Nolus Review
Nolus
nolus.io
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1
nolus.io
The World’s
First DeFi
Lease
Whitepaper
nolus.io2
1 / Abstract
2 / Context
3-6 / Inefficiencies
Over-Collateralized Loans / Risk
of Liquidations 4
High Costs / Ownership 5
Complex Experiences / Missing
Out 6
7-10 / Nolus Protocol
Finance 8
Asset Management 9
Business Model
10
11-12 / Market & Clients
13-19 / Nolus DeFi Lease
How Does It Work?
14
Mitigation Of Risk
16
Competitive Advantage
17
19-29 / NLS Token
Utility
20
Value Accrual
21
Allocations
22
26-36 / Technology
Network Components
27
Token Issuance / Delegation /
Rewards
28
DeFi Lease
29
Lease (Borrow)
30
Interest
32
Lend (Stablecoins)
33
Supported Assets / DEX / Ramp
36
37 / Advisors
Contents
nolus.io
Abstract
1
Nolus Protocol is a Web3 financial
suite that offers an innovative
approach to money markets with
a novel Lease solution to develop
the DeFi space further
The Nolus Protocol
utilizes a lightningfast Layer-1 blockchain
build with Cosmos SDK.
It is a decentralized,
censorship-resistant
medium with little to
no additional cost for
transactions and no
custody over the user’s
funds
The Nolus DeFi Lease
provides up to 150%
financing on the initial
investment, where the
user retains ownership
over the digital asset.
The Nolus DeFi Lease
comes with lower
margin calls and total
costs, all wrapped in an
intuitive and easy-touse UI
The DeFi Lease defines a money market
between lenders looking to earn yield
on stablecoins, and borrowers, looking
to borrow more digital assets than their
current equity
To borrow assets, the borrower locks up
a down payment as collateral and can
leverage their holdings in a preferred digital
asset
nolus.io
Context
1. Decentralized Finance: On Blockchain- and Smart Contract-Based Financial Markets 2
2. Crypto exchanges are booming, for now
3. The Shift Toward Decentralized Finance
The global cryptocurrency market is projected to grow at a
CAGR of 11.2% in the 2020-2027 period
The vast number of new DeFi solutions has been а fundamental
driver to the global cryptocurrency market
In recent years, a massive influx
of retail investors entered the
crypto world while institutional
support grew exponentially.
The vast array of new DeFi
solutions available to users has
been fundamental in driving
significant improvements
to financial markets, adding
transparent, open and
immutable infrastructure 1
In 2021, exchanges reported a
notable increase in both signups,
and trading volume – some citing
between 100-200% increases
in their usual rate of novel
registrations 2
According to some strategists,
this is not due to COVID boredom
but rather a move away from
legacy financial systems to a
more general acceptance of
cryptocurrencies as a new asset
class 3
The increasing digitization across
industries, legalization, purchase,
sale, or trade of virtual currencies
in various developed countries,
and convenient access to online
trading Protocols through
smartphones all contribute
to market growth. We believe
that the global cryptocurrency
market will continue its robust
expansion in line with the above
Cryptocurrency Market Research Report - Global Forecast to 2026
GLOBAL CRYPTOCURRENCY
MARKET PROJECTION
2022
0
1,000
2,000
3,000
4,000
5,000
2020 2021 2023 2024 2025 2026
16%
16.67%
17.33%
18%
18.67%
19.33%
1,812
2,151
2,559
3,045
3,627
4,324
5,159
Market Size Market Growth (USD Million)
nolus.io
Inefficiencies
3
Our firm conviction is that the popularity of
DeFi solutions will only increase in the future.
As a result, current market participants will
increase their holdings and involvement,
while newcomers with limited or no financial
background will enter this nascent asset
class
However, there are many
obstacles that must be
tackled before the sector
reaches the conflicting point
of mass adoption
nolus.io
4
Inefficiencies OVER-COLLATERALIZED LOANS
✗ PROBLEM:
The industry suffers
from rather steep
over-collateralization
requirements, making
lending options
unfavorable. A proliferation
of locked-up collateral
holds back the potential of
the market because it ties
up otherwise useful capital
to manage counterparty
risk
✓ SOLUTION:
Nolus DeFi Lease provides
financing up to 150% on
the initial investment
thus reducing the level of
collateralization by a
factor of 3
RISK OF LIQUIDATION
✗ PROBLEM:
In both cases, where users
want to maximize their
gains via over-collateralized
loans or futures contracts,
they are exposed to a high
risk of liquidation that
could lead to loss of equity
✓ SOLUTION:
Nolus DeFi Lease has 40%
lower liquidation rates
compared to the market
average (all parameters
equal)
nolus.io
5
OWNERSHIP
✗ PROBLEM:
One can use leverage
to speculate with more
equity without the need for
over-collateralized loans.
However, most exchanges
that allow futures or
perpetual contracts do not
give ownership of the asset
✓ SOLUTION:
With Nolus, ownership lies
within the user
HIGH COSTS
✗ PROBLEM:
Effective interest rates vary
between 11% and 19% for
CeFi, while DeFi solutions
have variable interest
that can go even above
30%. Transaction fees on
Ethereum can reach 50% of
the transaction for smaller
amounts
✓ SOLUTION:
With Nolus, total costs of
financing and transactions
are low – the neverchanging interest rate is
locked at contract creation,
with little to no additional
cost for transactions
Inefficiencies
nolus.io
6
COMPLEX EXPERIENCES
✗ PROBLEM:
Complex onboardings,
concepts, and processes
deter users away. CeFi
solutions are way too
technical for the average
person to operate with
✓ SOLUTION:
With Nolus, the user
enjoys a quick and clear
experience wrapped in an
intuitive and easy-to-use UI
with simplified onboardings
and processes
Inefficiencies
MISSING OUT
✗ PROBLEM:
Retail users have limited
liquidity and are unable
to purchase more assets
today at the desired price
level(s)
✓ SOLUTION:
With Nolus, the price of the
desired asset is locked in
at the contract creation
date, and the customer
can use the asset’s price
appreciation in the future
to repay the initial cost
of the investment and
has full ownership of the
underlying asset
nolus.io
Nolus Protocol
7
Inclusive, intuitive, and easy-to-use
solution to empower mainstream adoption
Nolus Protocol aims to merge the
boundaries between TradFi and DeFi in
a holistic experience, leveraging various
financial instruments and the advantages
that decentralized finance offers
Nolus’ Key Features:
Asset Management
→ Manage, Swap & Ramp
→ Earn Yield
→ Stake
Finance
→ DeFi Lease
nolus.io
8
Nolus
Protocol
FINANCE
The DeFi Lease defines a
money market between
lenders looking to earn
yield on stablecoins, and
borrowers, looking to
borrow more digital assets
than their current equity. To
borrow assets, borrowers
provide a down payment
and can leverage it
When a DeFi Lease is
opened, the down payment
and the loan provided by
Nolus Protocol are locked in
a smart contract instance,
both acting as collateral.
The never-changing
fixed borrower terms of
interest throughout the
lease contract provide
predictability for future cash
flows and yield distributions
toward lenders
Nolus Protocol is designed
to work on a cash basis
model where actual yield
rewards lenders. Interest
from DeFi Leases will be due
for collection in specific
periods and, if not paid, will
be automatically deducted
from active DeFi Lease
positions. The principal
can remain unpaid for as
long as the user desires,
however in the event of a
downturn, a margin call will
trigger partial liquidations,
eventually liquidating it in
full if the downturn is severe
nolus.io
9
ASSET MANAGEMENT
Nolus provides a
seamless solution to
manage a plethora of
cryptocurrencies and earn
on idle stablecoins
Nolus sources its deposit
yields from the interestbearing DeFi Leases and
incentivizes lenders with
additional rewards by
releasing NLS tokens from
the Incentivization Pool.
Payouts are done from a
couple of unique revenue
streams
Revenues from the DeFi
Leases will average at
~13% APR. Lenders will
receive 11% in stablecoins,
leaving the Protocol with
revenue of 2% (stream 1).
Combining it with a swap
spread (stream 2) and a
small TX fee (stream 3), the
three streams buy back
NLS tokens from the open
market, actively refilling
the incentives pool and
creating a sustainable
model that will reward
participants in the system
as long as it is economically
active
Nolus
Protocol
nolus.io
10
BUSINESS MODEL
Nolus goal is to build a novel user
experience-driven automated money
market, creating substantial value for all
participants. The Business Model laid out
below shows how the protocol will achieve
its purpose
NOLUS TOKEN UTILITY
Reduced Interest
& Downpayment
MANAGE
LEASE STAKE
EARN
Lease
Contract
CLIENT’S OUTSIDE FUNDS
ERC20, CW20 Tokens,
USD, YEN, GBP & 100+
NOLUS WALLET
Cryptocurrencies,
Nolus Token & NFT’s
LENDERS
Private Individuals,
Businesses
NOLUS TOKEN HOLDERS
Early Adopters
& Investors
NOLUS TOKEN UTILITY
Higher Rewards
NOLUS TOKEN UTILITY
Rewards From
TX Fees & Incentive
NOLUS TOKEN UTILITY
Gas/Network Fees
← Swap Tokens → Reward →
Reward →
← Deposit Fiat or Crypto
Withdraw Fiat or Crypto →
1 Down payment →
4→ Release
3← Repayment
2← Lease
Stake →
Blockchain
←
Supply Stablecoins
Liquidity Pools
Nolus
Protocol
nolus.io
Market & Clients
11
Nolus Protocol is a practical, simple, and
cost-efficient solution for everyone
By creating a safe, reliable, and user
experience-driven environment for DeFi
to grow on the Cosmos еcosystem, the
Protocol will bridge the gap from the core
market of early DeFi adopters to the vast
untapped mainstream markets
NEW ENTRANTS CURRENT HOLDERS
Users who already own digital
assets can immediately receive
access to a high-yield instrument
and a place to fund their future
purchases. They will benefit
from a cheaper and less risky
way of financing compared to
any other option on the market,
thus increasing the opportunity
to diversify their portfolio and
increase their crypto wealth
Nolus offers simple, high-speed
onboarding to advance the
adoption of digital assets. Users
can transfer fiat from their bank
account to the Protocol in a
matter of seconds through any
bank card, SWIFT, SEPA, or ACH
transfer. Users can then swap
different digital currencies, earn
on their holdings and apply for
financing
nolus.io
12
Crypto-asset investments have
grown among institutional
investors in the past years. In
addition, in times of accelerating
inflation expectations,
institutional investors actively
search for new and more
efficient ways to hedge their
portfolios and diversify their risk
According to JPMorgan’s note
to its clients at the end of 2021,
“Institutional investors appear to
be returning to Bitcoin, perhaps
seeing it as a better inflation
hedge than gold” 3
With Nolus, institutional
investors will be able to fund
their diversification needs lured
by the decreasing real interest
rates (fixed nominal interest
rate provided by Nolus less the
increasing inflation percentage
expected)
Market & INSTITUTIONS
Clients
ADDRESSABLE MARKET
According to Research and Markets 4, the global cryptocurrency market
size is expected to reach USD 5.2tr by 2026, with a cumulative value
in transactions, exchanges, and wallets exceeding USD 2.2tr per year.
Adoption would be spread evenly between Europe, the Middle East,
and Africa (39.03%), Asia-Pacific (31.5%), and the Americas (29.47%).
Cryptocurrencies are already a mainstream asset class and are
expected to grow significantly over the next few years. Nolus, with its
diverse products (buy, swap, store, send, finance & earn), is positioned
to grow with the market and become a leader in the DeFi lending space
JAN 21
$11B
29% OF TOTAL
DEFI MARKET
$110B
20% OF TOTAL
DEFI MARKET
DEC 26
3. Bitcoin not gold is the new inflation hedge, says JPMorgan
4. Cryptocurrency Market Research Report - Global Forecast to 2026
5. TVL on DeFi Lending Protocols
10x
The Global DeFi market is growing
at a rapid pace. DeFi Lending with
20% is the second biggest segment
after DEX and is expected to
increase further 5
nolus.io
DeFi Lease
13
HOW DOES IT WORK?
Nolus DeFi Lease is a crypto agreement where the
Protocol provides financing towards the user to
purchase more units of the desired digital asset
than their currently available equity
Nolus DeFi Lease allows crypto users to obtain
a financial product that is flexible in terms of
duration and repayments. The user only needs to
provide a down payment to enter the contract and
use the product for as long as desired. No early
repayment fees, monthly charges, penalties, or
additional fees apply. Once the Lease is fully repaid,
all leased assets are released to the user
THE PROCESS CONSISTS OF
THREE EASY STEPS:
User applies for Nolus DeFi Lease
by choosing from personalized
parameters of the contract
1
User repays in fiat or crypto
whenever and however they
see fit
2
Nolus smart contract releases the
digital asset towards the user
3
nolus.io
14
STEP 1:
CONTRACT INITIATION
STEP 2:
REPAYMENT
It is entirely up to the
user to choose when and
how much to cover of his
principle or interest or both
Lease
Contract
The user
chooses how
many units to
buy
Interest based
on the client’s
Nolus holding
The user chooses
the amount of the
down payment to be
deposited
The smart contract closed automatically the client can continuhold his asset
As soon as the loan amount
is repaid in full, Nolus
Protocol releases the asset
from the smart contract
STEP 3:
ASSET RELEASE
As soon as the lease
amount is repaid in full, the
assets are released from
the smart contract
DeFi
Lease
nolus.io
15
EXAMPLE
The interest rate
(the only charge that Antony would ever incur)
is fixed during the contract duration and is a function of:
the amount of the down payment and its
ratio vs. the market value of the asset
the amount of staked Nolus (NLS) tokens
(Interest reduction incentive)
1
2
For example, we will name our
client Antony
Antony would like to purchase
1 BTC at the market price of
$50,000
Antony is willing to enter into
the contractual agreement with
$20,000 (down payment), where
the Nolus Protocol will provide
the outstanding $30,000 to open
a buy position for 1 BTC. If Antony
decides to use Crypto Lenders,
he would need to buy some
crypto for $20,000, collateralize
it and receive a $10,000 loan to
purchase more crypto
In this example, Nolus Protocol
provides 3 times larger exposure
for the user than Crypto Lenders
Antony does not need to choose
any repayment period. The
contract is indefinite and will be
closed when Antony repays in
total - in one hour, one day, one
month, one year, or 100 years
from the contract initiation.
Antony has no other costs to
worry about except interest
Let us assume that Antony
decides to enter the above
contract. Once the agreement
initiates, Antony is free to repay
as he pleases. Antony may
choose to repay on the next
day (full or partial repayment is
possible at any time) and will be
charged with one-day interest
only. No other fees or taxes
apply. He may decide to repay
his interest every month for six
months and principal for the
next 6/12/18/24 months. He may
choose to cover his principal in
tranches every week/month/
quarter. He may pay principle at
any desired future point in time
(year/two/ten)
In a nutshell, Antony has the
ultimate freedom to repay
according to his needs and
possibilities
DeFi
Lease
nolus.io
16
The user must maintain a margin between
the current total outstanding debt due and
the current price of the digital asset locked
in the Nolus Lease smart contract. At any
given time for the duration of the smart
contract, the following ratio must be true:
Current Loan
Debt Due
Current Price < Of Digital Asset
In the case of price appreciation of the digital asset locked
in the Lease smart contract, Antony can use the upside of
the price to repay the loan partially or in full
The digital asset price locked in
the Lease contract could also
depreciate. In that case, Antony
will receive system notifications
at 30%, 20%, and 10% off the
liquidation price and will be
prompted to repay part of the
debt to avoid partial liquidation
In that case, when a further
decrease in the price of the
digital asset occurs, the Lease
contract will execute a partial
liquidation of the position to
recover the loan’s balance to a
healthy level
Since there is no fixed repayment
schedule, the DeFi Lease would
have a constant liquidation
price throughout the contract if
interest is covered regularly. As
Antony (in the example above)
has contributed a down payment
(upfront payment) of $20,000
and obtained $30,000 in the
form of Lease (to purchase 1 BTC
for $50,000), the liquidation
price for the contract would be
reached when the price of 1 BTC
equals $30,000 (or 40% decrease
in the cost of the digital asset)
For comparison, if the client
provides $20,000 collateral to
the Crypto Lenders, the loan
available would be $10,000 (3x
less than Nolus), and liquidation
will be triggered at a 37.5%
decrease in the asset price
(compared to 40% with Nolus)
In short, the user gets 3 times
more for lower liquidation risk
If Antony decides to cover neither
the principal nor the interest for
a while, the daily interest amount
will be added to the liquidation
price attributed to the loan, thus
increasing it
DeFi MITIGATION OF RISK
Lease
nolus.io
17
Nolus ambition is to increase the inclusion
of financial services within the crypto
ecosystem. The Protocol is an instant
low-margin-call-risk worldwide financing
solution that requires no technical
knowledge and is more cost-effective
compared to any alternative
DeFi COMPETITIVE ADVANTAGE
Lease
nolus.io
18
PRODUCT
FEATURES
CRYPTO
LENDERS
MARIGN
& FUTURES
Financial
Background
Needed
Total Cost of
financing
NO
10%
YES YES
14.2% 18%
avg. across market
Liquidation*
drop in price of asset 38%
decrease
67%
decrease
26%
decrease
No
collateralization
No
futures contract
Financing as %
of collateral/
downpayment
Up to 150% Up to 50% Up to 125x**
Ownership of the
digital asset Yes
Margin Call Risk Very Low High Very High
Fees Interest Only
Application fee,
Administration fee,
Spread, Interest
Application fee,
Maker/Taker fee,
Daily interest,
Withdrawal fee
avg. across market
DeFi
Lease
* example for equal parameters across the market - loan of USD 10,000 and deposited collateral (or down payment) of USD 20,000
** increased leverage brings higher liquidation risk. For example, if 10x leverage is used, the liquidation of the position would be hit in case
of 4.5% drop in the price of the asset
nolus.io
19
STAKEHOLDERS
There will be four types of stakeholders
within the Nolus Protocol:
Investors Users who purchased NLS
tokens through buying on the
open market, IDOs or airdrops
The Nolus ecosystem has been
uniquely designed in a way to
incentivize NLS owners to stake
their tokens and maximize their
benefits
Lenders will get boosted yields
depending on the amount of NLS
staked, while investors will be
incentivized to stake to maximize
the value of their holdings
This methodology will kick-start
the Nolus ecosystem and its
underlying Protocol while also
serving as a growth lever for user
retention and adoption
The staking incentivization
mechanism will further ensure
that a sizable proportion
of the NLS token supply is
being delegated to validators
contributing to the network’s
consensus
Stakers Users who stake Nolus (NLS)
tokens to receive rewards for
sustaining the blockchain’s
mandatory security level and
decentralization
Borrowers Users who will benefit from the
financing options on the Nolus
Protocol
Lenders Users who will supply liquidity
to the Protocol’s Vaults in
exchange of lucrative rewards
NLS Token
nolus.io
20
The NLS token incentivizes users by granting
better interest rates for the Nolus DeFi Lease
REDUCED INTEREST RATE
If the user stakes NLS tokens,
a lower interest rate will apply
depending on the amount staked
DOWN PAYMENT
Staking NLS token makes the
holder eligible for special down
payment options
GOVERNANCE
The NLS token is a governance
token that allows staked token
holders to decide the future of
the protocol, including every
implementation detail
TRANSACTION FEES
All fees for processing and
validate transactions on the
network will be paid with the NLS
token
NLS Token UTILITY
nolus.io
21
VALUE ACCRUAL
ADJUSTED DEFI LEASE INTEREST
Staked NLS tokens will grant borrowers lower
interest rates when leveraging through DeFi Lease
positions. Reduced interest will be calculated
dynamically based on the staking duration. The
longer the staking duration, the lower the interest
for consequent DeFi Leases
LENDERS TIERED APR INCENTIVE
Lenders will have to buy and stake NLS tokens to
increase their rewards on supplied stablecoins or
tokens. The more users utilize the protocol, the
more NLS tokens will be bought to achieve higher
APR. Consequently, the token value will grow
proportionally to the Protocol’s Total Value Locked
LEASE REVENUE
The majority of the revenue will come from the
interest-bearing DeFi Lease contracts. Part of the
total operating income will be used to buy back
NLS tokens on the open market, which would
subsequently be added to the Nolus Incentives
Pool used to pay out Lender’s rewards
The protocol will generate revenue and bring value to the
NLS token. A list of accrual mechanisms will be put in place:
NLS Token
nolus.io
22
ALLOCATIONS
15%
Inflation
Staking Rewards
Lenders
Incentives
12%
Strategic
Partners
5%
Liquidity &
Bug Bounty
5%
Team &
Contributors
19%
NLS Token
20%
Token
Sale
24%
Community
DAO Treasury
Total Supply
1,000 MIL
nolus.io
23
STRATEGIC PARTNERS
LIQUIDITY & BUG BOUNTY
5% of the genesis supply is
reserved for strategic partners to
help develop the ecosystem and
further contribute to the growth
of the Protocol. These tokens are
subject to a 9-month cliff which
will begin at the TGE, followed by
24 months of linear vesting
4% of the genesis supply is
reserved to bootstrap liquidity
and incentivize pools on several
Market Makers. An additional 1%
will be allocated to a bug bounty
program. These tokens will be
liquid at the TGE
TOKEN SALE
20% of the genesis supply is
allocated to investors who
participated in one of Nolus’s
private rounds. Proceeds will
be used to fund protocol needs
in terms of offered products.
Additionally, part of the proceeds
would be focused on Protocol
adoption expenses and technical
completion. These tokens are
subject to a 9-month cliff which
will begin at the TGE, followed by
24 months of linear vesting
TEAM & CONTRIBUTORS
19% of the genesis supply is
reserved for the core that ignited
the Nolus Protocol and the teams
assisting the development. Part
of the allocation will be used
to help attract new talent and
reward members for their work.
The allocation is subject to a
15-month cliff which will begin at
the TGE followed by 36 months of
linear vesting
Allocations
COMMUNITY (DAO TREASURY)
24% of the genesis supply is
reserved for the community.
Nolus community governance
will determine how and when to
distribute these tokens through
various incentive programs. All
types of contributors can be
eligible for community token
incentives, including but not
limited to technical contributors,
community builders, and
educators. All Community tokens
will be vested linearly for 36
months starting at the TGE
NLS Token
LENDERS INCENTIVES
12% of the genesis supply is
reserved for the Protocols
Incentive pool, which will
distribute rewards to lenders.
The allocation will be liquid at
TGE, but the actual distribution
depends on the Protocol’s
growth
nolus.io
24
INFLATION (STAKING REWARDS)
150m NLS tokens (15% of the total supply) shall be minted in 10 years and
will serve as staking rewards to incentivize validators and delegators
on the blockchain. At the end of the first month of operations, 2.5% of
all tokens will be minted than the monthly percentage of newly minted
tokens thereafter will decrease by 0.05 p.p. per month compared to the
previous month until the end of year 1. In the following years, the amount
will decrease monthly by 0.04 p.p. in year 2, 0.03 p.p. in year 3, 0.02
p.p. in year 4, 0.015 p.p. in years 5 to 7, 0.0125 p.p. in year 8 and remain
constant until the end of year 1
Staking Reward Distributio
n
Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10
4.9
%
3.0
%
0.8
%
0.8
%
9.3
%
7.1%
15.3
%
11.8
%
26.7
%
20.3
%
26.7%
47.0%
62.3%
74.1%
83.4%
90.5%
95.4% 98.4% 99.2% 100%
NLS Token
Allocations
nolus.io
25
The table below shows NLS token release schedule by quarter based on
the vesting and unlocking structures
NLS Token
1000
900
800
700
600
500
400
300
200
100
0
Token Release in Millions
Q0 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 Q19-Q40
Community (DAO Treasury) Token Sale Team & Contributors Inflation (Staking Rewards)
Lenders Incentives Strategic Partners Liquidity & Bug Bounty
Allocations
RELEASE SCHEDULE
nolus.io
Technology
26
User interactions are handled
through the current most proven
and used wallet - Keplr9 as a
browser extension to execute
transactions on the Nolus Web
Application. Once the MVP phase
is completed, a proprietary
non-custodial wallet solution
will also be made available
for users to interact with the
business layer of the protocol
on both mobile and the web.
Key management functionality
will be implemented to secure
a frictionless user experience,
providing familiar means for
non-crypto natives to create
and access their wallets. User
keys will be split via a threshold
scheme into shares, secured
by a mixture of authentication
methods and user devices
OVERVIEW
The technological backbone
of the Nolus Protocol utilizes a
lightning-fast Layer-1 blockchain
based on Tendermint’s PoS 6
algorithm, built with the Cosmos
SDK 7
. The simplified creation
of a sovereign, horizontally
scalable blockchain with its
proprietary token economy,
cheap and fast transactions, and
access to a thriving ecosystem
of interconnected dapps and
services are some of the many
advantages that the Nolus
Protocol benefits from
Most of the application and
business logic is executed on
top of the current state of the
CosmWasm 8 smart contract
framework. Coded with Rust
and executed within the
isolated sandboxing model by
CosmWosm and Web Assembly
enforces robust security and
multi-chain compatibility
6. The leading BFT engine for building blockchains
7. The world’s most popular blockchain framework
8. Secure, multi-chain smart contracts
9. Keplr Wallet
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27
DEVELOPMENT
Kickstarted using Starport 10
and deployed on AWS to allow
rapid development and testing
of the smart contracts and
connectivity with the network
Regular purging will be
performed to keep it quick and
small in size
TEST
All network updates and changes
will be rigorously tested before
their production deployment.
The test network will have a
simple faucet to transfer NLS
tokens and a blockchain explorer
PRODUCTION
To facilitate the active development of the protocol and
at a later stage of the production release, three network
instances need to be operational
To be deployed on separate
servers and even separate
cloud providers. At a
minimum, twenty nodes
will be operating the
network at launch, and new
nodes will be connected
on the next stage of the
development
Technology NETWORK COMPONENTS
10. Every project deserves its own blockchain
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28
TOKEN ISSUANCE, DELEGATION,
AND REWARDS
The network native currency is the NLS token, and its
parameters would be encoded into the genesis block
After genesis, each proposed
and validated block issues
rewards for the validator node.
Each validator receives rewards
based on their stake. The
rewards are then distributed
to all delegators. Each token
holder will be able to delegate
tokens to available validators. The
validator has a more significant
stake in the network with
delegated tokens, thus creating
more substantial rewards. The
rewards are distributed to each
delegator based on their token
amount. The validator could take
a percentage fee on the reward
before distributing it to the
delegators
Technology
Validation rewards for the first 96 months are calculated by f(x)=-4.33275
x^3 + 944.61206 x^2 - 88567.25194 x + 3.86335×10^6 where x goes from
0.47 to 96 following the months from 0 to 96. From 97 to 120, an equal
amount of 103125 tokens will be rewarded each month until reaching the
total amount of 150m tokens.
For example, the tokens rewarded
for the second month are equal to
Delegation
Rewards
Commission
Validation Decentralised
Network
Validator Token
Holders
f(x)dx
1.46510417
2.46020833
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The DeFi Lease defines a money market between
a lender looking to earn yield on stablecoins, and
a borrower, looking to borrow more digital assets
than his current equity. To borrow assets, the
borrower locks up a downpayment as collateral
and can leverage his holdings up to 3 times in a
preferred digital asset
The Protocol sources its deposit yields from the
interest-bearing DeFi Leases and incentivizes
lenders with additional rewards above the initially
agreed interest by releasing NLS tokens from the
Incentivization Pool
Technology DEFI LEASE
←
Supply Stablecoins
Lender
Person
Interest →
Interest →
Incentives
Pool
Blockchain
Liquidity Pools
Borrower
Person
Spread →
TX FEES
SWAPS
Fee →
Interest →
Rewards →
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30
There is a Liquidity Providers’ Pool (LPP) instance per
denomination that serves all borrow requests and
repayments in that same denomination. LPP calculates the
total principal and interest due and keeps details of the
opened loans. Each LPP instance calculates a fixed interest
rate on a borrow request and a total liability amount. LPPs
do not deal with currencies other than the LPP native one,
LPN
All lease positions are created by the Leaser contract, which
acts as a smart contract factory. One Leaser is connected
to one LPP and, therefore, to one stablecoin currency,
the liquidity pool’s native currency, LPN. If a user wants
to borrow USDC, they need to ask for the Leaser contract
connected to the LPP with USDC as an LPN
Technology LEASE (BORROW)
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31
Lease
(Borrow)
Technology
Suppose the borrower has open liabilities that do not meet
the desired conditions set within the protocol. In that case,
the system needs to sell (partially or fully) the borrower’s
collateral to remain solvent. These conditions are defined in
two invariants:
If the current liability of the
position is greater than or
equal to the max liability,
then the invariant is broken,
and a market price alarm
notification message is
sent. Given that the healthy
liability is less than the
max liability of the Lease,
the liquidation amount is
either the lease amount
itself or the amount that
is enough to guarantee
a healthy position after
the liquidation event has
occurred. This liquidation
amount is then swapped
to LPN and is used as an
input to the repayment
algorithm. If an excess
amount is returned, it is
transferred to the Profit
contract
Opening a new Lease is made via the Leaser by providing
only the down payment. The maximum amount to be
borrowed is based on the down payment and the initial
liability percentage
Suppose the borrower has
an outstanding margin or
loan interest left after the
defined interest payment
period has passed. In that
case, a grace period begins
during which the user has
the chance to repay their
owed interest. If there is no
payment, the invariant is
broken, and the repayment
algorithm is conducted
using the leased amount
LIABILITY COVERED INTEREST COVERED
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32
Lease
(Borrow)
Technology
Nolus Protocol is designed to work on a cash basis model
where actual yield rewards lenders. Interest from DeFi
Leases will be due for collection in certain periods and, if
not paid, will be automatically deducted from active DeFi
Lease positions
The DeFi Lease interest rate is derived from the current
utilization level of borrowed funds. When a higher
proportion of lent funds are borrowed, the interest rate will
go up, and when the opposite is present, the interest rate
will go back down. The loan interest rate calculation is not
exclusively reliant on the borrower’s base utilization rate but
also consists of a more elaborate algorithm that considers
various factors such as overall asset capitalization, trends,
and asset volatility. These factors are more precisely
measured due to a sequence of historical data points that
further enhance the algorithm and are asset specific.
Ultimately, the goal is to define an asset risk framework
through key features contributing to its performance and
introduce them along with different optimal borrower
utilization levels and base interest rates for the different
assets
Additional parameters representing the environment’s
effect in terms of expected asset dynamics will be
considered as well
INTEREST
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33
There is a Liquidity Providers’ Pool (LPP) instance per
denomination (LPN, i.e., native currency of an LPP), serving
all lenders that provide liquidity in that same currency.
Upon deposits, lenders obtain an amount of CW20 interestbearing token or nLPN. Interest amounts are computed via
index-based interest accrual
Each nLPN represents a fraction of the deposited amount
relative to the total amount of the pool. The interest accrued
and paid by the borrowers enters the pool and increases
the nLPN price. Once a lender withdraws nLPN, the received
amount includes the interest accrued for providing the loan
to the borrowers
Technology LEND (STABLECOINS)
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34
DEPOSIT LPN AND MINT NLPN
WITHDRAW LPN (BURN NLPN)
Technology
Lend
(Stablecoins)
If a user wants to become a
lender in an LPP, they need
to have some LPN in their
wallet, for example, USDC.
Since lenders are
depositing to a pool, they
need a receipt token
back. It guarantees a pool
share and can be used to
withdraw the underlying
assets. The balance of this
receipt token is introduced
to the state of the LPP
smart contract initialized at
0 alongside an additional
parameter describing its
initial price. The price of
the underlying LPN tokens
is also specified as another
parameter
To withdraw LPN tokens, the wallet address needs to have
a positive amount of nLPN tokens. The request can be
called multiple times, and the amount can be withdrawn in
tranches
Afterward, the balance of the nLPN in the LPP smart contract
is decreased accordingly alongside the balance of the LPN
tokens. Should the user wish to withdraw everything, then
the rewards will be claimed and the user will not be a lender
anymore
If the balance of the nLPN
tokens is empty, then the
price of a single nLPN token
would be equal to the initial
derivative price (1 nLPN
= 1 LPN). Otherwise, one
needs to take into account
the newly deposited
LPN tokens and the loan
interest rate from the
borrowers
As time passes, the nLPN
to LPN ratio will increase,
which means one nLPN
token would increase its
price relative to a single
LPN token
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35
Technology REWARDS
Lend
(Stablecoins)
Each LPP instance regularly receives rewards from the
Rewards Dispatcher smart contract based on LPP instance’s
total value locked (TVL) and the cumulative TVLs of all
other LPP instances. The LPP keeps track of incoming and
outgoing rewards, as well as minting and burning lenders’
CW-20 tokens by maintaining a global amount of rewards in
uNLS per nLPN
Each new reward increases the global reward per nLPN.
When a lender deposits or withdraws/burns nLPN, rewards
accrued by that lender for the balance so far is calculated
based on the value of the global reward per nLPN. That
amount is added to the pending rewards balance of uNLS
for that user
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To secure a seamless experience,
the users could on and offramp directly from the Nolus
Protocol. The ramping feature
will be enabled in partnership
with a third-party provider by
embedding their widget into the
application
FIAT RAMPING
SUPPORTED ASSETS
IBC 8 provides seamless
bidirectional communication
(transfer of native assets)
with other Cosmos-based
blockchains. With the Axelar
9 gateway, the functionality
extends further, making
transfers available for all
supported EVM blockchains
DEX
Nolus Protocol will utilize
Interchain Accounts 10 to
permissionlessly access
application features of another
blockchain and carry out any
action native to that chain. The
complex flow of sending and
swapping assets to a specific
AMM blockchain or application
will be handled entirely by the
protocol’s smart contracts,
the latter being a dramatically
improved user experience where
all interactions occur solely from
the protocol’s UI
Technology
8. Inter-Blockchain Communication Protocol
9. Axelar - Permissionless Network for Cross-chain Applications
10. Interchain Accounts - Composability to the Cosmos Ecosystem
nolus.io
Advisors
37
Tyler
Schmidt
Co-Founder at Strangelove
Shane
Molidor
Chief Executive Officer
at AscendEX
Zaki
Manian
Co-Founder of Sommelier Protocol,
Co-Founder of Iqlusion
Jack
Zampolin
Founder at Strangelove Ventures,
Co-Founder of Sommelier Protocol
nolus.io
38
The world’s most popular
blockchain framework –
Tendermint SDK
Secure, multi-chain smart
contracts –
CosmWasm
Interchain Assets
in One Place
–
Keplr Wallet
Inter-Blockchain
Communication Protocol –
IBC Protocol
Axelar - Permissionless
Network for Cross-chain
Applications –
Axelar
Interchain Accounts -
Composability to the
Cosmos Ecosystem
–
Cosmos Blog
References
Blockchain- and Smart
Contract-Based Financial
Markets –
Economic Research
Crypto exchanges are
booming, for now –
Financial Times
The Shift Toward
Decentralized Finance –
Forbes
Bitcoin not gold is the
new inflation hedge, says
JPMorgan –
Fortune
Cryptocurrency Market
Research Report - Global
Forecast to 2026 –
Research and Markets
TVL on DeFi Lending
Protocols –
Footprint Analytics
The Leading BFT Engine for
Building Blockchains –
Tendermint Core
nolus.io
Disclaimer
39
1. VOLATILITY OF CRYPTO ASSETS
THE VALUE OF CRYPTO ASSETS OF
ALL TYPES (INCLUDING CRYPTO
ASSETS CALLED “STABLE COINS”) CAN
SIGNIFICANTLY INCREASE OR DECREASE.
THERE MIGHT BE A SUBSTANTIAL RISK
THAT THEY LOSE THEIR ENTIRE VALUE.
THIS IS VALID FOR NOLUS TOKENS (NLS),
AS WELL.
You should carefully consider whether
purchasing, leasing, and holding crypto
assets are suitable for you in light of your
financial condition
2. RISKS ASSOCIATED WITH CRYPTO
LEASING FOR BORROWERS
Nolus DeFi Lease product only protects
you from negative balance. The collateral
you provide to enter into a crypto lease
may be partially or entirely liquidated due
to nonpayment of the lease, a drop in
price of the collateral, or other reasons.
Nolus does not protect you from market
conditions. You shall not receive any
“margin calls” and shall be required to
follow up on market conditions on your
own and provide capital to the smart
contract as necessary if you do not
wish for your positions to be liquidated.
The liquidation is automatic and is not
executed by Nolus Platform Ltd., but by
automated Liquidators acting on the
Nolus Network. Interest rates may be
subject to change and increase based on
market conditions and liquidity providers.
You should familiarize yourself before
entering into a DeFi Lease Agreement
with the concepts of “margin trading”,
“liquidation”, “leverage”, “collateral”,
“debt” and other financial concepts that
may apply - the list is not exhaustive
3. RISKS FOR LENDERS
In the case where you choose to provide
liquidity with your assets in the Nolus DeFi
pools - you may lose your entire capital
due to technical errors in the smart
contract, a significant drop or rise in
prices of the locked assets, nonpayment
from borrowers, or other unforeseen
reasons. Rewards may decrease in
quantity and/or value at any time to such
extent that lending is no more profitable
4.NO FINANCIAL PROMOTION
This document is for educational and
informational purposes only.
The contents of this document are not
a financial promotion. The information
outlined in this document may not be
exhaustive and does not imply any
elements of a contractual relationship.
None of the information or analyses
presented are intended to form the
basis for any investment decision and no
specific recommendations are intended.
Therefore, none of the contents of this
document serve as an invitation or
inducement to engage in any sort of
investment activity. This document is not
intended to be a prospectus, solicitation,
or offering for investment or the sale or
issuance of securities or any interests or
assets
5. PROTOTYPE STAGE
Nolus Platform Ltd. is a startup entity
without prior records. Тhe “Nolus Crypto
Lease”, “Nolus Platform”, “Nolus Network/
Nolus Protocol”, “Nolus Token”, “NLS” are
blockchain products at prototype level
under development currently.
The entire ecosystem is an experiment
without prior proof of concept, proof of
utility, or other records that prove the
feasibility of the project.
It may turn out that for legal, financial,
technical, operational, human resource,
or other constraints the envisioned
products will not be developed eventually
partially or to full extent.
It might turn out that the entire project
nature needs to be altered to comply
with international regulatory standards,
thus the products may have to become
centralized to receive licensing.
Nolus Platform Ltd. and its founders
do not promise any future results or
performance. They might terminate
operations at any time they meet
regulatory, technological, or other
obstacles.
No developer or entity involved in
creating the Nolus products will be liable
for any claims or damages whatsoever
associated with your use, inability to use,
or your interaction with other users of
the Nolus protocol, including any direct,
indirect, incidental, special, exemplary,
punitive or consequential damages, or
loss of profits, cryptocurrencies, tokens,
or anything else of value.
Nolus only provides software solutions,
which allow users to lease assets to
each other in a decentralized peer-topeer man free, public, and open-source
software. Nolus Platform Ltd. will not own,
operate, or control the Nolus Network/
Protocol. The sole function of Nolus
Platform Ltd. with respect to the Nolus
Network/Protocol is to issue NLS Tokens.
The Network will be run and operated by
a decentralized validator set
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40
6. NOT A FINANCIAL SERVICE
Nolus does not offer any regulated
financial services, nor any custody of
Clients’ crypto assets, nor services for
exchange between virtual currencies and
fiat currencies, nor securities services.
As of the time of the publishing of this
White Paper Nolus is not registered with
any Financial Regulator, as it is to our
knowledge not obliged under the current
British Virgin legislation to obtain such
license for its activity.
This White Paper expresses personal
beliefs about where the crypto market
is headed based on the free expression
rights of its authors. These beliefs are
not given as a financial consultancy.
The authors are not licensed financial
consultants.
Nolus does not provide any regulated
financial services or security services.
There are risks and uncertainties
associated with the provided services
and tokens that should be taken into
account
7. NOT A SECURITY
Nolus Platform Ltd. considers that the
NLS Tokens are not investment products
or securities and fall exclusively under
the “utility tokens” definition under
international standards. In the case
where the token is later on classified as a
“security” - Nolus Platform Ltd. shall hold
no responsibility for any losses arising
from that fact for anyone, who purchased
the tokens
8. RESTRICTED JURISDICTIONS
Nolus does not deal with individuals
or entities, whose origins come from
jurisdictions viewing crypto assets
services as “financial services” and/or
“securities services” (including but not
limited to the following countries – The
United States of America, Republic of
India, the People’s Republic of China and
others such).
Nolus does not deal with individuals or
entities that are blacklisted by FATF
9. NO GUARANTEE ON ACCURACY OF
INFORMATION AND COMPLETENESS
The information in this document is
given in good faith, but no warranties,
guarantees, or representations are made
by Nolus Platform Ltd. concerning the
accuracy, completeness, or suitability
of the information presented. Nolus
Platform Ltd. expressly disclaims all
responsibility, and Recipients expressly
waive any claim, for any direct or
consequential loss or damages of any
kind whatsoever (Whether foreseeable or
not) arising directly or indirectly from (i)
reliance on any information contained in
this document or any information which
is made available in connection with any
further inquiries, (ii) any error, omission,
or inaccuracy in any such information, (iii)
any action resulting from or (iv) usage or
acquisition of products
10. LIMITATION OF LIABILITY
In no event shall Nolus be held liable if
a license is subsequently required and
not obtained. Тhe product and platform
under development are at prototype
level and Nolus does not warrant/
undertake their actual future results or
performance.
This disclaimer applies notwithstanding
any negligence, default, or lack of care.
No regulatory authority has examined or
approved any of the information set out
in this document
11. NOT A FINAL VERSION
Nolus may update, modify, or correct
this document in its sole discretion,
without notice or incurring any obligation
or liability to any recipient hereof. This
document shall not bind, convey any
rights, obligations, terms, performance,
covenants, representations, or warranties
on behalf of Nolus to you, or create any
relationship between Nolus Platform Ltd.
and you or any other party.
This document is created by Nolus
Platform Ltd., a company registered in
British Virgin Islands under company
number 2088204 with physical address:
Trinity Chambers, Ora et Labora Building,
Wickhams Cay II, Road Town, Tortola,
VG1110, British Virgin Islands
Disclaimer
