Nolus: Bridging the Gap in DeFi with Interoperability Across Blockchain Chains

Ishan Pandey: Hi Kamen, I am delighted to welcome you to our "Behind the Startup" series. Can you tell us what inspired the concept behind Nolus?

Kamen Trendafilov: Hi Ishan, I am delighted for the opportunity to be here! Let me introduce you to Nolus. The design of Nolus was inspired by traditional lease products where one can obtain an asset by providing only a fraction of the cost upfront, use the asset throughout the lease period and receive full ownership once the loan is repaid back in full.

Applying a similar concept in the crypto space, Nolus created the DeFi Lease: a lending solution that unlocks the full potential of crypto money markets by reducing the industry's steep over-collateralization requirements. This results in significantly improved capital efficiency and more favorable lending options for borrowers.

Ishan Pandey: Could you explain the significance of Nolus' emphasis on interoperability and its ability to connect to various liquidity sources across different chains?

Kamen Trendafilov: Under the hood, Nolus utilizes a semi-permissioned PoS blockchain built using the Cosmos SDK and a CosmWasm smart contract platform. Nolus emphasizes interoperability, connecting to various liquidity sources across chains without fragmenting assets. The system can swiftly swap assets on any integrated DEX, streamlining lending by negating the need for multiple pools and ensuring liquidity providers handle only stable assets.

Ishan Pandey: How does Nolus navigate the complexities of the DeFi space, particularly in terms of regulatory compliance and building trust among users?

Kamen Trendafilov: Nolus is a non-custodial DeFi cross-chain money market. It ultimately defines a money market between lenders looking to earn real yield on deposited stablecoins and borrowers looking to amplify holdings with more assets than their current equity. And Nolus blockchain and smart contracts connect all participants in our ecosystem. Nolus is an open-sourced protocol with multiple audits and a high appetite for simplifying the complexity of DeFi and making it more accessible to a broader user base.

Ishan Pandey: How do you approach risk management, especially in ensuring a lower liquidation rate compared to other money markets?

Kamen Trendafilov: Nolus boasts lower liquidation terms compared to competitors courtesy of its unique design. In Nolus, the downpayment provided by the borrower and the loan in stables from liquidity providers both are used to purchase the desired digital asset. This represents three times more exposure compared to regular crypto lenders. Because both the down payment together with the loan are locked into a DeFi Lease position and act as collateral, borrower has larger exposure to the asset bu also lower margin call risk by 40% compared to other blockchain lenders.

During the amplified position with lower risk, the borrowers can utilize the assets within their active lease position in yield strategies whitelisted by the Protocol, basically creating self-repaying loans. For example, liquid staking derivatives will earn 20% APY which will create a margin of profits on the amplified position once interest is covered. The DeFi Lease comes at a never-changing interest rate and has no other related costs. Also, the price of the leveraged asset is fixed at the lease creation, thus any upside of the asset is for the borrower to keep.

In short, the borrower actually gets more exposure at lower risk in a fully decentralized manner, together with yield strategies and upside appreciation.

Ishan Pandey: Nolus aims to simplify and enhance cross-chain DeFi experiences. Could you share the near-term plans?

Kamen Trendafilov: Nolus aims at being inclusive for beginner DeFi users, as well as proficient and experienced ones. Ultimately, Nolus aims to simplify and enhance cross-chain DeFi experiences for everyone by becoming the one-stop-shop for your crypto transaction. In the pipeline we have DEX integrations (including EVM chains), asset listings, product expansion, tired staking system. We also aim at eliminating the user’s need to perform many transactions on different chains but rather use only Nolus to interact with different liquidity hubs and assets.

Ishan Pandey: Nolus is actively involved in the Cosmos ecosystem. How do you navigate the competitive landscape within Cosmos and position Nolus as a standout platform in comparison to competitors?

Kamen Trendafilov: We firmly believe that Nolus’ offerings are unique and Nolus is positioned to technologically and financially become a safe harbor during crypto market’s volatility. Nolus’ rapid growth is a testament to its unique selling propositions and user demand for safe and long-term investment opportunities. In the past 8 months after launch, a total of $50m of transactional volume have been processed with more than 50 thousand wallets interacting with the blockchain. DeFi leases exceed $25m in 25 different assets, while TVL currently stands at $5m. We are certain this is just the beginning of a long road for Nolus.

Ishan Pandey: With a focus on education, what strategies does Nolus plan to employ to simplify technical aspects for new users and position itself as a go-to solution within the Cosmos ecosystem?

Kamen Trendafilov: First of all, Nolus has carefully crafted a simple, easy-to-grasp UI that comes from best practices of traditional financial platforms. Everything on Nolus (including swaps, buys, lending, borrowing and staking) comes at a simple one-click step. We are also actively engaged in providing simplified and elaborate explanations of every single functionality of the protocol. The main goal here is to increase crypto adoption and usage though well-known web2 practices in the world of finance.

Ishan Pandey: How do you perceive the current challenges associated with the present bull run, such as increased market volatility and potential risks of liquidation, affecting the lending and borrowing market?

Kamen Trendafilov: As every cycle on the crypto and regular markets, the biggest inefficiency has always been the increased leverage we observe at the very top of the bull. Market volatility in the crypto market is set to decrease as we embrace more and more the technology and core capabilities of the network. Risk of liquidation, however, is always highest when we increase the leverage in the system. This is really where we position Nolus - our solution actually cuts down the DeFi sector's high over-collateralization standards, thus decreasing the levels of liquidations and protects borrowers from getting trimmed. Furthermore, Nolus has embedded a partial liquidation model (rather than full liquidation model), thus further protecting its borrowers. If a liquidation trigger is reached, a portion of the collateral will be sold to cover part of the debt and return the lease to a healthier level. But the beauty of it is that the position is still active and potentially can recover in time thus providing yet another safeguard to the borrower.

Ishan Pandey: How do you see the adoption of blockchain and DeFi transforming the traditional financial sector, and what challenges and opportunities do you anticipate in this process?

Kamen Trendafilov: Absolutely. It will be a long way to go, of course, but principles and methodologies in DeFi are already transforming different aspects of traditional finance operations. The blockchain technology connects people, wallets and institutions like nothing before and it will be more than widely used in many game-changing transformations we will encounter in the following years. The opportunity is obvious - large scale transactions, cross-border, cheap and simple; a one-click to reach any point of the world, for every service and product. The challenge lies in scaling securely and safely.

Ishan Pandey: In light of the increasing regulatory scrutiny in the crypto space, how does Nolus navigate compliance challenges and work towards ensuring a secure and regulatory-friendly environment for its users?

Kamen Trendafilov: Regulations and scrutiny are absolutely essential for mass adoption in the crypto space. As a governance appchain, Nolus is entirely committed to embracing all regulatory developments to follow. We actually welcome such because with regulations comes further growth and prosperity in the space.

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