NAOS Finance- A Key Project to Promote the Blockchain Industry
Introduction:
As a VC focusing on blockchain, we believe that the future blockchain investment hot points will be carried out in the following three aspects:
- Better development of blockchain infrastructures
- More fluent ways to record assets on blockchain
- More applications to wildly delploy on blockchain
The better infrastructure means the evolvement of blockchain technology, such as the creation of Bitcoin and Ethereum, and the emergence of other major public chains. While the fluent way of recording and the application on blockchain mentioned in the second and third points means the development of blockchain native assets and applications. From the perspective of blockchain assets, the technical layer is of great importance.The applications are more important than that. For example, Bitcoin itself is not a very advanced technology. Since it has broken through the limitations of traditional fait-money and centralized assets, it has not only become a new technology, but also integrates finance and community governance. Bitcoin itself is the first application as well as a key project in the blockchain industry. Without Bitcoin, there would be no such word as blockchain and blockchain industry. In this way, Bitcoin is groundbreaking.
With the formation and continuous development of the blockchain industry, driven by DeFi, NFT and other fields, Bitcoin and Ethereum have become the industry’s interest-bearing assets and are widely used and exchanged. The global market value of crypto assets has reached $2.92 trillion. DeFi is growing amazingly, which TVL (Total Value Locked) has reached $267.87 billion. At present, the scale of real assets is huge. If real assets are introduced into the blockchain, the blockchain industry will usher embrace new opportunities and harvest new growth and projects.
The way of recording assets on blockchain connects both the blockchain and the real world. This process is also an inevitable track to inject assets into the blockchain industry. With the rise of DeFi mortgage lending protocols such as Compound and AAVE, the gradual improvement of blockchain infrastructure, and the continued prosperity of DeFi and NFT fields, it is a suitable time point and opportunity for us to introduce real assets into the blockchain industry has arrived. At present, global DeFi users are probably less than 1%, so the introduction of real-world assets is expected to greatly expand the applications on blockchain. If we expand DeFi users, we can truly break through limitations. We believe that the introduction of real-world assets will be the next growth for the blockchain industry.
After our investment research and selection, NAOS Finance, makes itself stand out from massive projects that try to put real assets on blockchain. It is one of the most potential projects to realize assets recording on blockchain according to the industry development status.
About NAOS FINANCE
NAOS Finance is a decentralized lending protocol for real assets. It introduces high-quality real assets with stable cash flow into DeFi lending as collateral. At the same time, it uses the decentralization of crypto assets. It is global circulation without any permission. Real-world companies from all over the world provide flexible and convenient funds to realize the rebalancing between global capital risks and returns.
Team background
Founding team of NAOS Finance consisted of people with ability who have rich experience in corporate finance, strategic consulting, venture capital investment, blockchain development, and technology research.
Kevin Tseng, the founder, whose background mainly is investment and Internet finance. He started his career in Merrill Lynch’s investment banking department. After that, he worked in Walt Disney and Alibaba and was responsible for strategic investment. He served as the Partner and Head of Southeast Asia in the Venture Capital Department of Fosun Group. He was in Groupon and managed business in China. After Groupon was acquired by Tencent, he founded Foodpanda, a company acquired by Delivery Hero in Germany and founded Zalora which was acquired by Thailand Central Group.
The technical staff and marketing staff of the team come from companies such as ThunderCore, HTC, CoinTiger, etc., and have many years of work experience in the blockchain industry. For example, Wesley Liu, who is responsible for smart contracts at NAOS, has a deep research on smart contracts, privacy protection, data sharing and other fields. He holds patents related to smart contracts and has published books on privacy protection and data sharing. In addition, the team also has co-founders from Origin Protocol, such as Josh Fraser and Matt Liu, who serve as an advisor for NAOS
In addition to the track of the NAOS project, we also like the NAOS team, because the team is the key to success. We understand that after more than 3 years of accumulation, Kevin and some other team members have accumulated 300 million US dollars in real assets. Therefore, NAOS is currently one of the teams most likely to introduce large-scale real assets into the DeFi lending field.
NAOS Protocol
The NAOS protocol consists of two sub-protocols, Formation and Galaxy. Liquidity protocol Formation refers to the funds side of the entire lending process, which is mainly used to absorb funds from the DeFi side. While lending protocol Galaxy refers to the borrowing side in the lending process, which is used to connect real assets. Real-world borrowing companies mortgage real assets and tokenize them to guarantee the price of NFT. After that, the funds in the Galaxy fund pool were lent out, and interest was repaid regularly.
Formation
The Formation protocol was launched in July this year. Here is the website. — — app.naos.finance
Formation takes “deposit-taking” as its main purpose, and motivates users to deposit stable coins with liquidity rewards. After users deposit stable tokens, they can also mint the synthetic asset nUSD, whose value is 50% of the value of stable coins. nUSD can earn liquidity income within the Formation protocol, and is anchored 1:1 to stable coins supported by the system.The Formation protocol is cleverly designed, and its concept is similar to providing leverage for users to deposit stable coins. This allows users to obtain stable coins’ investment income that exceeds the market average level. As of November 17, the APR of Formation’s stable currency pool is probably above 40%
Such a competitive APR shows Formation’s super ability of deposit-taking. The source of funds problem is solved. So how does NAOS put assets record on the blockchain?
Galaxy
Galaxy, which simulates the lending protocol of traditional banks and introduces real assets, is the core of recording real world assets (RWA) on the blockchain.
Galaxy is divided into real asset lending pool Alpha Pool and insurance pool Beta Pool. The borrower in Alpha Pool lends the funds in Alpha Pool, mortgages real assets, and tokenizes them to guarantee the value of NFT.
DeFi users who inject stable coins into Alpha Pool can not only get interests backed by real asset cash flow, but also get additional NAOS rewards. DeFi users can also put the minted synthetic asset nUSD into the Beta Pool to provide insurance support for Alpha Pool investors in the event of a real asset default. If no default occurs, Beta Pool investors can obtain higher returns than Alpha Pool.
The two sub-protocols of NAOS operate interactively, which can provide more secure, robust and competitive stable coin investment income than other DeFi protocols.
1.1 Regarding the allocation of Formation funds, part of it will be used to obtain Yearn interest, and the other part will be used to invest in actual assets of Treasury under the NAOS agreement. These fixed incomes have extremely high security. 1.2 Users can also use the synthetic nUSD to gain high returns from the Beta Pool. Even if the borrower of the real asset defaults, the user’s nUSD invested in the Beta pool is used for insurance the payment, and the stable coin stored in the Formation is still safe. The system can automatically repay nUSD debts with gradually accumulated interest.
Galaxy’s testnet has been closed, and its contract is under audit. It is expected to be officially launched at the end of November or early December.
Types of assets that can be recorded on the blockchain:
Because Real World Assets are mostly non-standard assets, NAOS supports recording assets with high liquidity, including corporate loans and supply chain financial assets. The denominations of these assets will not fluctuate and have the characteristics of stable cash flow. NAOS first tokenize these RWS into NFTs, and then simulates the lending process of banks to obtain liquidity through mortgages.
Mortgage/Liquidation
1.2 NAOS has established a management mechanism in which the real assets mortgaged are managed by an independent trustee or Special Purpose Vehicle. When the default amount reaches a certain percentage, the trustee or the independent committee of the SPV organization will start liquidation, which will not affect the NAOS protocol and the borrowers.
NAOS Token Economics
the Maximum Supply：300M tokens，among which：
· 30% for Liquidity Incentive
· 25% for Ecosystem Growth
· 23% for Team and Advisors
· 22% for Private and Public Sales
Governance
NAOS also plans to give the community governance rights and allow the community to participate in decision-making, including recording assets to the blockchain mountain, interest rate setting, the incentive structure of the borrowing pool, and the product design.
Product progress
The Formation protocol has been developed and officially launched in July this year. The liquidity pool based on ETH and BSC has also been launched.
The Galaxy Protocol Testnet was launched in September this year. The team has completed the community beta and is now waiting for the contract audit results. Galaxy is expected to be officially launched at the end of November or early December this year. The official launch of Galaxy indicates that NAOS’s channel to link real-world assets is officially open. It will embark on a new journey, embracing the real world market with trillions of assets.
Analysis of Competitors
Both NAOS and Centrifuge are exploring the introduction of physical assets into the DeFi lending market, so that assets can be recorded in blockchain and other blockchain start-up projects.
Centrifuge Inc. was established in 2017 and is a FinTech start-up in Berlin, aiming at build a 21st century financial supply chain infrastructure. The Centrifuge P2P protocol is the underlying infrastructure of Tinlake. The team built a set of smart contracts based on Centrifuge OS. Tinlake uses the non-fungible token NFT asset pool to connect the partners, operators, investors and users of Centrifuge’s global financial supply chain in the open market. NFT is an on-chain manifestation of non-fungible assets under the chain, covering royalties, invoices, warehouse receipts, mortgages, etc., and can be pledged in DeFi loan agreements or sent to investors as collateral to obtain stability such as DAI Currency as the medium of financing.
Galaxy and Centrifuge in the NAOS protocol have the same effect. They both realize assets on the chain by turning real assets into NFTs. The difference is that Centrifuge is more like a middleman, through cooperation with funding partners, their funds are docked and loaned to real-world borrowers. NAOS has its own liquidity protocol Formation, which means it has its own source of funds. NAOS’s Formation+Galaxy two sub-protocols can realize the complete lending process, which is based on real asset mortgages.
One of the main reasons for our investment in NAOS is that the project team can directly connect with traditional companies and borrowers off the chain. With years of business accumulation, the project team has already nearly 300 million U.S. dollars on the asset side. Therefore, NAOS may have become the largest project in terms of real assets on the chain. The real assets provided by NAOS have stable interest income. The characteristic of stable value can well solve the stability issue of TVL. Benefiting from the stable prices of physical assets and diversified mortgage assets, the pressure of collateral liquidation on the crypto asset market will also be reduced.
NAOS has obtained financial licenses in many countries and regions, complies with regulatory requirements and launches related businesses. For a long time in the future, for other traditional industries and pure DeFi projects that want to enter the DeFi field, the license is an insurmountable gap in the field of real assets:
It is generally difficult for traditional companies to take over anonymous DeFi projects, because this requires an institution with a financial license or a third party to do the endorsement. Pure DeFi projects require cooperation and access to real assets, which means that different agreements are required in different countries and regions. As far as we know, it usually takes 1–2 years to obtain a financial license in Southeast Asia. Since 2019, many countries and regions have tightened or even stopped the issue of financial licenses.
In terms of recording real assets on the blockchain, we are more optimistic about the competitiveness and potential of NAOS, not only because of its stable assets that can be recorded on the blockchain, but also because of its financial licenses.
The future of NAOS
The NAOS protocol has already three functions, including liquidity, lending and insurance. The team is currently working with MakerDao and dForce, the project parties of the lending protocol, Chainlink, the oracle provider, Tidal, the insurance provider, EthSign, the on-chain contract auditor, IOT data provider IoTe, and other DeFi projects to cooperate to build DeFi infrastructure as well as to realize the recording of real assets on chain.
The development of this protocol will start with the lending business, combined with the non-financial data provided by IoTex, and finally create a a completely decentralized credit rating system. In this way, the lending process that links mortgage and credit can support the recording of decentralized assets on blockchain.
Investment institutions
Waterdrip Capital participated in the early investment of NAOS. Other investors include Coinbase Ventures, Huobi Ventures, OKEx Blockdream Ventures, MXC, Mechanism Capital, etc.
Notice: Waterdrip Capital participated in the early investment of NAOS. This article for reference only, no financal advice.
About us:
Waterdrip Capital is venture capital founded in 2017 by a group of forward thinking blockchain pioneers. We aim to invest in the most potential blockchain startups, to empower them with multiple resources and to build future-oriented distributed world together.
Website: http://www.waterdrip.io/
Twitter: https://twitter.com/waterdripfund
Linkedin: https://www.linkedin.com/company/waterdrip-capital
