Simplifying DeFi Lending with Cross-Chain Functionality: X Spaces with Nolus Protocol

Trendafilov believes that the market’s potential is limited by the excess amount of locked collateral, as it wastes capital that could be used to minimize counterparty risk.

He also noted that many DeFi solutions rely on variable interest rates, which can fluctuate wildly. “The inefficiencies we see in the market are quite simple, especially in lending,” he said. “You have a lot of overcollateralization, a high risk of liquidation, and you don’t own the assets of these derivatives,” he added.

Cointelegraph Accelerator participant Nolus, through its cross-chain leasing protocol, aims to solve these problems by offering a unique approach to borrowing and ownership through its flagship product, DeFi Lease. Launched in June 2023, the protocol has passed two independent security audits and has processed over $60 million in transactions through its Earn and Lease features, as well as $23 million in locked value from DeFi leases.

Nolus’ DeFi Lease runs on a blockchain network, connecting lenders and borrowers in one DeFi marketplace. Inspired by traditional leasing schemes, DeFi Lease allows users to receive up to 150% funding on their initial investment. Borrowers receive full ownership of the underlying asset from the start when they repay the loan.

One of the key benefits of DeFi Lease is the reduction of liquidation risk, which is a major concern for leveraged traders. The mechanism works like this: borrowers make a payment in any currency and receive up to 150% additional capital in stablecoins from lenders. This combined amount is then used to purchase the desired asset. Notably, both the down payment and the loan are used as collateral, which significantly increases the buffer compared to traditional DeFi lending models.

Nolus also uses a partial liquidation strategy. If a liquidation becomes necessary, only a portion of the asset is sold, giving the borrower additional time to recover the price and preventing the total loss of the asset.

Unlike other platforms, Nolus does not need to create its own liquidity pools for swaps. Instead, it uses existing DEX liquidity through IBC technology and cross-chain accounts.

“We are a native blockchain based on Cosmos, like Osmosis and Neutron. Nolus is connected to these two networks and uses their most liquid DEXs, such as Osmosis DEX on Osmosis and Astroport on Neutron,” Trendafilov explained, “and anything that has sufficient liquidity in these pools can be used by the Nolus protocol.” This eliminates the need to manage your own liquidity and allows you to offer a wider range of assets for borrowing.

Another unique feature of the platform is its cash-based model. “Anything paid in cash by the borrower, including the interest they pay, is immediately received by the lender,” the speaker said. As a result, lenders are assured of a direct return on their investment, rather than relying on theoretical interest rates.

Notably, Nolus also offers integration with liquid staking derivatives, allowing users to earn rewards on staked assets to offset the cost of borrowing. To maintain a healthy balance between supply and demand, Nolus limits the amount of liquidity lenders can provide.

“We keep everything below 65% utilization locked,” Trendafilov said. This approach is aimed at preventing situations where borrowers lack liquidity while ensuring that lenders receive interest steadily.

In addition, lenders are rewarded in NLS, the native token of the Nolus blockchain. These tokens not only serve to pay gas fees within the Nolus ecosystem, but also unlock additional benefits.

Looking ahead, the project’s roadmap is full of exciting developments. “In the short term, we are adding new asset listings and upgrading our blockchain to the latest version,” Trendafilov said. “Then we plan to create sell positions, not just offer buy positions. We have strategies in place to allow the asset to be used within DeFi leases. In the long term, the most important thing is probably cross-chain scaling and integration with the EVM ecosystem.”