Nuo 2020 DeFi Lending Rates 

BAT
BAT
0.04%1.38%
DAI
DAI
8.67%7.67%
ETH
ETH
0.36%0.41%
KNC
KNC
0.01%0.11%
LINK
LINK
0.25%0.82%
MKR
MKR
0.13%0.5%
REP
REP
0.3%0.29%
SAI
SAI
0%0.2%
SNX
SNX
0.06%0.1%
TUSD
TUSD
0.07%0.18%
USDC
USDC
12.17%11.66%
WBTC
WBTC
0.27%0.65%
ZRX
ZRX
5.37%5.58%

Nuo Network is a decentralized debt marketplace where users can interact with Ethereum-based assets in a number of ways.

Nuo’s lending product allows users to supply capital to a reserve pool and earn interest on a daily basis. With Nuo Borrow, users can over-collateralize their loans to trade on margin with up to 3x leverage. By leveraging meta transactions Nuo users do not need to pay for transaction fees after their initial deposit.

In April of 2020, Nuo added the Nuo Exchange – a gasless DEX allowing users to swap between any two ERC20 tokens with no transaction fees. 

Background

The India-based company is led by co-founders Varun Despande, Ratnesh Ray, and Siddharth Verma. Nuo was funded through the sale of equity led by Consensys Ventures with a $500,000 seed round. 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 including but not limited to InCrypt, Astarc Ventures and Singapore Angel Network.

How to Use Nuo

Nuo Network is a non-custodial meaning funds never leave the users’ wallet.

To create an account, users can either sign up using a traditional email address and password or connect a web 3 wallet, like Metamask or Coinbase Wallet.

When supplying capital to Nuo, 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 lending platforms like Compound where interest accrues 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.

We suspect this small vesting window is part of the reasons Nuo is able to offer such high returns on their lending product. 

Supported Assets & Margin Trading

Nuo currently supports 12 DeFi tokens including but not limited to ETH, USDC, DAI, WBTC and KNC along with a select few enabled for margin trading. 

Nuo also 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 is through insurance using Nexus Mutual. 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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