Nuo Network

Ranked #7 on DeFi pulse, Nuo is beginning to attract more value to its marketplace since its launch in early 2019. The platform has garnered around $14.5M in total value locked (TVL) as of writing with its all-time high hitting nearly $20M back in July of 2019.

Nuo Lending Rates

BAT
BAT
0.1%0.05%
DAI
DAI
3.83%4.73%
ETH
ETH
0.88%0.45%
KNC
KNC
0.01%0.01%
LINK
LINK
0.29%1.52%
MKR
MKR
0.04%0.03%
REP
REP
0.04%0.03%
SAI
SAI
3.77%3.77%
SNX
SNX
11.21%5.21%
TUSD
TUSD
2.58%2.76%
USDC
USDC
5.98%7.28%
WBTC
WBTC
2.98%3.71%
ZRX
ZRX
0.14%0.18%

Nuo Network is a decentralized debt marketplace where users can instantly borrow or lend Ether and other ERC-20 tokens on a global scale. Lenders can supply tokens to the reserve pool and earn interest paid out on a daily basis. When it comes to borrowing, Nuo also allows users to over-collateralize their loans which can be withdrawn from the platform or under-collateralized a loan that can be used to margin trade with upwards of 3x leverage. Moreover, with the usage of smart contract accounts, Nuo leverages meta transactions to allow users to easily access the network without ever having to pay for transaction fees.

The DeFi lending platform is powered by debt reserves where users can pool funds to be lent out to borrowers based on their loan requests (i.e. interest rates or term lengths).  Once a lender contributes capital to the debt reserve, they begin earning interest on a daily basis. When the user cancels the debt reserve, the entire reserve balance amount and the interest they earned are automatically transferred from the Nuo reserve contract to the user’s trading account.

Background

The team is based in India and is led by co-founders Varun Despande, Ratnesh Ray, and Siddharth Verma. Nuo does not have a native token and therefore, did not conduct an ICO or raise capital through a tokenized vehicle. Instead, Nuo went the traditional equity route and is largely backed by Consensys Ventures with a $500,000 seed. The company has also received backing from a handful of other early-stage venture funds and angels from India and other parts of Southeast Asia. This list includes:

  • InCrypt
  • Astarc Ventures
  • Singapore Angel Network
  • Amrish Rau (CEO, Payu)
  • Jitendra Gupta (MD, Payu)
  • Sanjay Mehta (Mehta Ventures)
  • Venu Palaparthi (Ex-VP, Nasdaq)
  • Rajesh Chelaurath (MD, Ceera)
  • Prashant Malik (Co-creator, Apache Cassandra)

How to Use Nuo

Nuo Network is a non-custodial lending platform as all user funds are locked in smart contract-based accounts without the team having any direct control or access to the funds. Smart contract accounts give users control over their ETH and ERC20 tokens while leveraging the use of meta transactions and other accessibility features to provide the best possible UX.

To create a Nuo smart contract account, users can go about it in two ways. The first is through a traditional email address and password sign up while the second is through a web 3.0 wallet, like Metamask. Users who choose to create an account from a web 3.0 wallet will directly control the login and access funds through that wallet. From there, users can deposit funds from their favorite crypto exchange, through other wallets or even add funds directly by using a U.S. debit card.

Once an account is loaded with funds, users can choose between any of the crypto assets they offer. After selecting the desired crypto asset, the platform creates a debt reserve where lenders begin to earn interest based on the daily loan repayments of the asset’s reserve pool. Unlike other decentralized lending platforms that accrue interest in real-time, lenders on Nuo start receiving interest after 2 days of the collateral being locked starting at 00:00 GMT, and interest will be distributed on a daily basis every day following.

Supported Assets & Rates

As it stands today, the platform offers 11 crypto assets to borrow and lend from along with a select few enabled for margin trading. The assets and their respective rates are listed below.

Supported Assets for Margin Trading

Nuo currently supports margin trades across limited ETH and DAI markets. The pairs currently available for long and short margin trades with up to 3x leverage includes:

  • ETH/DAI
  • WBTC/DAI
  • MKR/DAI
  • WBTC/ETH
  • MKR/ETH

Risks Associated with Nuo and DeFi Lending

In traditional terms, there is little counter-party risk associated with lending using Nuo smart contracts as every loan is collateralized and there’s little risk for default. However, there are two main risks associated with lending on Nuo and DeFi at large: (1) smart contract risk and (2) price flash crashes or surges.

Smart contract risk represents the potential for loopholes, bugs and other vulnerabilities in the code’s logic. This risk can be mitigated by ensuring that smart contracts are secure through audits and following industry best practices. For Nuo, all smart contracts have been audited by Quantstamp, a global smart-contract security, and auditing firm.

Extreme price volatility is the other major risk associated with DeFi lending. Flash crashes and price surges can trigger network mechanisms like loan liquidations or rebalances which can be a detriment to users. These are largely mitigated by having a robust set of price oracles.  Oracles are one of the backbones behind DeFi as they provide secure and stable price feeds tied to collateralization ratios in almost every lending platform.

One of the major ways to mitigate your risks when lending on Nuo and DeFi is through insurance covers on the platform’s underlying smart contracts. This can mostly be done through Nexus Mutual and a few other protocols. The Nuo team has also proposed an insurance fund where lenders can protect themselves against these risks by allocating a portion of their interest to the fund.

 

Other Drawbacks and Concerns

While Nuo has garnered millions in transaction volume over the past few months, there’s no whitepaper and little documentation on how the platform works. However, like other DeFi platforms, the code is open-sourced and verifiable by anyone. If you’re looking to dig into the code it’s available here but for those of you interested in learning about the nuances behind Nuo, you’ll have to rely on their FAQ.

The other looming concern surrounds some of the critiques from community members on Reddit who experienced unusual liquidations when using Nuo’s margin trading services.

The post may provide evidence that Nuo has some degree of control over the smart contract accounts and the liquidations. This comes as no surprise as more and more projects have shown to have some centralized features and mechanisms for the developers to take the reigns in the case of a malicious attack or other bugs in the smart contracts. However, these mechanisms can obviously be used to attack the users if the team has any sort of malicious intent and users should be cautious when storing large amounts of capital on the platform.

Summary

With lending coming to the forefront of the DeFi narrative, Nuo Network has seen a surge of growth over the past few months. Its ability to offer margin trading and traditional borrowing on the platform in tandem with its usage of smart contract accounts has put Nuo in a great position to capture a slice of the market. As the platform continues to mature, it will be interesting to see how it handles higher volumes and if any other concerns arise with the false liquidations.

For those interested in keeping up to date with Nuo’s developments, the best ways are through their Telegram, Twitter and Medium accounts. If you’re interested in having DeFi Rate complete a review of your platform, feel free to contact us!

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