Supply Limit Increase!
Nexon Finance has increased the total supply limit to $1.5M.This post also explains why there is a supply limit in place.
Yesterday was a big day, we hit a major milestone by reaching the $1M supply limit!
Today, We are excited to announce that Nexon Finance has increased its total supply limit from $1M to $1.5M. This move is in response to the growing demand from the community and the growing confidence in our project.
Our team introduced a supply limit to protect the user positions. This limit is designed to mitigate the potential liquidity risk, which has been a significant challenge for many other projects in the space.
But ser why is liquidity so important?
In pooled lending protocols liquidations keep the protocol solvent. To carry out liquidations, there are two ways to supply the required liquidity - either through direct access to funds (let’s call this direct liquidity) or by borrowing funds from DEXes or other sources, let's call this external liquidity. Liquidating large positions requires external liquidity, which can be a challenge if there is insufficient liquidity available from external sources. As a result, allowing users to create large positions without adequate external liquidity can be a risky proposition.
So why no external liquidity?
Apart from USDC & ETH, the liquidity of other crypto assets has been low recently, and this has been a significant challenge for many projects. While there is ample liquidity for ETH, it remains challenging to find efficient ways to leverage that liquidity. Borrowing liquidity via flash loans or flash swaps is not possible on some of zkSync's most liquid decentralized exchanges. Some decentralized exchanges either lack sufficient ETH liquidity or exhibit erratic fluctuations in their liquidity levels, making them unreliable to use.
We’re regularly following up with our partner DEXes about this. We also continue to explore new partnerships and collaborations that will help increase the supply limit so that everyone has open access to all the liquidity in the Nexon lending pool.
We recognize that the ability to access liquidity is critical to the success of any project, and we are committed to exploring new options. By introducing a supply limit to protect against liquidity risk, we are taking concrete steps to keep our users safe and ensure the long-term success of Nexon Finance.
Nexon is making strides towards its goal of simplifying the user experience (UX) of decentralized finance (DeFi) with this launch. Finally, we want to express our gratitude to our community for their unwavering support and dedication to the project. The Nexon team values your contribution at every step of the way.
We're creating Nexon with the entire DeFi community in mind, and we invite you to join us in shaping this collective experience. Let's build Nexon together!
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