Uniswap, Sushiswap, Trustswap, PancakeSwap, Quick Swap, Pangolin, Kyber Swap, 1inch, 0 Exchange, all of these are decentralized exchanges (DEXs), and we have only just touched the surface in the Nerve Finance review.
Blockchain platforms such as Binance Smart Chain, Solana, Avalanche, and Ethereum have exploded in popularity, with many developers tirelessly building new decentralized applications or dApps on them.
Most of the dApps being built are DEXs, and while it is true that some have unique features and usage, all of them have relatively the same standard interface, governance structure, and use case. However, there is one DEX that is rather peculiar because it instead focuses on one particular type of crypto asset; stablecoins. Moreover, unlike the parent DEXs that started it all, namely Uniswap and Sushiswap, this particular dApp is cross-chain, meaning you can swap tokens between different blockchains.
This DEX is called Nerve Finance and is a rapidly expanding protocol residing on the Binance Smart Chain. This article will take a look at this new dApp and analysis its structure, why it stands out from among other DEXs, and why the price of its token, NERVE, could potentially be on its way to the moon.
What is Nerve Finance?
Before we can even begin to understand its potential, we must first dive down into the basics. Nerve Finance is an automated market maker (AMM) DEX that is specifically designed for trading stablecoins with low price slippage. It is non-custodial, meaning developers do not have access to the tokens you provide for liquidity. It’s a relatively new project, having only been launched in early March of 2021.
On the surface, Nerve seems like any ordinary DEX. Users can provide liquidity for those rewarding fees in its native token, NERVE. It has a typical uniswap-style swap interface, with the Nerve (NRV) token being foremost a governance token. However, there are other features that make it very unique.
For starters, Nerve only allows users to provide liquidity in stablecoins, specifically in BUSD, USDT, USDC, and UST, along with Bitcoin (either as BTCB or anyBTC) or Ethereum (ETH or anyETH). This means that Nerve has bridges to three blockchains; Ethereum, Bitcoin, and Binance Smart Chain.
How Does it Work?
Nerve provides very low slippage when swapping stablecoins. Because you are swapping US dollar-pegged crypto assets, you have the expectation that whatever amount of USDC you have, you will be getting the exact same amount when swapping it for BUSD. With other AMMs, that is not the case, but with Nerve’s low slippage algorithm, you can expect to receive a near-zero slippage.
When doing cross-chain transfers, users were only previously able to do it via the centralized, custodial Binance Bridge. In addition, the Binance Bridge places restrictions and limitations, which has decreased its utility for many users. Nerve bridge does away with most of those restrictions and allows users to transfer large amounts of ETH or BTC to the Binance Smart Chain and back with minimal cost for convenience.
When it comes to providing liquidity, it’s a bit different from the traditional way users would provide liquidity on other DEXs. Instead of pairing two types of cryptocurrencies of equal value together, users can deposit any of their stablecoins as a stand-alone crypto. Meaning, you don’t need to pair it with any other crypto asset.
Here, you can deposit your BUSD, USDT, and/or USDC without pairing them together or any other crypto. You can deposit one of them or all three if you have it, although according to their documentation, you need to be aware of any bonus or penalties for stablecoins that are under-provided – or over-provided in the pool, a type of impermanent loss.
In this pool, users will receive NRV-LP tokens, which they can then stake to earn the 48% of all NRV emissions, there are no deposit or withdrawal fees, with no lock-up period. Now, you can only earn those NRV tokens if you do the additional task of staking your NRV-LP tokens.
The same process is for their BTCB/anyBTC pool, ETH/anyETH pool, fUSDT Metapool, UST Metapool, and rUSD/3pool – External Metapool, as seen below.
Liquidity providers in all pools will earn NRV tokens as a reward instead of a share of the trading fees. According to the documentation, as of May 13, 2021 trading fees from pools that the protocol hosts and charges are currently all going towards the DAO treasury, where all NERVE token holders will eventually be given control and decide on what to do.
That being said, NERVE does provide pairing pools that it does not host on its platform. This is the NRV-BUSD LP and NRV-BNB LP that you can provide liquidity on PancakeSwap. As such, Liquidity Providers in these pools do earn a share of the trading fees from PancakeSwap, receive 27% of all NRV emissions (only for NRV-BUSD pool), have no deposit or withdrawal fees, and no lock-up period. The NRV-BNB pool receives CAKE or BANANA rewards.
On top of all of this, you can also stake your single stake with your NRV tokens. However, because of technical constraints with its smart contract, the only way you can earn rewards is to stake your NRV tokens and, in turn, mint xNRV tokens at a 1:1 ratio. You can mint from and redeem to NRV.
The rewards for staking your xNRV are having a share of the 5% of the NRV token emission, having no exposure to impermanent loss, no deposit or withdrawal fees, and no lock-up period. XNRV holders also receive voting power in the NERVEDAO once it is established.
We have been constantly remarking that the protocol has no lock-up periods. However, that was only referring to providing liquidity or staking. Rather uniquely, Nerve does have a lock-up period of up to six months for all those NRV tokens you are meant to receive as a reward.
Yes, that means that for six months, you can earn those NRV tokens as a reward but will be unable to claim them until then. However, before you grumble in frustration, there is a glimmer of hope. Firstly, the six months vesting period is for only 2/3 of your rewards.
Meaning that users can immediately claim 1/3 of their NRV tokens, with the 2/3 remaining locked until six months again. You can unstake deposit and LP tokens at any time without issue, but even if you do that, the 2/3 rewards that you earned will remain locked until six months.
The reason for this vesting period of NRV token reward is simple; to prevent users from dumping their NRV tokens and causing the price to slump down. Speaking of tokens, it’s time to discuss NERVE’s tokenomics.
According to CoinMarketCap, the NRV token has a circulating supply of 46,237,771. It has a maximum supply of only 100,000,000, very few when compared to other DEXs, including Uniswap.
30,000,000 tokens have been allocated to the NERVE core developer team and investors for a six-month lock-up period, only unlocking on a per-block basis. Also, 10% of emissions are reserved for the community treasury to fun future Nerve d In addition, $450,000 of the fees earned were used to buy back and burn 568,000 NRV tokens, so there will only be 99,432,000 NRV tokens.
As for the team, well, they are anonymous, and according to their docs, they will remain anonymous.
Audits & Security
Nerve Finance has been audited by Certik, which you can find the audit report here. The contracts are currently in the process of being put under a 3/5 multi-signature process for enhanced security.
Who Is This Product for?
Nerve Finance is for any user that wishes to provide liquidity or have aneed to swap stablecoins or transfer them to another blockchain platform. Whether they are small retail investors or large crypto players, virtually anyone with enough BNB or ETH for transaction fees can use the platform.
Nerve is not without its competitors. Its biggest competitor by far is PancakeSwap, it not only has deep liquidity but also offers relatively lower fees to users. And although it does use the Binance Bridge, for those seeking to swap small amounts of stablecoins, using the Binance Bridge at one of the most popular, busiest DEXs can be more convenient.
Another competitor is also another new project that was only launched a few months prior, and that would be 0.exchange. This DEX has been rapidly expanding in adding new features. It recently launched its IDO ZeroGravity launchpad for new projects looking to launch its native token in several blockchains.
It also has four blockchain bridges, specifically BSC, Avalanche, Ethereum, and Polygon, with Solana and Moonbeam (Polkadot) coming soon. But it is not stopping there. 0.exchange seeks to be the go-to DEX by having all the necessary features, tools, and information necessary for trading, swapping, and technical analysis.
It is developing a charting system for all of its bridges, so traders will not need to go to other platforms to do TA. There have also been speculations that it is developing its own lending/borrowing platform. And to top all of it off, it is also developing its own cross-chain NFT marketplace!
Other alternatives to Nerve are Ellipsis Finance which has its own stablecoin pool, MDEX, and a bunch of other finance protocols that offer their own AMM pools, such as Goose Finance, beefy. finance, to name a few.
Nerve Finance is looking to become more than just a stablecoin swap protocol. It also has plans to develop a lending and borrowing platform later in the future. It also has plans to develop a EVM-compatible sidechain bridge and to also expand to Solana.
Nerve also seeks to eventually provide liquidity for synthetic assets.
Governance is also another area that the team is currently working on. A proposal has already been submitted on how the governing structure is going to look, but it will take a bit more time before the team begins to relinquish control to the community.
These are only just some of the features they are planning on adding to the platform in the future. You can take a look below to see what other features that it has planned
Nerve Finance Review – Conclusion
In conclusion, Nerve finance does have potential, but it faces an uphill in terms of competition. Many other DEXs and financial protocols offer users to swap their stablecoins, but this may not seems to be a bad thing. Swapping your stablecoins on other DEXs, regardless of the amount, does seem to have higher slippage than on Nerve.
When the prices are the same, the price impact tends to increase. This can be aggravating since stablecoins should be relatively the same in terms of price. They are stablecoins! This is something that Nerve has an edge on.
In addition, the platform does have plans on expanding to other areas other than providing a swapping interface and bridge. For example, it is considering converting a portion of the bridged funds into BNB for gas. This means that users using the Nerve Bridge could potentially not have to pay fees when transferring their stablecoins to and from BSC.
Yes, transaction fees on BSC are cheap, but it is better than nothing, especially if you are transferring to and from Ethereum. Nor is it satisfied with only three bridges. They are working on adding the Solana network as their fourth bridge, which has been exploding recently in dApp development and usage.
Nerve Finance does seem to offer limited swapping, but it is adding other cool features that could propel it to become one of the top five dApps on the Binance Smart Chain. Only time will tell if Nerve, its developers, and the community have what it takes to propel the Nerve token to the moon.
Nerve Finance Review
- Value for Money
- Ease of Use
- Good tokenomics
- Procedure in place to somewhat regulate users from causing massive price dumps of the NRV token
- Team is dedicated to listening to advice and suggestion of the Nerve community
- Have a lot of features coming up in the future.
- New project with low market cap, potential to increase exponentially.
- Can be really confusing on how to deposit your stablecoins and LP tokens.
- Receiving only NRV tokens as reward may deter some from providing liquidity
- Faces stiff competition from other DEXs, namely Zero Exchange, which already has 4 bridges.
- Only offers stablecoin swaps.