How It Works
nYUSD has several essential properties:
100% Backed and Stable
1:1 backed by other proven stablecoins Centralized and Decentralized stablecoins (DAI, USDC, USDT, UST, TUSD, BUSD, USDP, FEI, USDN, FRAX, & HUSD)
Generates yield by deploying the underlying assets to a diversified set of DeFi protocols, included on NEPRIV which is based on a fluctuations derivatives protocol for hedging yield sensitivity and market price.
Elastic supply constantly distributes additional units of nYUSD to holders
100% open-source, on-chain, and permissionless
Users will convert their existing Centralized and Decentralized stablecoins (DAI, USDC, USDT, UST, TUSD, BUSD, USDP, FEI, USDN, FRAX, & HUSD)) to nYUSD at the official NEPRI nYUSD DApp. Issued nYUSD begins accruing compounding yield immediately.
Users will convert their nYUSD back into other stablecoins at any time using the NEPRI nYUSD DApp. A 0.5% exit fee is charged upon redemption and is distributed as additional yield to the remaining participants in the vault. The fee serves as a security feature to make it difficult for attackers to take advantage of lagging oracles, preventing them from syphoning stablecoins from the vault in the event of mispricings of the underlying assets. The fee will exist to incentivize long-term holders over short-term speculators.
Upon redemption, the smart contract will determine which stablecoin(s) to return to the user. In the current implementation, the vault will return coins in the same ratio as the current holdings. This lack of user optionality also protects the vault as a whole in the event that any of the supported stablecoins loses its peg to the dollar.
nYUSD will generate yields by deploying the underlying stablecoins that were deposited to the nYUSD smart contract to other DeFi protocols such as Compound, Aave, Uniswap, Balancer, and Curve. It is expected there will be new diversified strategies added to the vault every month. Collected interest, trading fees, and rewards tokens are pooled and converted to stablecoins to produce nYUSD-denominated yields. Over time, the protocol will move assets in and out of different liquidity pools in order to provide the best yield to the holders of nYUSD.
The generated returns will be passed on to the holders of nYUSD via constant rebasing of the money supply. nYUSD will constantly adjust the money supply in response to the yield the protocol has generated. This will allow the price of nYUSD to stay pegged at $1 while the balances in token holders' wallets adjust in real-time to reflect yields that have been earned by the protocol.
The end result is a stablecoin that is easy to spend, earns outsized yields automatically, and is more desirable to hold than existing stablecoins.