# Overview We build a DeFi protocol allowing anyone to buy a digital asset with credit. ## Our Mission **Our objective is to improve notably users' shopping experience and contribute to web3 adoption. For that purpose, we develop payment flexibility and consumer finance services (such as split payment, try-before-you-buy, consumer loan, etc. which are very common in web2) for web3 assets. Projects can offer their community the ability to access & use their digital assets (NFTs, Real World Assets) and let them decide when and how to pay.** Over the last three decades, digital environments have become an integral part of our lives, with video games and the internet gaining immense popularity. Today, there are over three billion active video game players globally, with the number rising by over one billion in just seven years ([link](https://explodingtopics.com/blog/number-of-gamers)). In some regions, individuals spend almost a third of their day on a screen ([link](https://leclaireur.fnac.com/article/61800-toujours-plus-accros-aux-smartphones-les-francais-passent-3h30-par-jour-devant-leur-ecran/)). The advent of web3 and the NFT technology is a complete game-changer for the digital economy. NFTs have given tangible value to digital items, turning them into digital assets, by bringing two main features: (i) the proof of ownership (i.e. prove the uniqueness of a digital asset), and (ii) the liquidity (i.e. ease and secure primary and secondary trading). Thanks to this technology, digital environments are transitioning into digital economies. Examples include gaming, virtual worlds / metaverses, creator's economy and digital art. NFT use cases extend beyond virtual-native economies. The underlying technology can also be used to tokenize real-world assets, thus bridging the virtual and real worlds. Tokenization of real-life assets offers several benefits, such as transparent and tamper-proof data storage, automated payments, increased accessibility, openness, and liquidity. Examples include regenerative finance, real estate, collectibles tokenization, and NFT ticketing. All these new digital economies, whether virtual-native or representations of real-world assets, share common goals: make digital assets permissionless, free from censorship, with transparent cash flow mechanisms. Thus, we believe that web3 assets are here to stay. With the rapid growth of these digital assets, the first exchange infrastructures have emerged, with major marketplaces such as Opensea, MagicEden, and Blur. However, financing solutions remain very limited. If one wants to buy an expensive digital asset, he only has two options: either he has the funds to buy it directly, or he can go through P2P leverage trading solutions such as Blend, which are complex to use, difficult to scale and risky. There is no easy-to-use financing tool made for users, and that's the issue we aim to tackle at Nemeos. ## Our Vision At Nemeos, our goal is to create the leading on-chain credit solution for web3 assets, making credit for digital assets permissionless, simple to use, and free from censorship. We seek to facilitate the growth of digital economies such as GameFi, metaverses, collectibles, RWA, among others. We want to contribute to Web3's goal of establishing a more decentralized and open iteration of the internet. # Manifesto Blockchain technology allows to build a decentralized on-chain credit solution with real-life use cases. If credit is a core pillar of the emerging on chain financial system, the evolution towards general adoption of DeFi lending protocols is still very early. The main challenge lies in the economics: subsets of finance, such as transactions, can be decentralized quite easily, and Bitcoin may be the best example. But dealing with the core of finance, i.e. lending, is much tougher, as it relies on adverse selection model: the lender must estimate the probability of correct behavior from the borrower to get paid back, which is usually done through a proper credit risk analysis. This analysis is very complex in decentralized and open networks. Although DeFi protocols offer a transparent and accessible financial system, they are based on pseudonymity, which makes credit risk analysis challenging. As a consequence, unsecured loans are nearly impossible in open networks, as an anonymous borrower would have very little incentive to pay back. That's why most current DeFi protocols focus on pawn-lending, and use over-collateralization to mitigate the credit risk: a borrower should deposit a collateral of 150 to be able to borrow 100. In that way, the borrower has a real incentive to pay back, and the system remains viable, even in difficult market conditions. However, the major downside of this approach is that it limits strongly uses cases: a pawn loan system does not allow a user with little capital to acquire an asset. In traditional finance, most consumer finance products (consumer loans, split payment, etc.) are unsecured, meaning not collateralized by an asset. In decentralized networks, such solutions would be very complex to implement a priori. A solution based on a decentralized identity system, i.e. a decentralized on-chain credit score could work. The latter could integrate historical transactions, past credit performances, and interactions within communities and virtual ecosystems. If this approach could function in the long run, it has two main limitations: (i) a score, which is based on statistics, needs a mainstream adoption to be representative and to measure correctly the risk, and (ii) tracking every on-chain interaction within any web3 project to create a credit score might be questionable. Today's existing unsecured decentralized finance protocols (such as Goldfinch) mostly focus on business loans, for which the credit risk is assessed by the protocol risk team. At Nemeos, we do believe it is possible to make a user-friendly fully open and censorship-resistant financing protocol allowing anyone to take a loan to buy a digital asset, without having to deposit additional assets in collateral or to rely on an immature decentralized scoring system, under a set of conditions : * The financing is secured by the acquired asset itself, just like a classic mortgage loan. The asset will be foreclosed and sold in case on non-repayment ; * The protocol must be decentralized and structured as peer-to-pool approach, to be scalable and offer standardized financing conditions. A financing pool will be made for each collection, allowing LPs to select which assets they're willing to finance ; * While the credit is on-going, the user should be able to use his assets. # Our values Our values reflect our approach of Decentralized Finance. ## Accessibility Blockchain technology and DeFi have the potential to democratize access to financial services and digital ownership. By valuing inclusivity, we work towards building a platform that is accessible to all participants, regardless of their geographical location, background, or level of expertise. This also includes ensuring our platform is user-friendly and supportive of community engagement. ## Innovation The web3 space is evolving rapidly, with new standards and applications emerging regularly. We consider innovation as a required mindset, guiding us to stay receptive, adaptable, and imaginative in response to emerging use cases and shifts in market dynamics. We prioritize actively listening to our community's feedback, ensuring that the protocol always aligns with the needs of our users. This will ensure that our protocol remains cutting-edge and relevant. ## Security As a DeFi protocol handling valuable digital assets, prioritizing security is non-negotiable. This value reflects a commitment to implementing and maintaining the highest security standards to protect users' assets and personal information from vulnerabilities and cyber threats. ## Integrity Transparency and integrity build trust among users, investors, and partners. This commitment ensures that we operate with unwavering honesty, transparency, and ethical rigor in every facet of our work, from development to daily operations. # Why Nemeos? ### We build an innovative DeFi protocol At Nemeos, we want to contribute to the construction of DeFi and web3, developing innovative and scalable use cases . This approach can be summarized in three main differentiating items: 1. **User-oriented experience** Our financing solution opens the door for individuals with limited funds to acquire valuable assets they otherwise couldn't afford. But instead of building a trading-oriented solution, requiring users to master many technical aspects, we provide an uncensored lending environment, emphasizing ease of use with a straightforward repayment plan and fixed fees, making the process accessible to all users. 2. **Decentralized** At the heart of our protocol lies a commitment to user accessibility and inclusivity. Anyone can access our protocol without having to provide additional assets in collateral, thanks to our risk management approach: like in a mortgage, the loan is secured by the acquired asset itself. Utilizing this self-collateralization mecanism, borrowers secure loans with the assets they acquire, eliminating the need for additional collateral, which ensures a secure, equitable, and decentralized lending environment. 3. **Made for usage delegation** The Nemeos protocol is engineered with the end-user's lifestyle in mind, mirroring real-life (IRL) loan functionalities where borrowers can immediately utilize their assets. Through collaborations with web3 projects, our users can enjoy and leverage their newly acquired assets from day one, all while adhering to the loan repayment schedule. This functionality not only enhances user experience but also fosters a deeper integration of digital assets into daily life. # General FAQ ### What is Nemeos ? Nemeos is a DeFi protocol allowing anyone to take a loan to buy a digital asset. Web2 equivalents would be banks or consumer finance experts (i.e. Cofidis or Klarna), but unlike these actors, our services are (i) made of web3 assets only and (ii) censorship-resistant and accessible to all. ### Is Nemeos protocol safe ? The first version of Nemeos protocol has been audited by Quantstamp. Additional audits will be carried out as the protocol becomes more and more used. ### What are collections supported by Nemeos split payment solution? For the beta version, only 3 NFT collections on Polygon are supported by Nemeos. More collections will be added soon. ### How to add collections / projects ? For now, Nemeos team decides which project or collection to add on the application. For each collection, a dedicated liquidity pool is deployed. Feel free to contact us if you want to list your project. As the protocol becomes more and more used and secured, everyone will be able to deploy a liquidity pool associated to any project. ### Will there be a Nemeos token? A token would create value for all Nemeos stakeholders, allowing notably to decentralize governance decisions to the community. But launching a token implies a lot of constraints and thus is not our priority, we focus on building and improving the protocol. # Users FAQ #### Do I need to deposit collateral to use Nemeos split payment solution ? No you don't need to deposit collateral to use our protocol, because each loan is secured by the acquired asset itself. The objective is to make the user journey the smoothest possible. #### What will happen if I don't pay back ? The wrapped version of the NFT will be destroyed and the real NFT will be sold on a dutch auction sale. #### What is the cost of using Nemeos split payment solution ? Costs will depend on collections and partnerships. Liquidity providers decide at which rate they're willing to lend for each collection, and the final rate will be the weighted average of all liquidity deposited. Depending on integrations with projects, the interest rates will be paid either by users or by projects (like in web2). # Web3 Businesses FAQ #### Is it possible to integrate Nemeos split payement solution direclty in my web3 project? Yes, and it is the best way to benefit from the full potential of the protocol. Your users will have the option to pay in 3x with a button just next to the pay button. Contact us to discuss integration opportunities. #### What is the cost of integrating Nemeos split payment solution ? There is no integration costs ; our solution is very easy to integrate thanks to our SDK. # Liquidity Providers FAQ #### As a liquidity provider, what is my expected yield ? You decide at what rate you want to deposit your liquidity. The return you will get is the average of all rates selected by all liquidity providers, weighted by the amount deposited in the pool. Average yearly return on invested liquidity should be around 20-25%. #### How can I be sure my liquidity won't be used to finance a wash-traded NFT collection ? The amount you deposit is linked to a specific collection and you choose what collection you want to finance. #### What if Nemeos rug pull? Nemeos cannot rug pull as we don't own nor control the amount deposited in the liquidity pools. LPs can withdraw their funds when they want, depending on the non-invested liquidity. # Buy a NFT Now, Pay Later Our first product is a split payment solution for NFTs. ### **What is split payment?** Split payment is a financial arrangement that allows an individual to divide the total cost of a purchase into multiple smaller payments over time. Instead of paying the full price upfront, the cost is split into more manageable parts that are paid at regular intervals. This approach can make larger purchases more accessible by spreading the financial burden. ### **Why develop a split payment solution?** Developing a split payment solution addresses a major need in the market for enhanced purchase flexibility and improved shopping experience. By providing consumers with the option to split the cost of significant purchases over time, BNPL programs have enhanced the customer experience by removing financial barriers and making high-ticket items more accessible. Shoppers can enjoy immediate gratification while spreading payments over a set period, often interest-free. This flexibility attracts consumers who prefer to manage their budgets and avoid credit card debt. between the reasons explaining the use of split payment, is cited (i) to access expensive assets and (ii) because it is **convenient**. For merchants, split payments is a significant lever of adoption. Studies demonstrate that through BNPL, average order values by up to 20% and elevate conversion rates by up to 30%. Additionally, providing split payment options reduces cart abandonment by roughly 25%, as it lowers the immediate financial hurdle for consumers Approx. 1/3 of European buyers have already used a BNPL solution. **BNPL is a payment solution, but it's also a marketing tool. The aim for e-merchants is to address and convert customers they might not otherwise have converted.** In web2, split payments have downsides. One Achilles heel of BNPL solutions is acceptance rates. The higher the acceptance rates, the more shoppers will be able to buy, but the higher the risk is for the BNPL provider. Acceptance rates can be low, resulting in disappointment and loss of potential sales. Web2 BNPL accessibility thus depends on a risk scoring made by the BNPL provider, which is often seen as intrusive (screening of your bank account). ### Our solution Our decentralized BNPL solution provides an innovative payment solution for web3 assets, accessible to all, without having to score the user. The functioning is the following, so far structured in 4 payments of 25% of the full price, each payment occurring every two weeks. * First, Nemeos protocol only finances the floor price of a collection. The delta between the floor price and the current price of an asset (defined as the rarity premium) is not taken into account in the actual version of the protocol. To see how is the floor price is estimated by Nemeos, check the dedicated section ; * At checkout, the user pays an upfront payment, equal to 25% of the floor price plus the rarity premium. The remaining amount is financed by Nemeos liquidity pool related to the collection, and the seller receives the total price directly. Once the upfront payment is done, the user receives a wrapped version of the NFT in his wallet. This mirror asset allows to delegate utilities if a partnership is established with the project issuing the collection ; * Every two weeks, the user has to make a payment of 25% of the price to finalize the payment. Before each payment, the user is notified by email ; * In case of default of payment, the wrapped NFT is burnt. The real NFT is liquidated on a dutch auction sale ; * In case of complete repayment, the owner gains full ownership of the NFT. ### What are the benefits of Nemeos split payment solution ? #### For web3 users We allow users to acquire digital assets without needing to pay the full price immediately. This reduces the financial barrier, enabling more people to access NFTs, and contributes to web3 adoption. This increased accessibility also stimulates market growth and diversifies the pool of potential buyers. By spreading payments over time, we also allow users to smooth NFT collecting and gradually constitute a diversified NFT portfolio. Users can seize market opportunities and access high-end NFTs without disrupting all their crypto portfolio or needing to relocate their locked DeFi positions. #### For web3 projects Integrating a split payment solution not only makes your assets more accessible, but also fosters a flexible and inclusive shopping environment. As a result, this will increase user adoption, but also have a significant impact on customer satisfaction and loyalty, driving sustainable boost on digital assets sales. # Try before you buy Our second product is a Try-Before-You-Buy (TBYB) solution for NFTs. ### What is Try Before You Buy? 'Try before you buy' is a service that allows users to experience a product before purchasing it. In the context of NFTs, it provides users with temporary access to a digital asset for a set period, enabling them to explore the NFT's features, utility, and compatibility with their needs or preferences. Once the trial period is over, the user has the option to buy the NFT if they found the experience satisfactory or not. ### Why implementing a TBYB solution? TBYB programs have been widely implemented for web2 companies (such as Amazon, Youtube, etc.) to enhance the overall shopping experience and build customer trust. It can take multiple forms, such as a free trial period for software platforms, allowing customers to sign up for a trial of a service for a set amount of time before being charged, or product samples for food, cosmetic, and consumer goods companies. TBYB programs are very popular because it helps companies increase their sales by making their product their first business developer. Advantages of these programs notably include: * Build brand confidence: it gives users a risk-free way to see what you have to offer and how it works. It also demonstrates a strong confidence in the product and its ability to deliver what users expect. Notably in web3 where trust has been damaged by scams, this level of transparency and honesty is game-changer for building projects' trust ; * Increase customer satisfaction, and get valuable feedback on the product ; * Acquire new users: reducing the barrier of purchase allows projects to acquire new users, reducing costs of advertising. Conversion rates are also positively impacted ; benchmarks for freemium model are under 10%, while they are between 25% and 50% for free trials models. ### Our solution Our decentralized TBYB solution for NFTs works as a classic trial period solution. To benefit from the full potential of the service, a partnership has to be established with the project issuing the digital assets. The functioning is the following: * At checkout, the user has the opportunity to try the asset for a limited period. In one click the trial period starts ; * The user receives a wrapped version of the NFT in his wallet. This mirror asset allows to delegate utilities ; * At the end of the trial period, the user can decide to buy the NFT directly, split the payment over several weeks or not make the purchase. ### What are the benefits of using Nemeos TBYB solution ? Our solution is a very powerful tool to build trust and onboard new users. Benefits for web3 projects can be summarized in four points bellow: * **Get new users** Allow web2 users to jump into web3 by giving them the possibility to try NFT-based experiences. The product will be a top-performing acquisition method, with the best conversion rate. * **Strengthen the brand image** Demonstrate confidence in the product and its ability to deliver what is promised. Build brand trust through transparency. * **Animate the community** Build a strong relationship with the community by fully understanding their preferences and expectations. Leverage this relationship to offer an optimized customer experience. * **Unlock new usages** Ease NFT circulation between community members by going further and develop the pay-per-use functionality. Create new reward programs, new quests, new referral mechanisms and facilite scholarships. # Long term credit #### **Our protocol also allows to issue long term loans.** #### What is long term credit ? Long-term credit empowers individuals to acquire high-value assets by distributing the cost over sevral months / years. This financing option serve a dual purpose: * It first facilitates the procurement of expensive assets such as real estate or high-end art collections. An example could be the purchase of high-end digital art works ; * Secondly, long-term credit is often used as a financial instrument to increase returns on investments. An example could be the investment of tokenized real estate assets through leverage. Long-term credit is a cornerstone in the financial industry, enabling large-scale endeavors and investments that might otherwise be inaccessible. By integrating this possibility within our DeFi protocol, we expand the financial horizons for our users, allowing them to use one of the most powerful tool in the financial industry through an open-to-all and censorship-resistant solution. #### What is Nemeos long-term credit offer? There is no global offer, we can set up and deploy a pool to finance any operation / collection. Contact us to discuss your project. # Protocol design Regarding our objective of building a scalable, decentralized and easy-to-use credit solution, we have taken design decisions for our protocol to perfectly match our vision. ## Peer-to-Pool approach In general, two primary models have gained traction in the NFT/RWA lending spaces, each with its own advantages and considerations: * Peer-to-Peer (P2P) lending : individual lenders directly engage with individual borrowers. This approach eliminates the need for an oracle or a protocol to determine the NFT price and/or the appropriate loan amount. Lenders assume the responsibility of assessing the associated risks and deciding the loan amount they are willing to provide. While this model allows for flexibility and tailored-made loan terms, it presents two majors downsides: (i) challenges in risk management for lenders due to limited diversification and poor liquidity management and (ii) **very limited scalability** as it requires a lot of active individuals lenders to make the protocol work. * Peer-to-Pool lending : lenders request loans from liquidity pools. The loan amount is determined by the protocol, based on the floor price which is determined by a price oracle. This approach offers a more standardized process for lending which is sufficient for most users, but can be less performing for rare and illiquid NFTs, or less optimized for leverage traders. But it offers great liquidity and risk management (due to diversification), and high scalability. We have chosen a **peer-to-pool** approach because we want to build a scalable and standardized credit solution. Each pool is dedicated to one collection, which gives LPs the choice to select the collections they're willing to finance. ## Loan characteristics Loans are defined by three characteristics: the amount, the tenor (length) and the rate. ### Loan amount For secured loans, the loan amount is often defined by the LTV ratio. The Loan-to-Value (LTV) ratio corresponds to the amount lent, divided by the assessed value of the collateralized asset. As an exemple, when one wants to buy a house, he will pay upfront 10% of the price and borrow 90%, which leads to a LTV of 90%. LTV is a key ratio in financing because it is one of the most important metrics for risk management. In Nemeos protocol, the LTV depends on the product and is fixed for each liquidity pool, allowing LPs to manage their risk. For split payment products, the LTV is set to 25% of the floor price. ### Tenor In most of DeFi protocols, loans operate on a perpetual basis, which is particularly beneficial for NFT traders, allowing them to select the optimal moment to exit their positions. Interests are compound daily until the loan is paid back. In most cases, monthly payments are not set up for these loans, meaning that borrowers are required to repay the entire loan amount to get the asset back. In Nemeos, the duration of the loan is pre-determined by product, like in a mortgage. For a pay in four installments service, the loan lasts 6 weeks. ### Interest rate Both fixed and variable interests exist in DeFi, and there is multiple mechanisms and rules. As most of consumer-oriented loans are at fixed rate, we have kept this characteristic for each loan. Two consecutive loans can have a different rate, but once the loan is issued, its rate remains fixed. The interest rate is determined by LPs, and corresponds to weighted average of LPs' preferred rate by deposited liquidity. ## Liquidity management Deposits can be done at anytime in each liquidity pools, except for specific operations. Withdraws depend on two things: * The vesting, depending on the rate decided by the LP ; the higher the rate is, the longer the vesting is. The objective is encourage LPs to deposit their liquidity at a lower rate. * Once the vesting period over, each LP can withdraw its full position, as long as there is available liquidity in the pool. As an example, if the pool is worth 200$ thanks to 2 deposits of 100$, and if a loan of 150$ has been made, each LP can withdraw up to 50$ (first come first served). The rest of the liquidity will be available with the repayments of the user. # Detailed mechanics ## Overview At the outset a pool is created by a single address with a specific NFT collection and LTV (loan to value - w\.r.t to the floor price of the said collection). **Liquidity = Assets** The pool’s total-liquidity $$L\_{total}$$ is split in two: the available-liquidity (cash, ready to use) and the loaned-liquidity (liquidity currently being loaned to debtors). **Tokens = Liabilities** The total amount of pool-tokens $$T\_{total}$$ are split amongst the LPs (liquidity providers). The tokens give to their owner property over the pool’s liquidity as well as voting abilities in matters of pool-management, both in prorata to the total token amount.
## Tokens Tokens are emitted/burned during deposit/withdraw of liquidity. #### Liquidity deposit When a new LP wants to enter the pool, or if a former one wants to increase its contribution, he brings in a certain amount of liquidity $$L\_{LP}$$and is rewarded with an amount of pool-tokens $$T\_{LP}$$ computed in pro-rata to the pool’s total-liquidity and total pool-tokens : $$ T\_{LP} = \frac{L\_{LP}}{L\_{total}}T\_{total} $$ Please take note that the newly minted tokens are distributed with respect to the total-liquidity (= loaned-liquidity + available-liquidity), making a newcomer fully take part in the current loans, thereby exposing him to the associated risk and potential rewards. A certain minimum amount of liquidity is required in order to enter the pool. #### Liquidity withdrawal When a LP desires to partially or totally leave the pool, he forfeits a share of his LP tokens $$\tilde T\_{LP}$$(which are burned in the process) and withdraws the corresponding amount of available-liquidity : $$ L\_{withdraw} = \frac{\tilde T\_{LP}}{T\_{total}} L\_{total} $$ This operation can only be performed at the end of the vesting period, which will be detailed in the next part. ## Interest rates #### Rate referendum Each LP sets the rate at which he wishes the loans were issued. The pool’s rate (the real rate at which the loans are issued) is then computed as the weighted mean of all LPs’ preferences on the basis of each one’s token share: $$ rate = \sum\_{LPs}\frac{T\_i}{T\_{total}}rate\_i $$ This system is akin to a community vote, whereby the pool’s rate reflects the preferences of all LPs proportionally to their contribution. #### Rate update * **Direct** Each LP can update its rate preference once per day. To avoid re-computing the previous sum (and consequently the unnecessary gas fees) during such an update, the following equivalent formula is used: $$ rate:=rate\space+\space \frac{T\_{LP}}{T\_{total}}\Delta rate\_{LP} $$ * **Indirect** When the amount of tokens possessed by a LP is changed (either upon withdraw/deposit of liquidity) his voting power is diminished/increased accordingly as the pool rate is updated as follows: $$ rate:=rate\space+\space \frac{rate\_{LP}}{T\_{total}}\Delta T\_{LP} $$ * **New LP arrival** Upon entry of a new member to the pool with a token amount $$T\_{LP}$$, both the rate and the total number of tokens need to be updated simultaneously; leading to the following formula: $$ rate := \frac{T\_{total}}{T\_{total} + T\_{LP}}rate\space+\space \frac{T\_{LP}}{T\_{total} + T\_{LP}} rate\_{LP} $$ #### Vesting Upon entry to the pool, in order to encourage lower rates and discourage manipulations, a vesting mechanism is established: the LP can retrieve its liquidity from the pool only after a certain period directly proportional to the rate he has set-up. $$ t\_{vesting} = max (1, k\*rate) $$ Where $$t\_{vesting}$$is expressed in days, the $$rate$$ in %, and $$k$$is a constant (homogeneous to a duration). Both $$k$$ and $$rate$$ must be strictly positive. And when an LP sets a new rate preference, a new vesting time is recomputed, however it cannot be lesser than the remaining vesting duration he is currently in: $$ t\_{vesting} := max(t\_{vesting}, \lceil k\*rate\_{new} \rceil) $$ ## Loans The pool emits loans using its available-liquidity. * ✅If a loan is successful both the capital and interest flows are collected by the pool. Thereby transforming the lended-liquidity back to the available-liquidity, with a net-gain coming from the interest-rate. * 🚫And if it isn’t, the collateral (NFT) is put into a Dutch auction sale, then the retrieved cash amount is transferred back to the pool. It is easy to see that the amount of total liquidity over the total amount of tokens represents the overall pool’s performance, and can be used to gauge its P\&L. # Protocol global architecture The protocol global architecture, for the Buy Now Pay Later product linked to Opensea marketplace, is summarized below.
# Market value assessment This page underpins the analytical computations behind our in-house floor. To be as marked to market as possible our floor price is based on actual historical transactions cleared on decentralized exchanges as opposed to mere posted ask quotes on those same exchanges, an approach akin to the one behind the recent LIBOR reform. The algorithm is based on two safeguarding principles – one volume-bound and the other time-bound – working in conjunction and aimed at thwarting any potential wash-trading. Their implementation will be explained below. *Note: in the examples below the floor’s values at a given date are produced using only prior data (falling before the floor’s computation date), therefore those examples represent the historical floor values as they would have really been if the algorithm were put into production with a real-time data feed.* **VOLUME-BOUND FLOOR** Considering a certain lookback window composed of M most recent trades (thus avoiding potential illiquidity problems), obvious outliers are removed from the sample, as well as values too far removed from the sample’s mean. Then another smaller window of N (\
Here is a zoom on the sharp increase that happened mid-January, please note the corresponding lag on the rise, but not on the subsequent decrease.
And here are the historical values on a the BAYC collection:
And with a zoom:
**TIME-BOUND FLOOR** For an ill-intentioned operator to manipulate the volume-bound floor would require a number of trades high enough to jeopardize its computation: essentially at least N and at most M (guaranteed success). Risking in the process potential heavy losses if the operation were to fail due to fairly high transaction fees (2,5% on Opensea at the time of writing). If he were to succeed though, he could potentially issue a set of loans that would empty the current liquidity pool. That's why we've introduced a second time-based safety-net, whose role is to curb any sudden increases of the volume-based floor. The idea is to render the floor’s value smooth on the rise (linear in time) by imposing a certain increase rate. Here is the graph for both floors for the Pudgy Penguins collection:
And here is an example with real data, augmented with several hundred concentrated fake trades (as if issued by a malicious operator) at 2PM February 6th:
# Terms and conditions Updated : July 23, 2024. At Nemeos, we aim to contribute to web3 adoption, by developing payment flexibility and other financing services (such as split payment, try-before-you-buy, consumer loan, etc.) for web3 assets. These terms and conditions ("Terms") govern your use of Nemeos services. By accessing or using Nemeos, you agree to comply with these Terms. If you do not agree with any part of these Terms, you may not use our services. ### 1. Definitions 1.1 Application: Refers to the Nemeos lending and borrowing application, including its functionalities accessible through the Nemeos Website. 1.2 Blockchain: Refers to any network of distributed ledger technology connected to the Nemeos application. 1.3 Crypto-asset: Refers to any digital asset operating on a Blockchain, such as a utility token or a digital asset designed for lending and borrowing purposes. 1.4 NFT: Refers to a token stored on a Blockchain complying with a non-fungible token standard associated with the underlying Blockchain. 1.5 Projects: Refers to any natural or legal person who is the legitimate holder of the rights associated with a specific NFT Collection / digital asset on the Nemeos application. 1.6 Services: Refers to the lending and borrowing services provided by Nemeos. 1.7 Specific Terms: Refers to any additional and separate agreement concluded between Nemeos and a Project. 1.8 T\&Cs: Refers to these terms and conditions. 1.9 Users : Refers to any natural or legal person borrowing or lending digital assets on the Nemeos application. ### 2. Purpose and Scope 2.1 Nemeos builds smart contracts which allow to deploy financial services on the Blockchain. Nemeos operates the application, which allows borrowers to borrow cryptocurrency by collateralizing NFTs, and lenders to issue cryptocurrency loans in exchange for NFTs/cryptocurrency. Nemeos acts solely as an intermediary, providing a digital infrastructure to facilitate transactions on NFTs. 2.2 The purpose of the T\&Cs is to define the conditions under which the Nemeos application may be accessed and to define the rights and obligations of Users and Nemeos in this context. 2.3 Due to the lending and borrowing nature of the application, the T\&Cs do not govern any relationship between Users and Projects. Nemeos's role is limited to the operation of the lending and borrowing application and the provision of related services. 2.4 As to Projects, the T\&Cs may be supplemented by Specific Terms. In case of contradiction between the T\&Cs and Specific Terms, the Specific Terms shall prevail. ### 3. Pre-contractual Information; Warnings 3.1. NFT Features and Characteristics 3.1.1 NFTs act as digital ownership certificates of any data or asset (which can be virtual or real). The scarcity, ownership, and traceability of an NFT are guaranteed by the underlying token. 3.1.2 Unless otherwise stated by Projects, the purchase of an NFT does not imply the purchase of others IP-related rights, such as image rights, copyrights, and trademarks. 3.2. Use of Blockchain and Cryptographic Technologies 3.2.1 Accessing the Nemeos application, using the Services, and borrowing and lending digital assets require a deep understanding of blockchain technologies, digital non-custodial Wallets, and a good knowledge of the lending and borrowing market. 3.2.2 Users understand that Crypto-assets operate on networks without intermediaries and do not have legal tender, unlike currencies issued by central banks. The legal framework of Crypto-assets and NFTs varies by jurisdiction, and they may be subject to a regulatory framework that could impact their value. 3.2.3 Users are aware that Crypto-assets and NFTs are digital assets with value not inherently guaranteed, and their value depends on unregulated markets, exposing Users to high risks of loss of value. 3.2.4 Services based on blockchain technologies, such as Nemeos, are exposed to cyber-attacks (e.g., phishing) and hacking practices more than other services. 3.2.5 In case of doubt or lack of understanding of the functioning of blockchains, non-custodial wallets, Crypto-assets, or NFTs, Users should refrain from accessing the Nemeos application and using the Services. 3.3. Security 3.3.1 Due to the non-custodial features of Wallets, Users acknowledge and agree that they are primarily responsible for the security of their Wallets, their NFTs, their Crypto-assets, their data, and their funds. 3.3.2 Users must ensure that their Wallet is secure and should never share their Wallet credentials or seed phrase with anyone. Nemeos will never ask for a User’s credentials associated with a Wallet. 3.3.3 Nemeos does not store any password or seed phrase, nor has any access to any User credentials, except the User’s email address when willingly shared with Nemeos. Nemeos cannot be held liable for any security breach attributed to a User. ### 4. Access to the Services 4.1 For Users 4.1.1 In order to fully use the Services (e.g., borrow and lend digital assets), Users must have (i) a Blockchain address, (ii) a wallet associated with such Blockchain address, and (iii) funds in Crypto-assets associated with such Blockchain address. 4.1.2 Compatible wallets that may be used on the Nemeos application are listed on the website. 4.2 For Projects 4.2.1 In order to register as a Project and fully benefit from the Services (especially offering NFTs for lending and borrowing), any natural or legal person must contact Nemeos beforehand. Access and use of the Services may be subject to prior approval from Nemeos. 4.2.2 Projects acknowledge and agree that the use of the Nemeos application and access to the Services are subject to the Project having a legal and tax status (e.g., a company or a regular freelancer status) allowing the regular provision of services in compliance with local laws where they operate. ### 5. Acceptance and Amendment 5.1. Acceptance 5.1.1 These T\&Cs apply, without restriction or reservation, to any use of the Services, the Website, and the Nemeos application. By using the Services, each User fully and unconditionally accepts the associated conditions and acknowledges the associated risks. ### 6. Governing Law and Jurisdiction 6.1 The T\&Cs are governed by and interpreted according to French laws. 6.2 Any conflict or dispute related to the validity, the interpretation, performance, and/or termination of the T\&Cs must be submitted to the exclusive jurisdiction of the Commercial Court of Paris (1 Quai de la Corse, 75001 Paris). 6.3 According to applicable consumer laws, non-professional Users may submit any dispute related to the T\&Cs in the jurisdiction where they were living at the moment of the acceptance of the T\&Cs or in the jurisdiction where the damage occurred. ### 7. Security Breach and Protocol Exploit 7.1 Audit and Security Measures: Nemeos acknowledges that the Blockchain protocols operating the lending and borrowing services have been audited by Quantstamp in March 2024. While this audit aimed to enhance the security and integrity of the application, Nemeos acknowledges that no system is entirely immune to vulnerabilities or exploits. 7.2 User Acknowledgment of Risks: Users acknowledge and accept that, despite best efforts in implementing security measures, the inherent nature of blockchain and decentralized finance technologies carries risks, including the risk of exploits and security breaches that may result in the loss of funds or digital assets. 7.3 Limitation of Liability: Nemeos shall not be liable for any loss or damage arising from unauthorized access to, or use of, the application and services, including any loss of funds or digital assets resulting from a security breach or protocol exploit. This limitation of liability is applicable to the fullest extent permitted by law and survives any termination or expiration of these Terms or the use of the Nemeos application and services. 7.4 Notification of Breach: In the event of a security breach or suspected protocol exploit, Nemeos will make reasonable efforts to notify affected users promptly, subject to the needs of law enforcement and any measures necessary to determine the scope of the breach and to restore the integrity of the system. 7.5 User's Responsibility in Security Breach: Users are responsible for taking immediate steps to secure their accounts in the event of a security breach, including changing passwords, securing digital wallets, and monitoring their accounts for any unauthorized activity. 7.6 Cooperation in Investigation: Nemeos and its Users agree to cooperate fully with any investigation into security breaches or protocol exploits and to assist in the prosecution of any individuals involved in such activities. 7.7 Amendments in Response to Exploits: Nemeos reserves the right to amend these Terms and its protocols in response to a security breach or exploit to enhance security and protect its users. ### Cookies and Local Storage This section is dedicated to explaining how we use cookies and local storage on our website. #### What Are Cookies and Local Storage? Cookies are small text files stored on your device by a website. They are commonly used to remember your preferences and enhance your browsing experience. Local storage is a method that allows websites to store data directly in the web browser. #### How We Use Cookies and Local Storage We don't use specific cookies, except from: * **Google Analytics Cookies (\_ga):** These cookies are set by Google Analytics and are used to distinguish users and sessions. They help us understand how visitors interact with our website, enabling us to improve user experience and service quality. #### Data Security and Privacy We are committed to ensuring the security and confidentiality of the data we collect through cookies and local storage. The information gathered is used solely for enhancing user experience and for analytical purposes. We do not use these cookies to collect personal information about our visitors, and we do not share this data with third parties without your explicit consent, except as necessary to provide our services or as required by law. #### Your Choices and Consent By using this website and interacting with it, you accept the use of these cookies when you first visit our website. You can also control and manage these cookies through your browser settings at any time. Please be aware that disabling cookies might impact the functionality of our site and your user experience. #### Changes to Our Cookie Policy This policy may be updated to reflect changes in our practices or legal obligations. We encourage you to review this policy periodically to stay informed about how we use cookies and related technologies. If you have any questions about our use of cookies, or if you would like to exercise your privacy rights, please contact us at . # Audit Nemeos' protocol security audit was made by Quantstamp, and published on the 15th of March 2024. The final report is available here: {% embed url="" %}