Introducing Nirvana V2: Here's What You Need to Know

The Nirvana protocol has one mission: to produce a truly resilient store of value. One that holds its worth regardless of market cycles, evolves without central planning, and scales indefinitely. Without these three legs to the stool, an asset’s value will only ever be temporary. Nirvana builds on the open and algorithmic nature of decentralized finance to create an entirely new class of asset that meets the promise of this new paradigm we call “DeFi”.

In a word: Nirvana’s store of value – ANA – could very well be the most “cryptonative” of all assets on offer. It takes the principles of crypto and blockchain seriously – almost fanatically – and encodes them into its DNA.

It is not controversial to note that crypto (and especially DeFi) has been going through a rough, prolonged puberty. The sector has been stuck in the awkward phase of being half “decentralized” and half “traditional”, half “democratic” while half manipulated by cabals of ultra-wealthy insiders. The goal was trustless, open, algorithmic systems, but the reality has been a messy blend of old-fashioned problems with new-fashioned aspirations.

Crypto caught on because it promised to create an asset that is resilient, decentralized, and scalable. Nirvana’s purpose is to bring this vision finally to reality.

Let’s take these three pillars one at a time.

1. Resilient Value

The hope for Bitcoin is that it becomes “digital gold” – that is, a “safe haven” asset that holds its value with a rock-hard grip. So far, this remains just hope. The annualized volatility of Bitcoin has been 4-9 times greater than gold’s, and it is anyone’s guess where the roller coaster goes next. The problem is not Bitcoin’s fault.

It is that Bitcoin’s technology is not of the same ilk as its market. Its ledger is famously tamper-resistant, but its market is only human, and sometimes, humans decide to rotate out liquidity. This fact will never change. Bitcoin’s price has nothing to do with blockchain technology, and the value that Bitcoin stores has much to do with the convictions of Michael Saylor and Blackrock.

We should go one step further with digital assets. Nirvana’s key insight is: make the market algorithmic too. If the liquidity for the asset is deterministic, and the humans are left out of the equation, then we can guarantee value for a token with the same mathematical precision that we guarantee its supply.

Yes, Bitcoin guarantees that the supply will stop at 21 million – but what if it could guarantee that its price will never go below, say, $70k?

Nirvana does.

Nirvana’s ANA token has a hard floor price, guaranteed at the protocol level. This price cannot be breached because the mathematical rules of the Nirvana market ensure that every ANA token in supply can be sold back to the protocol at this floor price. But why stop there? The floor price for ANA also rises.

It rises automatically with demand for ANA and follows the price of ANA upward. Every time the floor ratchets up, the intrinsic value of ANA gets locked in forever. The more expensive ANA becomes, the higher the floor price becomes, and the greater amount of value gets permanently stored in each token.

We can do better than “digital gold”. After all, the price of physical gold has no bottom. When we make the market and liquidity itself algorithmic, we have an entirely new kind of asset that has truly guaranteed value. The price of ANA may go up and down, but it can only go down so far as its current floor allows.

2. Democratic Participation

One remarkable goal of crypto protocols is to be everlasting. They should continue to live long, healthy lives even if the founder disappears. After all, they are just code.

But the original creator is not infallible, and protocols need to adapt after inception to survive. It is not viable to freeze the code once, and never touch it again. The truth is that all major DeFi teams make changes to their programs, big and small, all the time. The founders must operate their business as businesspeople would, and it is an open secret that a great many attempts at decentralized governance turn out to be theater in practice.

There is another path. Nirvana’s governance is simple, deterministic, and mechanical – just like its market.

The first and most important step in liberating governance from central authority is zero “team allocation” of governance power. With Nirvana, everyone is on equal footing on Day 1. There are no governance tokens held back in insider wallets, put on vesting schedules, or pre-sold in dark OTC markets. Remember: when a team “airdrops” its governance token, but keeps 80% of the supply in reserve for its own stewardship, this is oligarchy, not democracy.

The second step is to embed the governance process in the automated, immutable code of the contract. The code itself is like a Constitution document for the protocol – it sets the rules for how governance functions and makes affects on the program. All that can happen is users participate in governance according to those indelible rules.

The method for governing Nirvana is simple. Every mutable parameter of the protocol is a number, and this number can be nudged in one direction or the other every week, according to a programmatic ballot. This elegant system gives full control over the token holders to steer the protocol gradually, without the need for any central committee with admin access. Nirvana gives control of the protocol to the rational, economic incentives of its participants. And by doing so, ensures that the protocol will endure, evolve, and adapt regardless of any one human’s involvement.

3. Endless Scale

DeFi broke down barriers. All you need is a connection to the internet in order to participate. But most, if not all, crypto assets buckle under the weight of massive adoption and ultimately break. They cannot truly scale as useful stores of value for hundreds of millions of individuals simply because too much of the supply is overly concentrated among those who got in early.

Concentration can be good for price, but it is bad for liquidity. The key to making an asset scalable is that it becomes more liquid as it becomes more valuable. The status quo among crypto assets is unfortunately the opposite. The common playbook for tokens is to restrain supply, and thereby reduce liquidity and increase volatility, in the hope of price appreciation. Needless to say, low liquidity cuts both ways. And the brief history of crypto markets has already experienced numerous liquidity crises where panic selling seemed like the only option.

The ANA token is paradigmatically different. It scales indefinitely, meaning there is no cap on supply, but it is also never printed out of thin air. Every ANA token exists strictly because someone paid for it. And when that someone bought it, they also increased its liquidity – that is, they extended the sell depth. With this one move, Nirvana turns the presumed negative relation between supply and price on its head.

The prevailing myth is that a greater supply implies a lower value, but with ANA its supply and its value are positively correlated. More ANA means more liquidity and value for ANA.

There is no cap on the supply for ANA because there is no cap on the value of ANA. These two properties are combined in the mathematics of the Nirvana market. ANA will become as plentiful and valuable as its holders want, and the floor price will rise at pace. But even if the circulating supply and price explode, illiquidity is not a problem ANA will ever face since the floor price is guaranteed for all tokens.

Panic selling is not rational in this system. And even if a spurt of irrational selling does occur, it will never move the price beneath its floor. There is no reason to rush to the exit.

Nirvana’s store of value is one that can be held securely by everyone because the market liquidity is maintained by no one. It scales automatically with adoption.

Vision: cryptonative Store of Value

Crypto ignited the imagination of a generation with its dream to produce an asset that is fair, open, and, in some real sense, permanent. Nirvana embodies this ideal by infusing cryptonative principles into every aspect of the protocol, including the price and liquidity of its asset. ANA is a “pure” cryptonative store of value. The market is cryptonative, the governance is cryptonative, and the scale is unlimited.

The protocol truly steers itself and the market truly makes itself because the only power that has influence over either comes from the organic, anonymous users that participate in them. The value that ANA accrues comes from genuine market demand, and the value that ANA stores is guaranteed by the protocol’s floor price.

By. Sid of Nirvana Finance

About Nirvana

Founded by a distributed team of DeFi veterans with deep roots in the Solana ecosystem, Nirvana is on a mission to redefine token markets and elevate the decentralized finance landscape. With the relaunch of Nirvana V2, the team reaffirms its commitment to building secure, transparent, and equitable financial systems for all.

This story was distributed under HackerNoon’s Business Blogging Program. Learn more about the program here.