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Risk-free borrowing & leverage

Nirvana includes a built-in lending module that generates the synthetic stablecoin: NIRV. Each NIRV token is fully collateralized by deposited ANA and has its value hard-pegged to a backing asset in the Nirvana reserves (e.g. USDC). All NIRV loans are issued with 0% interest and carry no risk of liquidation for the ANA collateral. This is possible because ANA has a guaranteed minimum floor price. The amount of NIRV that can be borrowed against ANA is strictly limited to the floor value of the ANA collateral. Since ANA will never drop below its floor price, the NIRV loans remain fully backed at all times. As the floor value of ANA rises, a user is able to borrow more NIRV for the same amount of collateralized ANA. This increase in their credit is due to the increased minimum value of their ANA holdings. Since the floor value of ANA is guaranteed to never drop below its initial value, the amount of NIRV that can be borrowed will never exceed the floor value of the ANA collateral. In summary:
  • NIRV loans are 0% interest with no liquidation risk. It is a means for leverage on ANA.
  • NIRV is pegged to the value of the backing token for ANA (eg USDC)
  • NIRV is minted by collateralizing ANA. This ANA can only be withdrawn and sold if the NIRV debt is repaid

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ANA as collateral

NIRV borrowing

The NIRV loan value does not exceed the floor value of the ANA collateral.

ANA can be used as collateral for NIRV loans. The amount of risk-free NIRV that can be borrowed is limited to the floor value of the ANA collateral (which is generally less than the current market price). Since the floor value of ANA is guaranteed to never drop below its initial value, the amount of NIRV that can be borrowed will never exceed the floor value of the ANA collateral. If an account has existing NIRV debt, the required minimum ANA collateral cannot be withdrawn. Only ANA in excess of the required collateral can be withdrawn.

Example NIRV borrowing

If an account has 100 ANA collateral, and the floor price is $2.00, then the user can borrow up to 200 NIRV, since there is $200 of floor value in the ANA collateral. If the user has 50 NIRV debt, this debt is fully collateralized by 25 ANA. The user can withdraw the remaining 75 ANA.

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Use cases

The primary use case for NIRV is leverage. Investors can purchase ANA, use it as collateral, and borrow NIRV equal to the ANA floor value. They can then choose to sell the NIRV, effectively recovering the floor value of their collateralized ANA, or they can use the NIRV to purchase additional ANA directly from the Nirvana market. With 0% interest and no liquidation risk, NIRV provides a low-cost, risk-free means to leverage ANA holdings.

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Fees

There is a flat fee for borrowing NIRV, which is paid in NIRV at the moment of borrowing. The fee is governed through ATMA governance, and subject to change. The revenue generated from the NIRV fee is distributed to prANA and METTA holders. There is no ongoing interest fee for NIRV debt, and NIRV loans never need to be repaid.