Prelude: The Terra Ecosystem

For those who don't know, the Terra Ecosystem is one of the most exciting integrated DeFi spaces out there. It all takes place in the same blockchain, and can integrate with virtually all others. You can earn 20% APY fixed rate on UST (stablecoin) by depositing on Anchor Protocol, trade or pool synthethic versions of stonks like Tesla or even other coins like ETH on Mirror Protocol. It has a launchpad in Pylon Protocol and a Mirror Yield optimizer in SPEC Protocol, not to mention its CHAI Dapp which allows for cheap and quick merchant payments. 

The entire network is based on the LUNA-UST pairing, in which the value of the UST (algorithmic stablecoin) is pegged to the dollar by burning and minting LUNA accordingly by arbitrage traders. UST is at the center of it all, and is used to pay for all transaction fees in all Terra protocols.

The April 2021 Doomsday $LUNA Crash

It was May 2021 and the cryptoverse was booming. A series of seemingly inconsequential FUD news brought crypto prices low enough to trigger a series of DeFi liquidations. Over-leveraged retail traders trying to pull an all-or-nothing crypto bet were REKT, compounding the dip in prices into a full-on price crash. 

Terra's native $LUNA token lost 75% of its value over that month, of which 40% occurred in a single day in April, as the conservative yet critical LVT ratio for $bLUNA in Anchor Protocol was reached, leading to a spiral of liquidations. Opportunist traders were making a fortune 'shorting' $bLUNA on TerraSwap.

Nexus Protocol: No more getting REKT

The DeFi space is new and the cool thing is that these crashes are helping it mature. Using volatile crypto as collateral to a loan is always risky business, but most of this risk can be minimized by using bots to prevent liquidation while maximizing yield gainz. 

Nexus Protocol is going to be revolutionary, allowing the commoner like you and me to do pro-style yield maximizing strategies while minimizing the risk of getting REKT. This medium article by the Nexus team explains it in detail so here I aim to provide a short summary:

Nexus Protocol: How it works, in a nutshell

Created by six Terra community members, it is currently under audit and will be released when the Colombus-5 upgrade comes out in late-September, all going well.

Nexus will use algorithms (bots) that can read the most up-to-date market prices (even before the Anchor Web App refreshes it), allowing it to dynamically manage your investment better than any pro-yield farmer ever could. 

Nexus lets you optimize both an Anchor borrow position (where you used your $LUNA or $stETH as collateral to borrow $UST) and an Anchor lend position (Where you received 20% APY $aUST for providing $UST).

The $bLUNA Vault - Loan Management

1) Avoid liquidation of collateralized $LUNA ($bLUNA) on Anchor Protocol (Terra's borrowing/lending protocol) by using Nexus to automatically sell part or all of your borrowed $UST before liquidation takes place. 

2) At the same time, Nexus maximizes yields by dynamically buying and selling $UST and $bLUNA/$stETH. Of course, the borrowed $UST does not sit there idle, but would instead be dynamically invested in yield maximizing strategies on Mirror Protocol.

3) And if you're an Anchor Protocol noob, it is worth knowing that you are rewarded in $ANC tokens when borrowing $UST using $LUNA or $stETH (staked ETH usable in Anchor using Lido Finance). Nexus goes ahead and optimizes the $ANC reward system by automatically claiming airdrops while dynamically using it to pay back part of the loan.

The $UST Vault - Deposit Optimization

Most of us are already stoked by our 20% APY on our Anchor $UST deposit. However, Nexus can take us a step ahead, and optimize our gainz by making $aUST (token representing the deposited $UST and its accrued interest) work even further on Mirror v2 which lets you use $aUST as collateral to short positions on mAssets (synthetic stocks, synthetic ETH, etc) which you can then use in Mirror Liquidity Pools (e.g. mTesla-$UST LP)

The Nexus bot (I like calling it a Probe, if you get the SC reference) then proceeds to dynamically manage the $aUST collateral by using the prices of the minted mAssets to manage the liquidity pool like a pro and avoid both liquidation of the $aUST and impermanent loss.

Pro DeFi Degens have been using these strategies to make crazy gainz for a while. Nexus will allow the commoner like you and me to do it better than the pros without giving up our 9-5 jobs.

How to get some $PSI tokens EARLY

I am obviously very bullish on Nexus Protocol, and so I am also bullish on the governance and fee token $PSI.

Instead of babbling about its tokenomics, which you can find here (10 billion will be vested over 4 years), I want to talk about how to get your hands on some $Psi tokens.

1) Stake $ANC in Anchor by buying it on TerraSwap or by borrowing some $UST using $LUNA or $stETH on Anchor. A snapshot will be taken sometime in September so it might be worth getting a bit in there.

2) There has been a delay in the Colombus-5 upgrade and with its release on Pylon Gateway (Terra's launchpad that let's you earn $PSI by locking $UST for a period of time, like the DOT parachains). But when its out, this is going to be a great opportunity to get it at a premium price.

3) Public sale on Star Terra, Terra's gamified launchpad, also coming soon. This method however requires KYC verification, as of lately.

To keep up-to-date with the release of Nexus Protocol follow them on twitter, I am definetely keeping a close eye on their public sale and $ANC airdrop. Hopefully the protocol will be release before the next crash to make sure no one gets REKT!

Also, you can access the full litepaper here.

Other articles by yours truly:

FOR TERRA FANS | Step-by-step: How to swap your BUSD, USDT or USDC into Terra UST

FOR TERRA FANS | $MINE Tokenomics | Bullish or Bearish...?

FOR TERRA FANS | Pylon Gateway Explained | + link to best resources

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Disclaimer:

Non of this contents or should be considered financial or investment advise. I am no financial advisor, I am merely a content writer using freely available data and information to produce the best OC I can come up with for educational purposes. Sources for the images displayed can be found in the references below.