AMA Recap: Nova Finance x CryptoRand
This AMA session was conducted on December 22, 2021. Our Co-Founder Tom Sichel answered in real depth to some diverting community questions related to the platform, goals and mission for Nova. A real treat for the DeFi brain!
Q: Why did you feel the need to launch your platform on blockchain? Was blockchain the only option?
A — Crypto is an economic, philosophical, political and social paradigm shift, this generation of internet natives and technology adopters live
in a truly incredible age where innovation and tech is accelerating at a pace never seen before. In my belief innovation will only accelerate
more as the token economies mature and grow in adoption; without blockchain tech this wouldn’t be possible.
Building on blockchain, in my belief, is fundamentally different to normal tech architectures because you can build protocols where…
- They are censorship-resistant; no one can stop them.
- They are decentralized; no one controls them.
- They are permissionless; anyone can use them.
- They are secure; bad actors can never abuse them.
- They are programmable; trust is enabled through code.
- They are transparent; data is accessible and easy to use.
- They are immutable; protocols never change.
- They are progressive; innovation is rapid & open source.
To summarize, thanks to blockchain, where there is internet there can be money…
Q: Will ETH 2.0 have any impact on your solution and what kind?
A — Solana is fast and it’s TXs are very low cost, this lets us deploy complex investment rules across 100s of assets, something unfeasible on ETH 1.0.
That said, we do plan to be multi-chain, Nova will have an EVM version available in Q2 of 2022, meaning our users will be able to program assets & create portfolios with not just the Solana network but also in Polygon, other layer 2 networks and of course with all Ethereum based assets. Said another way, our belief is, the more assets that can be programmed on Nova the more value our platform will bring its users.
Indeed, with Nova being multi-chain and our protocol functioning best when gas is low + TXs are fast, ETH 2.0 would be incredibly good for Nova.
Q: Will anybody be able to create a portfolio to follow or will you hand pick reputable traders to follow?
A — Anyone can create a portfolio on Nova. You might ask, why do this? Will it not lead to bad returns? The why behind this is pretty clear for us.We believe strongly in being permissionless, that anyone across the world should be able to invest or create portfolios with Nova. It can be said, however, that there will be a lot of spam portfolios and bad investment opportunities on Nova if everyone and anyone can create portfolios. The way we prevent the problem of poor returns is through two mechanisms:
1) Performance Indicators
Embedded into Nova are a set of features that let you see if a portfolio is actually a good investment or not. This will include a feature that shows how “diversified” a portfolio is. This one metric alone can increase returns & mitigate risk dramatically, you can check some of the theories out behind it here: https://www.youtube.com/watch?v=Nu41HaSh7D4
Another performance indicator we’ll include will be called the “Backtester Score”. Because Nova’s portfolio is made of assets and these assets are being bought, sold or yielded according to a set of fixed trade rules it means we can see how well a portfolio would have performed based on historic market data. In using the back-tester feature a portfolio creator can stress test their investment thesis before releasing the portfolio to the public.
Both diversification and backtesting are core performance indicators among many others soon to come to the platform, technology risk score and Asset manager reputation score, to briefly mention a few other performance indicators.
2) Portfolio curation through the Nova Token. The Nova token is primarily designed for governance. One area it will do this with is in the curation of portfolios. Imagine the platform is filled with 100s, maybe even 1000s of portfolios, this would make it nearly impossible for an investor to decide which portfolio to allocate money toward. For this reason we will be creating investment criteria that owners of the Nova can vote upon. This will include criteria such as “how diversified is this portfolio?”, “Does the asset manager have a great reputation?” and so on…
In letting Nova token holders essentially rate portfolios according to tried and tested investment criteria Nova can then tap into the wisdom of the community. Now, you might ask, why would I want to rate/ curate portfolios with my Nova tokens? The answer, you’ll be given large Nova rewards if you bring genuine value. Essentially, if you rate a portfolio early, long before it has large AUM (assets under management) then you will be rewarded a large payout of Nova for making the community aware of the investment opportunity. In some ways you can think of this process similar to venture capital… VC’s are presented investment proposals, they then vote as a VC committee on which proposals to invest in and then they make a big reward if they were right. Nova has taken this same model and will make it open to a community. This idea is the reason for calling Nova an Autonomous Venture Fund. A core part of our DAO vision I’d love to share more about at a later date with you all :)
Q: What is the biggest benefit of using your app compared to other portfolio trackers like Blockfolio, Kubera or Delta? Why would users switch to your app? It’s great that you can look and/or copy the portfolio’s of other (more)experienced investors, but many experienced investors give insight into their portfolio.
A — It’s true that Blockfolio, Kubera and Delta are excellent portfolio platforms, they make it easy to invest across a range of many assets. That said, these platforms are centralized and therefore not permissionless. That is, there are many different countries that cannot use these portfolio platforms because of regulation. Nova is different to this, it is decentralized, meaning where there is internet there can be access to one of Nova’s portfolios — it doesn’t matter where you are from you can use Nova, you just need the internet and a computer or smartphone.
Another aspect to consider is tokenization. Unlike other platforms, Nova’s portfolios are tokenized. This means you can increase the value or use of the portfolios you invest in. To give one example, you could get a collateralized loan against your portfolio tokens on a platform like Aave. With the number of features and use cases growing exceptionally fast across the DeFi space, it’s safe to say that with Nova’s tokenized portfolios there will be a number of incredible benefits yet to be built by the wider crypto ecosystem — who knows, maybe someday someone gets a mortgage for their house based on collateral from their Nova portfolio, the sky is truly the limit in terms of what people will do with portfolio tokens. Finally, and probably most importantly, with Nova there is an emphasis on governance and being community-owned. Our dream and hope for Nova is that it can become a DAO and fully owned by the community. Participating in a meaningful way with DAOs can be extremely rewarding for the early adopters both financially & also in terms of the connections or relationships you can go on to form.
In many ways, Nova is aspiring to mimic a similar voting process to Bridgewater. That said, there are a number of key differences. Our approach to governance and culture is what we call a “Liberal Meritocracy” as opposed to an “Idea Meritocracy” — we aspire to what is similar but not the same as Bridgewater. In a Liberal Meritocracy the basic idea is that you are free to pursue what has merit. To do this at a global scale there must be a set of common merits & individual merits, or, said another way, common values & individual values the protocol governs itself according to. The merit and values of Nova, at this current moment, are: Evolution, Trust, Prosperity, Meaning, Sagacity, Self Sufficiency & Sustainability. Each merit has sub principles that help guide us as a team. It’s worth saying that these values came about from the individuals of the Nova team, we set out our own individual values and then discovered we had 6 values in common across the whole team. The merits or values mentioned are used in Nova to vote on protocol improvements, to rate portfolios and potentially much more as we improve our governance process. The aim with governance in a Liberal Meritocracy is to make decisions as a group that align with what is deemed to have merit — Nova’s big decisions are merit driven. At a later date, we will open this governance process beyond just the Nova team and go on to include Nova token holders. In the case of portfolio curation this takes the form of pre-defined investment criteria, Nova token holders can rate portfolios based on a set of investment principles that have been deemed to be meritable by the Nova community. The first set of investment criteria will be set out by the founding Nova team. But, as time progresses and the Nova DAO is formed, anyone can propose investment criteria that can be voted upon and added to our principles for investing. I would love to go deeper on this subject, but, for the moment, this will be all I write. Thanks for asking this question.
About Nova Finance
Nova is a programmable asset framework that allows people to access DeFi without having to learn complex financial management skills. Within the product, users can create a portfolio of assets which auto-generate returns through yield strategies while auto-executing on investment strategies such as dollar cost averaging, take profit calls and much more.
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