Users who currently hold mAssets for price exposure to equities currently forego the dividend yield enjoyed by their counterparts in the traditional equity markets. This can constitute a significant driver of asset returns especially for more ‘value’ equities recently listed, e.g. mJNJ and mKO. Hence, Nexus has developed a wrapped mAsset Strategy that utilises delta-neutral principles and Mirror short farming to provide users with yield that will mimic existing dividend distributions.
Instead of purchasing mAsset, the users may mint or purchase wrapped mAssets with Nexus (nmAssets), effectively an yield bearing mAssets.
The user deposit mAsset to Nexus mAsset vaults + minting fee in UST
Short farm is created for same mAsset, utilizing deposited mAsset as a collateral
LTV set at min LTV + 0.1%
Borrow UST from Nexus UST vault (LP Money Market) with locked UST as collateral. Pay minting fee from stage 1 to Nexus UST vault
Purchase mAsset from mAsset-UST pair, same kind and amount as shorted in stage 2
Collect rewards & Distribute
Once locked UST from stage 2 is unlocked; provide it to Nexus UST Vault
Source of Yield
- nmAsset Minting Fee
- Paid by nmAsset minter, paid to UST depositor (LP Money Market)
- mAsset sLP rewards
- Buyback to Psi, paid to nmAsset holder
Observing on-chain distributions of mAssets, mAssets are mainly utilized as a mean for liquidity farming or traded on Ethereum blockchain for arbitrage opportunities. Thus, directional investment demand for traditional assets seems to be less evident yet on Terra Blockchain. Considering that the nmAssets would address the user group who wishes to make a long position on mAssets, such observation dictates there may not be sufficient demand for such product in the market.
Closing nmAsset position would involve 1.5% mirror protocol fee, thus in order to fully serve the users best interest, readily available method to trade nmAsset is required. However the current AMM DEX requires substantial cost to provide liquidity.
We would like to take this opportunity to hear feedback on this product idea, especially with regards whether this product may have sufficient demand to be worthwhile building