Nova Finance seeks to make DeFi accessible to every investor through automation and education

The asset-management protocol wants to even the playing field for anyone looking to delve into the cryptocurrency space.
Written by Evan Zimmer, Staff Writer
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Image: Getty Images/iStockphoto

Nova Finance, a Decentralized Finance (DeFi) asset-management protocol that's planning a soft launch in the coming weeks, has pioneered a way to allow cryptocurrency experts to build crypto portfolios for other, less experienced, investors to take advantage of.

Nova Finance, which is built on the Solana blockchain, utilizes a unique module called an nAsset. An nAsset is a module backed by a particular token, whether it be Solana or Ethereum or Nova Finance's own native token, Nova.

 nAssets can then be programmed to execute specific commands or to apply specific investing rules to portfolios. 

For example, an nAsset backed by ETH can be programmed to execute a trade when ETH hits a specific value, automating the trading process. Cryptocurrency experts can use nAssets to build portfolios using the Nova Finance framework and program them with varying levels of risk, diversification, and how to manage the digital assets held within the portfolios.

The portfolios are programmed with specific trading rules via the nAssets, and can then be shared with other investors. The automated portfolios do all of the work, and the portfolio creators get a 10% yield of the portfolio's return. By allowing the automation of trades, Nova Finance seeks to lower the knowledge barrier that prevents many would-be crypto investors from diving into the space.

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"There's really a new massive wealth opportunity to be had," Tom Sichel, Nova Finance co-founder, told ZDNet. "It's almost like finding a new frontier in economics and the way in which money yields value for people and creates wealth through investments. For [Adam Greenberg and I,] it was about, 'how can we bring others on that journey alongside us?'"

Sichel, along with fellow co-founder Adam Greenberg, saw the potential in blockchain technology early and are now looking to make it as accessible as possible for any consumer interested in the space. But it has its fair share of challenges.

"I think the reason that DeFi projects struggle the most is because they're built and run by engineers. People who love the technology, but that doesn't always translate into what you can actually do with it. So, for us, we really try to take a user-centric approach," Greenberg said.

As such, the Nova Finance team has done hundreds of different interviews and sessions with users to really get to know their mentalities in order to figure out how consumers will engage with the Nova Finance platform. They've tested and retested, and are doing their best to smooth out consumer pain points. And when their mobile product launches "probably within the next four months," Greenberg said, Nova Finance will see yet another overhaul to ensure a seamless and accessible consumer experience.

Pulling back the curtain

Growing up in the internet era prepared Sichel and Greenberg to dive head-first into the growing world of cryptocurrency and blockchain technology. Whereas older investors, or perhaps simply less tech-savvy people, might find it a bit more challenging.

"The idea sort of stemmed from watching my dad buy crypto for the first time," Sichel said. "After convincing him, I went through the reality of educating him on what a wallet is, how you actually buy [crypto], and it was a real nightmare to say the least. And after he had actually bought Bitcoin, he turned around and said, 'Tom, can I lose half my money in one week from this investment?'"

Sichel said the process of explaining how to purchase crypto, and the risk involved, to his father, highlighted the knowledge barriers keeping people out of the blockchain space. So Sichel and Greenberg set out to build a crypto protocol designed to get everyone into crypto that wants to be a part of it.

The Nova Finance team is aiming to level the playing field so all investors have an opportunity to grow wealth and access tools and strategies typically reserved for experienced investors or institutions. According to Nova Finance, DeFi is the answer.

"[DeFi is] opening up this kind of gateway that typically a lot of those financial operations, such as lending and yield generating opportunities, that have only really been reserved for the super wealthy and institutions in the past. And so, for people to get their head around these kinds of concepts, and be on a level playing field, is the biggest thing that we've got to overcome," Greenberg said.

But how can you pull back the veil of complexity surrounding DeFi and blockchain that puts off so many would-be investors? According to Nova, the answer is simple: Just remove that complexity.

"Many protocols say, educate more and get users on board. But our view is, why not take away the complexity all together? And this brings us to nAssets. Etch your investment thesis into the programs of the asset, and then share that portfolio with newcomers so they can follow your investment thesis," Sichel said.

What's an nAsset, and how can they be used?

Buying and holding crypto in either a hot (physical) or cold (digital) wallet is only the first challenge for investors to overcome. Once you own the digital asset, next you have to learn to manage it in the correct way that yields the maximum return. That's where Nova Finance's nAssets and pre-built crypto portfolios enter the picture.

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According to Sichel and Greenberg, at launch, Nova Finance will have featured portfolios created by the Nova Finance team. The portfolios will be programmed with nAssets and utilize the team's considerable knowledge of crypto and investment strategies. However, following Nova Finance's launch, the team hopes to build a community around their innovative investment portfolios.

Nova token holders will be able to vote on the effectiveness of portfolios based on several predetermined investment criteria. Criteria could include diversification, risk tolerance, and what sort of technology is involved within the portfolio.

"What we're trying to do is basically tap into this community and get people to bubble up to the top the best investment opportunities through their ratings," Sichel said. Investors that get in early with lucrative portfolios and let other investors know about it by utilizing their Nova tokens to vote, will see the greatest return on their investment.

"You've got creators who make portfolios, curators who come in and use their Nova tokens to rate and curate the portfolios, and then investors who allocate capital. And that's the synergy we're trying to build there between those three [facets]," Sichel said.

Additionally, nAssets will be able to give investors even more utility down the line once the team implements the ability for them to be tokenized. Once the nAsset is tokenized, holders will be able to use the token with other protocols and networks, giving Nova Finance considerable interoperability.

"You can tokenize your [nAsset] and then, because it's a token, you can go off and use it in different protocols," Sichel said. "So, that allows for interoperability in our system to work with other protocols like Port Finance, for example, which lets [consumers] get loans against [their] crypto."

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That means sometime in the future, nAsset holders can tokenize their investment rules they've created with Nova Finance and then use that token as collateral with Port Finance to get a loan. The team is also looking to back nAssets with stable coins such as Hubble Protocol. "So as DeFi is going to create more and more financial use-cases, there will be more and more benefits you can get with your nAssets," Sichel said.

Educating the masses

Automating investment strategies and building collateral for consumers isn't the only way Nova Finance is looking to lower the barrier around DeFi. The team is also building Nova Academy, which will be a key factor in onboarding consumers into the crypto space.

According to the team, the academy will focus on educating users on the basics of crypto, such as what is a wallet, how to set it up, and other basic information. The team hopes its nAssets will handle the more complex facets of crypto investing, taking some of the pressure off of consumers.

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Nova Finance is planning a soft launch on the Solana Mainnet in the coming weeks. The team has been running on a devnet period utilizing dummy tokens and running tests for a few months. They've recently embarked on an audit with Certik – which measures blockchain protocol security – and will release following completion. Once Nova Finance releases, the team wants user feedback to finetune the experience in order to create the best asset-management protocol for investors to utilize.

"The soft launch is happening in the next few weeks, so it's definitely something we want everyone to check out and give feedback on. Even if they hate it, we actually want to hear that in particular," Greenberg said.

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