Nyan.finance and the importance of Decentralized funds management
What is a decentralized Hedge Fund?
Traditional Hedge Funds require investors to have both a minimum amount of funds ready to deploy and charge an average of 20% for funds management. These prohibitive measures lock out smaller traders.
Through the use of Decentralized Finance, individual traders of various sizes can actively take part in a group managed pool with NYAN being used as the means of voting. By allowing NYAN holders to vote within specific block periods, they can essentially set new strategies on a minute by minute basis. Paired with yield farming strategies, these holders could selectively move into markets with higher yields or aggressively purchase tokens that are expected to grow in value.
The NYAN/NIP yield loop
NYAN is the limited supply token that’s used to mint Catnip and vote on ecosystem governance. Catnip(NIP) is the token that is used as the liquidity to move in and out of markets. As a pseudo Hedge Fund, the overall goal is to deliver yields that come from the funding pools. These yields will be delivered through a swap back to Catnip from the purchased asset. However, in order to ensure that NIP can maintain its value through the process, only individuals providing liquidity within an NIP/ETH pool on the Nyan website, or holding Nyan, will be compensated with the NIP bought back.
This increase in available liquidity will keep NIP price stable and keep buying pressure up as more individuals attempt to purchase NIP in order to have a role in voting alongside NYAN.
- NYAN is staked on the Catnip contract in order to mint more Catnip. The rewards release rate can be adjusted to meet market demand. Keeping the minting rate low will help keep the sell pressure low as the market for NIP grows.
- The NIP funding pool is voted on through holding NYAN. Voting occurs through a bidding process where users vote on the functions that the Voting smart contract will execute. Specific parameters can be included to allow for granular control of the fund. This will allow the Fund to be able to split between multiple investments. The voting process occurs over a number of blocks and automatically executes the parameters with the highest bid(NYAN votes).
- Voters can begin voting immediately after a successful previous vote. If they choose to withdraw funds from an asset, it is sold to purchase NIP and that NIP is proportionally distributed to liquidity holders in the pool.
This format creates the opportunity for voters to act as aggressive or passive as they please. As NYAN staking continues to mint NIP, pool funds can be split into a basket of assets with different yield rates all generating towards one goal. Voters may even chose to send all, or a portion of, funds to an extended contract or protocol developed by community members. These extensions could either interact with the main NYAN ecosystem or branch into a new burgeoning ecosystem; where NIP liquidity holders immediately hold a stake.
Thinking with modularity
In order for NYAN to become a truly robust yield farming network, many additional modules will have to be introduced over time to establish the NYAN ecosystem as a standard in Defi yield farming. The community should have no problem with branching out into separate strategies with specific contracts that handle specific functions. For better structure, a NYAN contract standard can be introduced to help community members discern whether an extended contract is safe. As a caveat, this does not limit where and to whom the voters may send funds to.
We believe that NYAN, along with other Defi products, represent a new era of financial applications that help users put their money to work, with or without direct management.
