Key Features & Benefits
How we are trying to innovate within DeFi
Last updated
How we are trying to innovate within DeFi
Last updated
Credit managers can deploy customized investment nodes without needing approval from a central authority. This opens access to advanced financial strategies for a broader audience. The node manages all user deposits and withdrawals on behalf of the manager.
NashPoint Nodes offer flexibility in asset allocation. Managers can precisely define their investment strategies, setting target weightings for various assets, maximum deviations from these targets, and rebalancing parameters. This adaptability enables the creation of diverse investment products tailored to specific market conditions or investor preferences.
Managers can upgrade their nodes by adding new modules. This provides enhanced capabilities and allows NashPoint to evolve alongside the on-chain credit ecosystem, while maintaining a secure core. Initial modules will support ERC-4626 vaults and ERC-7540 asynchronous vaults. Future modules will enable cross-chain lending, RWA integrations, volatile asset custody, and rehypothecation. Each module is optional, and all new modules must be whitelisted by NashPoint. In the future, governance will allow anyone to propose and build modules for the protocol.
In the real economy, intermediaries like banks solve duration mismatches by matching borrowers with different loan terms to lenders with varying liquidity needs. NashPoint brings this function on-chain, allowing managers to allocate capital to both short and long-term borrowers through smart contracts and automation. This gives managers the tools to execute risk-managed strategies on the behalf of their users and enhances liquidity in the on-chain ecosystem. Managers set the strategy rules, while NashPoint’s automation handles all transactions for investing, rebalancing, and processing user redemption requests.
NashPoint’s design leverages network effects to increase aggregate liquidity as more nodes join. This benefits participants through:
Capital Efficiency: Combined liquidity allows for more efficient capital use and risk management.
Improved Execution: Larger liquidity pools lead to better pricing and reduced slippage.
Diversification: A growing network offers a wider range of investment opportunities.
NashPoint uses the ERC-7540 standard for asynchronous withdrawals, improving liquidity management and handling illiquid assets more efficiently. Deposits are handled using ERC-4626.
Managers may use a swing pricing algorithm to optimize liquidity and protect long-term investors. This mechanism adjusts token share prices during deposits and withdrawals based on the current cash reserve ratio. By doing so, it discourages speculative withdrawals during market stress and incentivizes deposits when liquidity is low. The swing pricing factor is calculated with an exponential function that accounts for deviations from the target cash reserve, allowing for fine-tuned adjustments to ensure optimal performance.
Unlike traditional mutual funds with a threshold-based approach, NashPoint’s swing pricing is applied continuously for fair and transparent pricing at all times. During normal conditions, the impact is minimal, but as cash reserves deplete, the algorithm scales exponentially, passing transaction costs to withdrawing shareholders. These fees cover any costs to withdraw from underlying loans, and any surplus is distributed pro-rata to vault holders, rewarding long-term investments. This dynamic pricing model protects the protocol against potential "bank runs" and creates arbitrage opportunities that contribute to the ecosystem’s overall stability.
