Read on Twitter
1/ Why you shouldn't be buying @NexusMutual $NXM right now unless you have $17.6m in ETH.
2/ With the recent FOMO on CT about $NXM, there has been a mad lad rush of the crowd getting into @NexusMutual
This can be noted with a huge inflow of 25,000 ETH into the Capital Pool since 8 Aug 2020
This can be noted with a huge inflow of 25,000 ETH into the Capital Pool since 8 Aug 2020
3/ Analysing at how purchases of $NXM are made over the past 3 days, a majority of these buyers have no idea on the Math and the structure of @NexusMutual and are just riding on the hype train.
4/ This would have worked perfectly on any other project expect @NexusMutual and here's why.
On Governance Proposal #83, the MCR incremental was reduced from 1 day to 4 hours.
On Governance Proposal #83, the MCR incremental was reduced from 1 day to 4 hours.
5/ What this means is that over time, the price of $NXM will decrease every 4 hours
(assuming capital pool growth < growth of MCR ETH)
My previous tweet explaining why using maths https://twitter.com/ka_toos/status/1284474207921790976
(assuming capital pool growth < growth of MCR ETH)
My previous tweet explaining why using maths https://twitter.com/ka_toos/status/1284474207921790976
6/ To explain in even more simple terms here are 3 charts I got my 5-year-old girl to draw. (An ELI5)
7/ The Good.
When capital pool growth is greater than MCR(eth)'s 1% growth, the price increase over time.
At every 4 hour mark, there is a drop in price but this is negated as whales buy-in pushing up the price.
When capital pool growth is greater than MCR(eth)'s 1% growth, the price increase over time.
At every 4 hour mark, there is a drop in price but this is negated as whales buy-in pushing up the price.
8/ The Bad.
When capital pool growth = 0, the price decreases over time.
As buying pressure dries up and no new sheep buys-in at the overvalued range, the price of $NXM will drop at every 4-hour mark.
When capital pool growth = 0, the price decreases over time.
As buying pressure dries up and no new sheep buys-in at the overvalued range, the price of $NXM will drop at every 4-hour mark.
9/ The Ugly.
When capital pool growth is less than 0, the price rekts over time.
When whales realise they should take profit on overvalued ranges, this will cause the price to drop and is further compounded every 4 hours.
When capital pool growth is less than 0, the price rekts over time.
When whales realise they should take profit on overvalued ranges, this will cause the price to drop and is further compounded every 4 hours.
10/ So as of this tweet
MCR = ~160%
Nxm Price = 0.0718 ETH
Capital Pool Size = 86,095 ETH
MCR eth = 53,617 ETH
If capital pool growth does not outgrow MCR(eth)'s 1% incremental every 4 hours, the price will eventually decrease over time until MCR = 130%
MCR = ~160%
Nxm Price = 0.0718 ETH
Capital Pool Size = 86,095 ETH
MCR eth = 53,617 ETH
If capital pool growth does not outgrow MCR(eth)'s 1% incremental every 4 hours, the price will eventually decrease over time until MCR = 130%
11/ At MCR = 130%, assuming capital pool growth = 0, the $NXM price will drop to 0.043 ETH in 3 days time.
A 40% decrease in price.
If whales start TPing it will drop even lower.
If a whale decides to buy now it will sustain the price until the next whale buys his bags.
A 40% decrease in price.
If whales start TPing it will drop even lower.
If a whale decides to buy now it will sustain the price until the next whale buys his bags.
12/ At current levels is there even a rush to enter into $NXM?
People who are saying it is the BEST risk/reward they've seen, well.. it is for them when MCR=130% but not for you at these levels (MCR =160%).
People who are saying it is the BEST risk/reward they've seen, well.. it is for them when MCR=130% but not for you at these levels (MCR =160%).
13/ With new buyers FOMO'ing in, the early entry guys are only free-riding on them.
14/ As it stands right now, there needs to be $17.6m USD (44,000 ETH) worth of buying pressure into the capital pool till $NXM moons.
As when MCR eth = 100,000 and the MCR eth incremental slows down to a 24 hour period.
As when MCR eth = 100,000 and the MCR eth incremental slows down to a 24 hour period.
15/ A misconception is that we will get there in 12 days as this user on the forum points out.
16/ 12 days is the MINIMUM assuming some whale fills up 44,000 Eths into the pool.
If that doesn't fill, it will stagnate back to MCR = 130%.
If that doesn't fill, it will stagnate back to MCR = 130%.
16/ According to https://nexustracker.io/capital_pool
The capital pool growth has dramatically slowed down with ~4k eth increased in past 24hr period compared to the previous 24hr period of ~9k eth increased.
If the trend continues it is only a matter of time before the buys dry up.
The capital pool growth has dramatically slowed down with ~4k eth increased in past 24hr period compared to the previous 24hr period of ~9k eth increased.
If the trend continues it is only a matter of time before the buys dry up.
17/ On a side note, Capital flows constantly into the market's highest Alpha Yields. $NXM is what everyone is Fomo'ing today but what happens when $SRM launches on @FTX_Official or when $CRV releases on @CurveFinance?
Will capital pool growth still hold?
Will capital pool growth still hold?
18/ If you feel so, buying in now is ideal.
However if you don't feel capital pool growth will hold, sit back, relax and watch it fall.
However if you don't feel capital pool growth will hold, sit back, relax and watch it fall.
19/ Bonus Alpha Leak:
Did you know you can arbitrage between
$NXM --> $wNXM --> Uniswap Pool
and Vice-Versa
The main buys are coming in on $NXM and only a few uses $wNXM Uniswap pool which results in high arb opportunities.
Did you know you can arbitrage between
$NXM --> $wNXM --> Uniswap Pool
and Vice-Versa
The main buys are coming in on $NXM and only a few uses $wNXM Uniswap pool which results in high arb opportunities.
20/ There has only been one guy arbing this across 3 days and is a known public figure 
who supports the project.
who supports the project.
