TradFi passive investing is broken. Financial products are issued, managed, and controlled by centralized, shrouded institutions, with little flexibility and diversity in the products offered.
But with the possibilities with DeFi and crypto, we have the opportunity to change that. DeFi's composability and community-driven nature unlock a whole new horizon of what we can achieve with products such as indices, as well as massively expand the design space that we have access to.
However, current index protocols, while unquestionably improvements over TradFi-equivalents, have yet to truly crack this problem. Most currently available on-chain instruments are still relatively limited and restricted in options offered, mechanics, and composition. Most of them are restricted to only a few asset types, and tied to rigid rebalancing parameters.
But as the industry matures and more sectors and narratives starts to emerge, those options are no longer sufficient. Users need more choices, flexibility, and freedom.
Nebula is a protocol built on Terra that enables users to invest in narratives and strategies expressed through decentralized basket instruments called clusters. Clusters are smart contracts that manage a dynamic investment strategy
These clusters possess two main unique properties:
Programmable, updates for target weight allocation
As opposed to its TradFi counterparts which are seldom managed and adjusted through rigid parameters, Clusters can quickly adjust their target allocations as frequently as every block, to actively steer their inventory composition to stay course or pivot according to their designed strategy. There are no inherent restrictions on the possible logic used or the assets included, and thus no limitations to what strategies the cluster can follow
Decentralized, continuous rebalancing
Whereas traditional structured products are periodically balanced by a centralized entity, clusters are continuously and organically kept in balance with their target through the activity and actions of the users of the protocol themselves. Clusters need no active management and are powered from the organic activity of Nebula users.
These offers 3 main benefits to the users of the protocol:
- Community-determined parameters: What tokens make up each Nebula cluster, and what algorithms are used to rebalance each, are fully determined by the community
- Economically-aligned rebalancing incentives: Unlike TradFi, there is no central entity taking fees. Instead, the community are encouraged through economic incentives to act as rebalancers themselves, helping clusters maintain their peg defined by the algorithm
- Diverse array of potential assets: The protocol imposes minimal restrictions on the set of assets that can be included in clusters. These allows the community to have maximum flexibility and endless design space to create the clusters that they truly want
Nebula clusters enable users to passively take part in an endless array of evolving narratives and algorithmic strategies by simply holding the cluster's token - a redeemable share of a cluster's underlying inventory. The flexibility offered by Nebula is designed to ensure that clusters can adapt and thrive in any market conditions, and that users have the flexibility and ability to design and choose the the specific options that best fits their needs.
The protocol opens a new universe of possibilities for decentralized dynamic investments: powerfully expressive, openly accessible, and fundamentally democratic. The protocol relies on community effort not only for operation but for direction and governance: resolutions by collaborative consensus that determine the shape of the protocol and its future trajectory.
Nebula is a project maintained and completely governed by its community of NEB token holders, who stake their tokens and gain voting privileges. Nebula is initially supported by its core development team, which oversees its path toward complete autonomy by the community. The Nebula team holds no admin keys.
There are several tokens involved in Nebula Protocol with different functions:
|TerraUSD||UST||Native||Stablecoin, primarily used for trading and providing liquidity to Cluster Tokens pools|
|Cluster Token||CT||CW20||Tradable share of a Cluster's inventory|
|LP Token||LP||CW20||Earned by providing liquidity to CT-UST pairs, can be staked to earn LP rewards|
|Nebula Token||NEB||CW20||Governance token and mechanism incentive|