nuMoney Synthetics
Decentralized, yield-bearing synthetics with zero-slippage trading
Last updated
Decentralized, yield-bearing synthetics with zero-slippage trading
Last updated
nuMoney is the name given to any of the synthetic assets minted via the numa protocol. Users burn $NUMA tokens in order to mint their chosen nuMoney asset, such as $nuUSD or $nuBTC or $nuGOLD. The value is transferred 1:1 or dollar-for-dollar, based on the present market price of $NUMA and the price feed of the synthetic asset. Burning $NUMA to mint nuMoney incurs a 0.25% fee: 0.1% is burned and 0.15% is sent to the treasury.
For example, if a user wants to mint $500 worth of $nuUSD, they will burn $500 worth of $NUMA tokens at the present price. After some time, the same user can burn their $500 worth of $nuUSD for $500 worth of $NUMA at a future price.
When $NUMA tokens are converted to nuMoney, the present value of burned $NUMA is stored in the minted nuMoney assets. If the value of ETH in the vault outperforms the aggregate value of minted synthetics over time, then the price of $NUMA will increase, and fewer $NUMA will be minted in the future if/when those nuMoney assets are converted back to $NUMA. Likewise, if the value of nuMoney outperforms ETH, then $NUMA price will have decreased and more $NUMA will be minted than was originally burned if/when the nuMoney assets are converted back to $NUMA. In this way, the supply and price of $NUMA always adapts to the relative performance of the rETH vault and the value of synthethics issued.
nuMoney synthetics are issued as standard ERC-20 tokens on the Arbitrum blockchain. As such, they are fully composable and fungible assets and can be incorporated into any protocol that employs the ERC-20 standard. The initial assets available at protocol launch will be $nuUSD (USD), $nuBTC (Bitcoin), $nuETH (Ethereum), and $nuGOLD (Gold). In the future, there will be a myriad of nuMoney, which will be released according to the needs of our partners and in consultation with the numa community. Any asset with a reputable on-chain price feed can be offered as nuMoney.
In contrast to other issued collateralized debt positions (CDP), nuMoney synthethics cannot be liquidated, and require no explicit over-collateralization from user to mint. The overcollateralization is inherent to the system and represented by the vault price of the circulating $NUMA tokens. In a sense, holders of $NUMA tokens are taking a counter-party position to nuMoney holders: as such, holders are exposed to a leveraged long ETH position with respect to the aggregate pricing fluctuation of issued nuMoney.
Initially, the primary focus for nuMoney will be fiat currencies and commodities, to demonstrate numa's market-leading efficiency for bringing real-world assets onto the blockchain. Any commodity, or even bonds and equities may be supported in the future, so long as they have a robust on-chain pricing oracle. nuMoney are initially minted and pegged to the price of publicly-traded assets—such as USD, BTC, or Gold—via a Chainlink oracle that provides a price feed. Price pegs are maintained through a combination of transparent proof-of-reserves and arbitrage.
nuMoney can be single-staked to earn sustainable, real yield—as a structural part of the protocol. Our rETH vault allows the protocol to award real yield on assets that wouldn't normally earn yield, such as commodities. nuMoney can also be swapped for other nuMoney synthetics with zero-slippage, such as $nuUSD to $nuBTC.
To exit nuMoney positions, users can either sell their tokens into an LP or they can burn their nuMoney and mint $NUMA. Burning nuMoney to mint $NUMA incurs a 0.25% fee: 0.1% is burned and 0.15% is sent to the treasury.
As noted, the protocol mints nuMoney at a 1:1 ratio, so that $500 of $NUMA burned will mint $500 of $nuUSD, minus the 0.25% fee. To protect against exploits and maintain the integrity of the system, the protocol employs the following formulas to determine the value of $NUMA that will be used at the time of minting or burning nuMoney. The LP15minPrice and LP30minPrice incorporate $NUMA TWAP LP prices at the noted intervals, while the buy price and sell price refer to the current mint and burn price of the vault. maxSpotOffsetPct is 1.45%, which represents the estimated natural peg variance caused by sequential fees involved in the arbitrage required.
Example:
Let's say a user wants to mint $500 worth of $nuUSD. Using the formula above, we insert some values: Min ($0.90, $0.81, $0.83, $0.82). We take the lowest of these prices ($0.81) and multiply it by (1+0.0145) and use this to mint $nuUSD. This would treat $NUMA as being worth $0.821745: so, in order to mint $500 worth of $nuUSD, the user must supply approximately 608.5 $NUMA tokens.
