FinNexus is an open finance protocol on top of the Wanchain network that aims to bridge the blockchain with traditional financial services.
There are many decentralized finance (DeFi) projects in the space today that offer various services. Yet few, if any, have managed to integrate complex financial products and create a remunerable system like FinNexus. This fragmentation dampens the capacity of DeFi to provide a complete suite of financial products, which FinNexus aims to fix.
This is because their platform combines an innovative way to trade options using pooled liquidity with a highly profitable mining mechanism whose reward multipliers reach up to 320x.
Furthermore, with a strong and growing team, the project has been launching upgrade after upgrade in recent weeks, boosting services and performance.
But how does all this work?
Table of Contents
Background
Ryan Tian, an investment banker, and Boris Yang, the key designer and co-founder of Wanchain, are the co-founders of FinNexus. They built the platform with the objective of bridging decentralized and traditional finance, bringing options trading to the permissionless world of DeFi.
That is how FinNexus was born. Based on Ethereum and Wanchain, FinNexus is the up-and-coming DeFi platform that allows users to trade options in a seamless and permissionless way.
Their system does not rely on traditional order books to exchange options. Rather, liquidity is pooled and premiums are shared among participants through an innovative system powered by FNX, the platform’s token. (Which, by the way, is up over 100% since two weeks ago.) The mechanism makes it easy to buy and exercise BTC, ETH, LINK, SNX, and MKR options in a secure and decentralized way.
What is FinNexus?
FinNexus is an open finance protocol on top of the Wanchain network that aims to bridge the blockchain with traditional financial services. The initial design of the program began with the establishment of a hub that gathers all supported decentralized projects and financial products in one interface.
Through FinNexus, it will be much easier for crypto users to manage their blockchain-based assets and perform cross-chain transactions with other users. The protocol also connects Over-the-Counter (OTC) platforms, brokers, and exchanges which users can conveniently access anytime they need to.
FinNexus also introduced the Multi-Asset Single Pool (MASP) model to provide users with the option to increase their leverage or gain exposure on a pool of cryptocurrency assets.
Features of FinNexus
There are three main features of the FinNexus protocol. These are all aimed at addressing the team’s perceived pain points in today’s DeFi ecosystem.
- Links users and the blockchain. FinNexus has an application layer protocol. This is designed to link users, such as developers, providers, or clients, with DeFi applications and services. In doing so, FinNexus reduces the friction between users on different blockchain networks through the establishment of a second layer network linked with other public chains.
- Asset channel for blockchain networks. To make the flow of assets seamless between different financial service providers, both blockchain-based and traditional finance, FinNexus established a DeFi Economy Asset Channel. Through this, the protocol can function as a gateway for the exchange of various assets. It helps the platform achieve greater liquidity than the usual crypto-exchange protocol.
- Ecosystem of service providers. FinNexus has a DeFi ecosystem and value channel. Its purpose is to help users access different financial service providers on the platform. Right now, the protocol has already successfully connected trading and brokerage platforms, settlement services, as well as other service providers.
Products of the FinNexus Protocol
FinNexus Protocol for Options (FPO)
The FinNexus Protocol for Options (FPO) is the platform’s main product. It is a state-of-the-art tool designed to facilitate the writing and trading of options in a decentralized way. Thanks to smart contracts, traders are able to write, trade, and settle options at any time, anywhere.
While the FPO offers promising returns for options writers – who can reap premiums without having to take on excessive risk -, buyers can also develop their own financial strategies according to their risk profiles.
Since FinNexus facilitates cross-chain transactions, FPO functions as a universal options protocol too. This diverse offering is made possible by the pooled liquidity which follows their Multi-Asset Single Pool (MASP) model.
Liquidity Pools in FPO
The underlying assets and liquidity are collected in pools managed by smart contracts. This allows the platform to spread and minimize risks across liquidity providers while giving all of them equal opportunities to earn rewards.
The core architecture that backs FPO liquidity pools is the Multi-Asset Single Pool (MASP) model, whereby several assets can be pooled together. This means that theoretically any asset can be used as an underlier for options traded on the platform, while the mechanism can to support any type of cryptocurrency despite differences in blockchain networks.
It is important to remember that the term “Single Pool” in MASP does not necessarily mean that the platform only has one pool. As of today, the protocol already supports two pools (USDC/USDT and FNX) on Ethereum, and one hybrid pool (FNX/WAN) on Wanchain. More may come in the near future, especially since the team is continuously working on having more cryptocurrency and underlying assets added for collateralization.
These steps are aimed at improving the liquidity of FinNexus’ derivatives market as well, for the backbone of MASP is collateral tokens that provide the liquidity needed to write and settle options contracts.
FPT Tokens
FPT tokens, or “FinNexus Pool Tokens,” represent the share of a liquidity provider in the FPO. Every time investors contribute to the liquidity of the existing pools, they receive a proportional amount of pool tokens.
Options Market
FinNexus has a marketplace for options contracts. This trading function is supported by the protocol’s pooled liquidity feature. Through the options market, anyone can conveniently purchase options contracts based on their own terms. They can draft their bespoke options just by choosing from a set of option types and expiration dates.
Additionally, the options market lets users choose an options strategy according to their own risk profiles. The availability of diverse options offerings enables buyers to come up with an investment portfolio with the combination of several options contracts.
Most of the primary products of FinNexus are anchored on offering universal options. According to the team, they are continuously working on having more cryptocurrency and underlying assets supported for collateralization. These steps are aimed at improving the liquidity of its derivatives market as well.
FNX Token
FNX token is the platform’s native utility token. It can be used as a medium of exchange or as collateral. It also allows holders to participate in liquidity mining, as well as in voting and governance.
Token holders can vote on important protocol decisions, including collateralization ratios, supported assets, and platform upgrades, among others.
The FNX community has recently voted on a series of upgrades that will go live in the coming weeks.
FinNexus Mining
Anyone can make additional earnings by participating in mining. It is not even difficult to do so – it really only takes a few steps:
- Purchase USDC or FNX tokens —The first step is to purchase USDC or FNX tokens and stake them in the FPO liquidity pool. This will give the user a Pool Token which will represent the holder’s part of the liquidity pool.
- Stake Pool Tokens — After acquiring a Pool Token, it may then be staked and locked on mining contracts.
- Redeem — After you have gotten enough rewards from staking in mining contracts, the next step is to redeem the reward. This can be done at any given time, but factors such as the length of time an asset has been locked in a mining contract affect the amount of rewards a user can get.
The computation of mining rewards is simple. It is just the base reward multiplied by the lock time modifier.
The base reward is the fixed amount of cFNX rewards that miners receive daily. This amount, however, is affected by their mining score. If you have a high mining score, your share of the base reward also increases.
cFNX is “Convertible FNX,” which can be converted to FNX at an equal ratio. Once converted to FNX, the cFNX is burned and it entitles the holder to claim ⅙ of the FNX monthly over 6 months.
How do You Get a Better Mining Score?
Users’ mining scores are affected by the amount of assets they locked in the mining pool. One FPT-FNX and one FPT-USDC are both worth 1 point. But according to the new system, designed to increase liquidity and the stability of the system, a set of 1 FPT-USDC combined with 10 FPT-FNX will be worth 200 points.
What is the Lock Time Modifier?
The lock time modifier is derived from the length of time a miner’s asset is locked in the mining pool. The longer it is, the bigger the multiplier becomes.
Once both mining and staking are fully factored in, the multiplier can reach up to 320x.
Latest News
Just yesterday, FNX token pumped substantially following the announcement of its new mining mechanism, which boasts a whopping 320x multiplier.
But this isn’t the only information that made its community bullish. In fact, they have completely remodeled their interface, added a new stablecoin pool, and added USDC to the pool.
As can be seen on the chart, FNX went from $0.1658 to $0.2517 in less than 24 hours following the announcement. This is a testament to the value placed on its new features – especially FNX mining – and on the overall quality of its products.
Closing Thoughts
There is no doubt that FinNexus is building an intriguing value offer. While it remains to be seen how they will compete with relatively older projects such as Polkadot, the team is off to a promising start.
FinNexus has conceptualized an effective liquidity strategy that will power the platform’s trading functions. It has also intelligently deployed smart contracts to back its non-custodial, permissionless, and decentralized design. The fundamentals of the project appear sound.
