secure manner without relying on third-party entities. Currently, IBC chains communicate through light client verification, with each light client acknowledging and distributing state headers between connected chains. While initially constrained to Cosmos SDK chains, IBC is rapidly evolving.
Traditionally, LSTs in one blockchain ecosystem (like Ethereum or Solana) remain locked within their native chains, creating a fragmented DeFi landscape. Cross-chain LSTs aim to dissolve these barriers by allowing staked assets to maintain their staking benefits while becoming portable across different blockchains. Users can stake native assets (like ETH, SOL, NIBI, or ATOM), receive LSTs in return (like stETH, stSOL, stNIBI, or stATOM), and then use bridges to move these LSTs across ecosystems.
This cross-chain capability introduces new yield-generating opportunities. Users can participate in liquidity pools, lending platforms, and other strategies across multiple blockchains with their LSTs. For example, stATOM might be used in Ethereum's lending markets or Solana's liquidity pools while still earning staking rewards in the Cosmos network. This multiplicity of use cases significantly enhances capital efficiency, allowing users to optimize their DeFi opportunities by moving their LSTs to any connected chain, breaking the siloed nature of traditional LSTs. To further drive adoption and liquidity, NexusFi may offer additional rewards or emissions for users who stake or provide liquidity using their cross-chain LSTs. These incentives could come in the form of protocol-specific tokens, higher yield rates, or other benefits designed to attract users and maintain the long-term sustainability of the ecosystem.
Lido's wstETH aims to extend staked ETH's role across complementary ecosystems, helping build a unified Cosmos-based DeFi hub. This bridge marks wstETH's first true cross-ecosystem expansion, significantly advancing the unification of Ethereum and Cosmos DeFi ecosystems. NexusFinance plans to leverage this development to boost liquidity on Cosmos chains and its ecosystem. By providing lending protocols and liquidity pools for wstETH, NexusFinance will offer users the opportunity to earn yields and $NEXUS points simultaneously. This approach synergizes with NexusFinance's existing interoperable LSTs, creating a powerful combination. Users can now benefit from the established presence of wstETH across networks like Optimism, Arbitrum, and Polygon, while also tapping into the Cosmos ecosystem through NexusFinance's platforms. This integration not only enhances capital efficiency by allowing wstETH to be used in various DeFi activities on Cosmos chains but also incentivizes participation through $NEXUS points. The synergy between wstETH and NexusFinance's interoperable LSTs creates a more interconnected and liquid DeFi landscape, spanning both Ethereum and Cosmos ecosystems, and offering users diverse yield-generating opportunities across multiple blockchain networks.
One of the primary features of the LSM that Nexus Fi will be adopting is the ability to instantly convert already-staked ATOM tokens into liquid ATOM (lsATOM) tokens, without the need to wait for the traditional 21-day unbonding period. This streamlined process will significantly improve the user experience and reduce friction for Cosmos community members looking to participate in liquid staking. To maintain the security and decentralization of the Cosmos network, Nexus Fi will integrate the GlobalLiquidStakingCap, a parameter that limits the total amount of ATOM tokens that can be liquid staked to 25% of the total staked supply. This safeguard helps prevent any single liquid staking provider from accumulating an outsized portion of the network's voting power, ensuring the overall health and resilience of the Cosmos ecosystem.implementing ValidatorBondFactor, a mechanism designed to address the potential principal-agent problem between validators and delegators. This parameter requires validators who wish to receive delegations from liquid staking providers to self-bond a certain amount of ATOM tokens, aligning their incentives with the long-term interests of the network and its delegators. By implementing the LSM, Nexus Fi will seamlessly integrate with the broader Cosmos ecosystem, leveraging the power of the Inter-Blockchain Communication (IBC) protocol to facilitate interoperability and cross-chain capabilities. This integration will enable Nexus Fi users to participate in a wide range of DeFi activities across the Cosmos network and beyond, further enhancing the capital efficiency and utility of their liquid staked assets.
Incentivization and use cases
NexusFinance will focus on three key use cases of Liquid Staking Tokens (LSTs): lending, stablecoin minting, and liquidity provision through Nexus pools. In the lending sphere, NexusFinance will leverage LSTs as collateral in lending protocols, allowing users to borrow other tokens or stablecoins. This approach aligns with the growing trend of LSTs becoming the primary collateral choice in the DeFi lending landscape. The unique advantage of using LSTs as collateral is their ability to accumulate value from staking rewards, effectively creating a self-paying debt mechanism against ETH. For stablecoin minting, NexusFinance will explore using LSTs as collateral, enabling users to create decentralized stablecoins and contributing to the diversification of stablecoin options in the crypto market. The constantly growing value of LSTs over ETH (barring any de-pegging events) makes them ideal collateral for stablecoin minting. NexusFinance plans to integrate with emerging platforms that accept LSTs as collateral for stablecoins, similar to mkUSD from PrismaFinance.com. Additionally, NexusFinance will introduce Nexus pools, providing users with opportunities to supply liquidity using their LSTs. These pools will not only allow users to earn rewards from trading fees and yield farming but will also distribute $NEXUS points, further incentivizing participation in the NexusFinance ecosystem. By focusing on these use cases and introducing Nexus pools, NexusFinance aims to position itself at the forefront of LST utilization, offering users innovative ways to leverage their staked assets for lending, stablecoin creation, and liquidity provision within the Cosmos ecosystem and beyond, while simultaneously earning $NEXUS points and additional rewards.
Flash Unstake
In the world of Decentralized Finance (DeFi), immediate access to liquidity is crucial for the smooth operation of various applications. However, traditional unstaking processes often involve extended waiting periods, tying up users' assets and reducing overall capital efficiency. NexusFinance's Flash Unstake feature directly addresses this challenge.
Overview of Traditional Staking
In traditional Proof of Stake (PoS) systems, token holders "stake" their tokens to support network operations and earn rewards. However, these tokens are typically locked for a specific period, known as the "unbonding period." This period serves as a security measure to prevent rapid withdrawal of funds that could destabilize the network.
The Challenge of Unbonding Periods
While unbonding periods enhance network security, they can be inconvenient for users who need quick access to their funds. For example, on the Cosmos Hub, this period lasts 21 days, meaning users must wait three weeks to access their staked tokens.
Enter Flash Unstaking
Flash Unstaking is a mechanism that allows users to instantly unlock their staked tokens without waiting for the traditional unbonding period. This feature significantly improves liquidity for token holders while maintaining network security through alternative methods.
Liquidity Pool: A liquidity pool is established, containing tokens available for instant unstaking.
User Request: When a user wishes to unstake immediately, they submit a request to the system.
Token Swap: The system swaps the user's staked tokens with unstaked tokens from the liquidity pool, allowing the user to access their assets instantly.
Unbonding Process: The originally staked tokens then enter the standard unbonding process in the background.
Pool Replenishment: Once the unbonding period is complete, the tokens are used to replenish the liquidity pool, ensuring it remains available for future requests.
Integration with Multiple Networks: NexusFinance aims to support flash unstaking across various PoS networks, ensuring the service is not limited to just one blockchain.
Liquidity Provision: NexusFinance will establish and manage liquidity pools for each supported network, ensuring sufficient tokens are available for flash unstaking requests.
Smart Contract Automation: The platform will utilize smart contracts to automate the flash unstaking process, ensuring quick and secure transactions.
Risk Management: NexusFinance will implement risk assessment models to maintain the health of liquidity pools and protect against potential exploits.
User Interface: A user-friendly interface will be developed, allowing users to initiate flash unstaking with just a few clicks.
Fee Structure: A small fee may be charged for the flash unstaking service to sustain the liquidity pools and incentivize liquidity providers.
Governance Integration: Token holders may have the ability to vote on parameters related to flash unstaking, such as fee structures or supported networks.
NexusFinance’s Flash Unstake feature employs a fixed-rate conversion approach to ensure users receive the full value of their assets. When a user initiates a Flash Unstake request, the protocol taps into a dedicated pool of liquid assets specifically maintained for this purpose. This pool is carefully managed to maintain optimal liquidity levels and accommodate varying demands. Users can convert their staked tokens directly to the original asset or other supported tokens within minutes, providing swift access to their funds. Initially, this feature will support up to 5% of the total tokens deposited in NexusFinance’s staking module. As the protocol’s Total Value Locked (TVL) increases, this capability will scale accordingly to meet varying levels of demand while ensuring sustainable liquidity as the protocol expands.
NexusFinance will implement a dynamic fee structure for Flash Unstake, responsive to the volume of assets being unstaked. This approach ensures that fees remain fair and consistent, adjusting based on transaction volume. The fee structure operates as follows:
Base Fee: When the liquidity pool is well-supplied, the fee starts at a low base rate, offering users cost-effective liquidity.
Demand-Driven Increase: As more assets are unstaked and the pool’s liquidity decreases, the fee gradually increases to discourage excessive withdrawals and maintain stability.
Fee Stabilization: Once the unstaked amount reaches a certain threshold, the fee stabilizes at an optimal rate, ensuring the pool can support high transaction volumes without depleting its resources.
Let’s consider a scenario where a user wants to Flash Unstake 100 tokens. They initiate the transaction through the NexusFinance platform, which promptly converts their staked tokens to the original asset. Here’s how the process unfolds:
Fee Calculation: For the 100 tokens, a fee of 0.5% (0.5 tokens) is applied. This fee is split, with 0.25 tokens supporting the protocol and 0.25 tokens rewarding new stakers.
Transaction Execution: The user receives 99.5 tokens instantly, bypassing any traditional unbonding period.
After the unstaking is complete, there’s a need to replenish the Flash Unstake pool for subsequent requests. New stakers are incentivized to stake on the NexusFinance platform. For instance, if a user contributes 200 tokens, the first 100 tokens receive additional incentives derived from the 0.5% Flash Unstake fee, as these funds directly help replenish the Flash Unstake pool. This mechanism encourages further participation and helps maintain competitive prices for NexusFinance’s staked tokens compared to decentralized exchanges.
By introducing the Flash Unstake feature, NexusFinance is setting a new standard in the staking industry, offering unparalleled liquidity, flexibility, and efficiency to its users.
DVT
Distributed Validator Technology (DVT) is a decentralized, open-source protocol that enables the duties of a validator to be distributed among a cluster of nodes, rather than relying on a single machine. By leveraging threshold cryptography, DVT provides a decentralized staking layer on Ethereum. This allows anyone to create and share a validator across multiple fault-tolerant machines, ensuring that if any one node is offline or faulty, the validator can still perform its duties.
DVT enhances the fault tolerance of the system, which refers to the system’s ability to continue operating despite failures or malfunctions. Essentially, DVT adds an extra layer of fault tolerance for Ethereum validators, eliminating potential redundancies such as single points of failure and centralization issues.
Distributed Validator Technology (DVT) is a blend of distributed key generation, multi-party computation, Shamir's secret sharing, and Byzantine fault-tolerant algorithms. These technologies work together to allow validator duties to be split across multiple nodes without violating Ethereum's staking rules. In the following sections, we will explore these algorithms and the roles they play in DVT.
NexusFi will integrate Distributed Validator Technology, enhancing security, decentralization, and reliability for its users. This integration will position NexusFi at the forefront of innovative staking solutions within the PoS ecosystem.
Overview of DVT Integration
Nexus FI will implement DVT to distribute validator responsibilities across multiple nodes, significantly reducing the risk of single points of failure and improving the overall resilience of its staking infrastructure. This integration will involve several key components:
Distributed Key Generation (DKG): Nexus FI will implement a DKG protocol to generate and distribute validator key shares among a cluster of nodes. This ensures that no single node holds the complete validator key, enhancing security.
Threshold Signature Scheme: A threshold mechanism (e.g., 3 out of 4 or 5 out of 7) will be implemented, allowing a subset of nodes to perform signing duties. This feature ensures continued operation even if some nodes go offline.
BLS Signature Aggregation: BLS signatures to combine individual key shares into a single aggregated validator key, streamlining the signing process.
Multi-Party Computation (MPC): Secure MPC will be employed to enable nodes to collectively sign messages without reconstructing the full private key on any single device.
Byzantine Fault Tolerant Consensus: BFT consensus algorithm to ensure agreement among nodes for block proposals and other validator duties.
Node Operator Network: Nexus FI will establish a network of trusted node operators to run the distributed validator nodes, ensuring geographical and infrastructural diversity.
Smart Contract Updates: The protocol's smart contracts will be updated to accommodate the DVT infrastructure, including the management of distributed validator keys and rewards distribution.
Improved Liquid Staking Tokens: The integration of DVT will enhance the stability and reliability of Nexus FI's liquid staking tokens, potentially increasing their value and utility in the DeFi ecosystem.
$BTC stakers are often confronted with limited yield opportunities, which restrict their ability to generate substantial returns from their holdings. This limitation is further compounded by the challenges faced by Liquid Staking Tokens (LSTs), which frequently suffer from low liquidity and constrained yield generation. These factors make it difficult for users to fully capitalize on the potential benefits of staking. Bitcoin holders can maximize their assets by introducing liquid staking, which combines the benefits of staking and liquidity. Traditional Bitcoin staking involves locking up assets, making them inaccessible for trading or other uses, By allowing BTC holders to stake their assets and receive liquid tokens representing their staked BTC, NexusFi provides continuous access to liquidity while still earning staking rewards. These liquid tokens can be traded, used in DeFi applications, or held, all while generating yield. This innovation not only enhances the flexibility of Bitcoin staking but also opens up new avenues for earning and growing BTC holdings Rationale for BTC Liquid Staking: Bitcoin, holding over 48% of the total cryptocurrency market capitalization and with a daily trading volume exceeding $20 billion, traditionally lacks staking opportunities due to its Proof-of-Work (PoW) nature. NexusFi addresses this gap by introducing BTC liquid staking, allowing users to earn up to 5-7% annual yield without compromising the liquidity of their BTC. This initiative aligns with NexusFi’s mission to provide flexible and profitable DeFi solutions, tapping into a market with over 19 million BTC in circulation.
Following the approach pioneered by Babylon Chain, NexusFi will integrate a self-custody staking model, ensuring that users retain control over their BTC while participating in staking. The integration will include the following components:
Non-custodial approach.
Self-Custody Staking Model: Users will be able to stake their BTC without transferring ownership or control to NexusFi. Instead, NexusFi will leverage Babylon Chain’s technology to facilitate staking while the users retain full custody of their assets.
stBTC Tokens: NexusFi will issue stBTC tokens, akin to those introduced by Bedrock, representing staked BTC. These tokens will be tradable and usable within NexusFi’s ecosystem and across other DeFi platforms.
Users can utilize stBTC tokens within NexusFi's DeFi ecosystem, participating in activities such as yield farming, lending, and liquidity provision. This integration maximizes the utility of staked BTC while enhancing potential returns.
NexusFi will offer both proxy staking, where wBTC (Wrapped BTC) is staked via a proxy, and direct conversion of BTC to stBTC. This dual approach ensures flexibility and efficiency in the staking process. implementing multi-signature vaults and transparent record-keeping on the blockchain.
