In our previous article we explained how is Nord Finance evolved from Slick and how are we making DeFi more accessible and user friendly for the investors.
Over the course of this 3-part article series we will explain how Nord Savings simplifies De-Fi Investing and delivers the highest risk-adjusted APY with near zero transaction fees.
To read Part-1 Click here
How Does Nord Savings Work — Part 2
The Gas Fees Reduction:
A key challenge, and barrier faced by most De-Fi investors with relatively small capital is the high gas fees. Exponential growth in the number of transactions has led to slower transaction speeds on the Ethereum network leading to exceptionally high gas fees. According to many reports, Ethereum miners earned gas fees of USD 166 millions in September, largely driven by De-Fi Yield Farmers- You !
Let’s understand the impact High Gas Fees have on APYs.
Consider 2 investors — Jack & Jessica — with 1000 USDT in their wallets for yield-farming.
Jack’s Journey — Gas fees Conundrum
Jack wants to use traditional yield-farming sites.
Step 1: Post completion of his due diligence, Jack decides to invest in Pool 1. To invest in the pool and start yield-farming, Jack has to spend approximately USD 30 in gas fees upfront. Thus essentially investing USD 970 in the pool only.
Step 2: Once the APY starts to drop, Jack decides to withdraw his investment from the pool. To withdraw his investments, Jack needs to spend another USD 30 in gas fees.
Step 3: Similarly, for every transaction that Jack makes he spends USD 30. Thus, to invest in 2 pools Jack ends up spending USD 120 on gas fees alone. It is no wonder the miners are making millions!
Thus, effectively Jack is investing only USD 880. Due to the high gas fee paid upfront, Jack needs to earn 14% just to break-even on his initial investment. (USD 120 to be recovered with USD 880 investments).
Jessica’s Journey: The Nord Experience
Instead of choosing traditional yield-farming sites, Jessica decides she wants to use Nord.Finance with the 1000 USDT in her wallet.
However, unlike Jack, Jessica doesn’t need to pay any gas fees upfront. Nord’s Smart Contract is designed to absorb the gas fees on behalf of its users. This eliminates the need to hold Ether in the wallet. What you see is what you get!
Nord.Finance also pools liquidity from multiple users. As more users adopt Nord.Finance, the Smart Contract achieves economies of scale. Thus, achieving near zero gas fees compared to the gas fees paid by traditional yield-farmers such as unfortunate Jack.
With it’s efficient transaction management, Nord.Finance’s Smart Contract routes transactions across pools at the lowest possible gas fees. This reduces Jessica’s gas fees liability to a fraction of Jack’s. Additionally the Smart Contract automatically adjusts Jessica’s final APYs by deducting gas fees, spread across users, at the time of withdrawal.
The Nord Finance Advantage:
The intuitive UI offers users the ability to:
- Track investments & APYs in real-time across all pools in which Nord Finance invests.
- Assess pool risk profiles (more on this coming soon).
- View their share of gas fees (proportionate to investments).
- Invest across multiple chains with seamless interoperability.
- Earn $Nord governance tokens & vote on yield-farming strategies.
To Be Continued..