Introducing Nacho Finance, the low-fee ecosystem for ETH lovers.
An inside look at Nacho Finance, how we came to be, where we’re going, and why this is not just another Tomb fork.
It’s been called Tomb fork season for a reason. In December 2021 alone, over a dozen Tomb Finance clones launched in hopes of riding the grave wave (and the coattails of Harry Yeh’s gloriously successful model to a billion dollar protocol). Except some were a bit too quick to Frankenstein their protocol and overlooked a few key nuances deep in the math. And none of them have Harry Yeh.
The excitement for the DeFi 2.0 crowd (or 3.0 according to some) has been too much to hold back. It’s part FOMO 2.0 and part bull-minded YOLO. For the folks who came late to the first run, this is the opportunity to get in at that ultra-early stage for through-the-roof APRs and through-the-roof risk. For others, who are learning just enough at the right time to be dangerous, this is the chance to see how passive income can change one’s life. For these neophyte Defi explorers looking for opportunity, the surge of new money-printing forks, themed with everything from farm animals to house cats to eastern bison to ancient Egyptian beetles, couldn’t have come at a better time.
This begs the question, which one to choose? Or which three? The one pegged to Fantom on Fantom, the one pegged to Matic on Matic, BUSD, BTC, AVAX — the choices can feel overwhelming. For those needing a quick lift, playing the APR musical chairs game is a tempting option to make some nice short-term gains. But for those who know how real wealth is made, there are some important factors to assess before committing to making a bigger play. This is a decision that requires some research and a lot of patience to make sure you find a protocol that will grow with you and its community while it grows into a game changer. Imagine picking an agile project that reacts to the market needs, the community feedback and will actually survive more than one cycle to be around beyond a 3-year time horizon.
What’s the appeal of Nacho?
Knowing the Tomb fork season would have at least a couple (!) solid rival projects, the big decision of where to peg and on what chain seemed to have multiple correct answers. As we prepped our game plan and looked across the opportunities of which coins to peg and which chains to launch on, one thing kept coming back to us — focus on the coin everyone loves, but the coin that burns the wallet hardest. Yes, we launched Nacho Finance to bring value to holders of the most promising cryptocurrency out there; Ethereum. Just imagine if we could bring high APRs to ETH holders, but without the high gas. And that’s what we did.
We launched our new algorithmic stablecoin as the inaugural step in our roadmap. Our exchange token, $NACHO, is an algorithmic stablecoin that serves as the backbone of our growing ecosystem. It’s pegged 1000:1 to ETH, and has the low-fee benefit of transacting on Polygon. Everything we’re building is aimed at increasing the value of $NACHO, bringing high APRs, with low fees, to ETH holders today, not in 2–3 years time.
The protocol’s underlying mechanisms dynamically adjust NACHO’s supply, pushing its price up or down relative to the price of ETH. When we’re above peg, staking $NSHAREs in the Bowl prints $NACHO as rewards. When we’re below peg, in a period of contraction, no new $NACHOs are printed and $NACHO can be burnt in exchange for $NBOND. As we’ve seen through December and into January, the protocol has responded amazingly well to the downward market volatility with a peg swing of less than 0.6 points of change — this is the basis for a healthy protocol.
$NACHOs that Keep
In this early Tomb fork season rush, we’ve seen a lot of exciting action. However, the wheat has started to separate from the chaff. In the recent market downward movement, a critical test for young projects, some forks have boasted an above-peg hold — which sounds great — except when you discover that these stablecoins were 200x above peg days before the dip, dropping to 1.5 is no sign of sustainable peg health. Behemoths like Tomb have shown that stability in times of volatility is critical to keeping elastic finance protocols alive and scaling.
What matters most is a healthy peg — one that responds to market change, adjusts for supply and demand, can hold stability while below, and functions in a way commiserate with a protocol designed for the long term. Controlled expansion rates and bonding mechanisms offer the balance here.
The conventional below-peg bonding mechanism allows holders of seigniorage-based stablecoins to buy bonds in exchange for the stablecoin token, which is then burned to reduce circulating supply, driving up price. In practice, it actually takes an informed and committed community forging together with patience for this to reliably work. This is because, traditionally, bonds catered only to committed users with a positive outlook and a longer time horizon, since the bonds themselves couldn’t be put to work while they were held. Enter Nacho Finance… and now they do. Nacho has added a bond pool to its farm, so that NBOND holders supporting the healthy functioning of the protocol can earn individual rewards while doing the right thing for the project.
But that’s not the only bond evolution we brought to the table. In times of great supply expansion Nacho has the ability to release above-peg bonds. Through this unique mechanism participants can purchase bonds with whatever Polygon token the treasury deems valuable to hold. In most cases it will be wETH (which we can use to help support the Peg), but the treasury can also take in stablecoins or even LP tokens which allows Nacho to own its own liquidity (Protocol Owned Liquidity). This is a huge innovation for Tomb forks.
Building a Treasury
A healthy treasury is a critical component of any Tomb fork. The treasury is used for everything from paying contractors and employees to supporting the peg at critical times. Most Tomb forks don’t have a billionaire like Harry Yeh supporting them, so a healthy treasury is extremely important.
The basis of Nacho’s roadmap is to develop a sustainable high utility protocol by building multiple best in class products that generate reliable revenue in both bear and bull markets. The first product will be Nacho Swap, or NSwap, a rival to other Polygon DEXs that will offer low fees, competitive farming rewards and a beautiful UI. Regardless of what direction the market is headed, action on NSwap will bring fees into the treasury building resilience and sustainability supporting protocol. But this isn’t the only development on the horizon.
Roadmap to a Sustainable Ecosystem
The DeFi space is excited by returns — but ultimately, people and capital move toward innovation and growth. All of our next phase endeavors aim to do 2 things;
1) bring more value to the $NACHO token by growing our ecosystem; and
2) create opportunities for new types of users previously unfamiliar with DeFi.
Nacho has several products coming up in the next few months, including a yield optimizer (an auto-compounder), a lending platform, an analytics platform, and an NFT project bringing added utility and some secret benefits…
Incentivizing with NSHAREs
NSHAREs are the governance token of Nacho Finance, and act as a proxy for the value of the Nacho protocol and shareholder trust in the ability of $NACHO to maintain peg. By providing liquidity or staking bonds, protocol participants earn these NSHAREs as rewards. However, there are only a very limited number of these tokens available.
In the first year 60,000 NSHARE will be used for rewards. The max lifetime supply is 1,000,001 NSHARE which is designed to last a long time. There’s 30% reserved for the developer fund to continue with the ecosystem build, and the remaining NSHARE are reserved as incentive rewards for other Nacho projects, like the aforementioned NSwap, lending platform, additional farms, etc.
Our team is led by industry veterans of 10 years — people behind some of the earliest cryptocurrency and blockchain success stories dating back to 2012. While we remain anonymous, sharing the spokesperson identity Felis Silvestris, we understand the importance of accountability in the space, and have KYC’d with RugDoc to provide that assurance.
At the end of the day, we are here to ungate and democratize advanced decentralized financial tools for everyone regardless of their background or exposure to Cefi or Defi. Thereby unlocking, for everyone, the power of compound interest to sustainably build wealth independent of existing legacy frameworks. Nacho is for everyone, everywhere; it’s part altruism, part justice, and it’s all Nacho Libre!