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Nexus – A Sleeping DeFi Blue Chip

Jan 19, 2021 · 4 min read

By Medio Demarco

This is a sample of a research note we sent to clients yesterday. For the next 24 hours, anyone who uses code “ETHATH” will get 50% off their first month of any subscription or 20% off an annual plan! Lock in your Delphi Membership here

As ETH ripped higher in recent weeks, NXM followed suit. Over the past 30 days the price of ETH increased +88% while NXM and wNXM rose +90% and +84%, respectively. The reason for this lock-step appreciation across assets is due to Nexus’ capital pool, which is almost entirely comprised of ETH. As the value of ETH held in, and controlled by, the protocol increased so did the token which has claim on it.

This was expected. In our Institutional Nexus report from July, we outlined our investment thesis and stated that we viewed NXM as a form of “levered” pass-through exposure to ETH. If changes in the price of ETH represent beta exposure for DeFi, then NXM price performance in excess of that would be alpha. If we look at the chart below, the recent gains for Nexus can be entirely attributed to its beta component, as the dollar price soared while the bonding curve price, denominated in ETH, stayed flat.