Borrowing in DeFi usually means variable interest rates that spike without warning and liquidation systems that can wipe you out during a bad day in the market. Nolus works differently: fixed rates, real asset ownership, and liquidation thresholds that actually give you room to breathe. The protocol is now expanding to Solana through Solray, bringing this predictable leverage model to one of crypto's deepest liquidity pools, without relying on custodial bridges.
Key Takeaways
- DeFi Lease Innovation: Nolus features a leasing-style algorithm that can finance up to 150% of an initial contribution.
- Lower Liquidation Risk: The protocol handles positions with deeper safety margins, so the system tolerates sharper price swings before stepping in.
- True Asset Ownership: Unlike futures or perpetuals, borrowers retain full ownership of the underlying assets.
- Fixed Interest Rates: Nolus removes the guesswork from leverage by fixing interest rates at the start, protecting borrowers from the unpredictable fee surges.
- Cross-Chain Interoperability: The protocol is wired into multiple ecosystems, so liquidity and swaps aren't limited to a single network.
What is Nolus Protocol
Nolus is an asset-backed margin leverage protocol that addresses a specific problem in DeFi lending: over-collateralization requirements, which lock up excessive capital. Most leverage platforms require 150-200% collateral ratios, meaning you deposit $1,000 just to borrow $500. Capital sits idle as risk insurance. Nolus reverses this: you deposit collateral and borrow up to 150% against it. That 2.5x capital efficiency matters operationally.
The main idea is deliberately conservative. Nolus focuses on asset‑backed positions, predictable costs, and risk controls that make sense to both active traders and more traditional investors. In practice, that means you deposit collateral, borrow assets at a rate that never changes, and use the combined amount to buy the real asset you want, SOL, ATOM, or others, while the protocol holds it in a smart contract. The interest you pay becomes yield for lenders, and because positions stay open longer due to lower rates and better liquidation cushions, utilization stays high, which in turn keeps APY attractive for capital providers.
Core protocol logic operates on a sovereign blockchain, ensuring enhanced security and operational integrity. This architecture gives borrowers access to deep liquidity without custodial risk, while maintaining the security guarantees that come from on-chain verification.
The Founding and Early Growth
Mainnet launched on May 23rd, 2023, marking the start of live trading on the Nolus protocol. The launch followed months of development and testnet validation. The initial focus was straightforward: enable staking on the protocol, bootstrap lender deposits into liquidity pools, and allow borrowers to open DeFi Leases against Osmosis' most liquid assets via integration with the Osmosis DEX.
Behind the launch was a professional team with founders: Ivan Kostov (product) and Kamen Trendafilov (finance). They invented Nolus to improve how crypto leverage works, and chose to build on Cosmos because interoperability between blockchains mattered.
The project raised $2.5 million at a $20 million post-money valuation from Dorahacks, Everstake, Token Metrics Ventures, Cogitent Ventures, and Autonomy Capital. The advisory board included Cosmos veterans like Zaki Manian (Sommelier, Iqlusion) and the Strangelove team, ensuring solid cross-chain expertise from day one.
Throughout 2024, Nolus' first full year of operation, the protocol expanded rapidly with product upgrades, enhanced asset offerings, and DEX integrations. The protocol added support for volatile assets as base lending currencies, enabling short positions and creating a comprehensive leverage solution for both long and short market participants. Late 2024 saw the introduction of Kai, an AI assistant built into the app. Kai handles onboarding, explaining collateral ratios, liquidation mechanics, yield calculations, notifies users about network upgrades, and answers protocol questions in real-time. Later, Kai expanded to Nolus Discord, providing moderation and protocol updates, reducing friction for new participants.
In 2025, the protocol refined its infrastructure. Fee abstraction allowed transactions in any supported asset, removing friction for users without holding NLS. User experience improvements included tax-ready CSV exports, mobile wallet support, and one-click restaking for delegators. In November, the team announced Solray, the first implementation of IBC (Inter-Blockchain Communication) directly on Solana. That means that margin flows will execute in Solana’s high-performance, high-liquidity environment, unlocking new possibilities for users across both ecosystems. As of December 2025, the protocol has processed $171.7 million in cumulative transaction volume, with near $2 million in current TVL.
How Nolus Works
Nolus operates as a Layer 1 Proof-of-Stake blockchain built with Cosmos SDK. The protocol runs on CometBFT consensus, enabling fast transaction processing and high throughput. This architecture gives Nolus fine-grained control over risk parameters, liquidation mechanics, and oracle integration - capabilities essential for safe leverage trading.
The protocol relies on ABCI 2.0 (Application Blockchain Interface), which provides finer control over transactions and introduces vote extensions, validators can participate directly in a decentralized price-feeding mechanism, enhancing data reliability and reducing dependence on off-chain oracle providers. Smart contracts execute on CosmWasm, which adds support for more efficient cross-chain operations. IBC (Inter-Blockchain Communication) modules integrate directly into the chain, enabling native cross-chain message passing without wrapped tokens or custodial intermediaries.
From Long-Only Leasing to Two-Sided Margin
Nolus originally launched as a DeFi leasing protocol, enabling users to amplify upside through fixed-interest loans and built-in risk controls. The model proved product-market fit, but it had a structural ceiling: positions could only be long. Users could profit from rising markets but could not hedge, short-sell, or express two-sided views.
In 2025, Nolus removed that limitation. By expanding its position architecture, the protocol evolved into a two-sided, asset-backed margin leverage instrument. Users now open both long and short positions while preserving the core principle: real asset ownership inside each margin position, backed by fixed protocol interest locked for the position's duration.
This evolution completed the transition from a single-purpose leverage tool into a structure capable of rivaling both spot and perpetual markets, without inheriting their fragility.
DeFi Lease
The core Nolus mechanism is the DeFi Lease. When you deposit collateral, say, 1,000 USDC, the protocol makes available borrowed stablecoins up to 150% of that deposit. That combined amount swaps into your target asset through the best available DEX route and locks into a dedicated smart contract. You own the actual token, not a synthetic derivative or perpetual futures contract. The position is backed by real assets held in escrow.
Borrowing costs are fixed when you open the lease and remain locked for its duration. The protocol calculates the interest rate based on current pool utilization and lender demand, then freezes that rate at origination. This predictability matters: you can model position returns accurately without worrying about funding rates shifting unexpectedly.
Liquidation avoids the all-or-nothing wipeouts common in other leverage platforms. When a position's health metric approaches danger, the protocol executes a partial liquidation, selling just enough collateral to restore health. If you have a $2,500 position with $1,000 collateral, the protocol might sell $200-300 of collateral to restore health, leaving you with $2,200-2,300 of exposure intact. This partial approach means you lose less capital during downturns.
Market Anomaly Guard: Protection During Chaos
Sharp price crashes create a problem: exchange prices can briefly fall far below real market value. If liquidations happen at those depressed prices, you lose far more than you should.
Nolus' Market Anomaly Guard watches for this.
How it works:
- Liquidation thresholds rely on EMA pricing to filter short-lived spikes rather than reacting to every price movement.
- On-chain swap output is simulated before execution. If the expected output falls below a defined safety threshold, liquidation pauses.
- If prices recover, the liquidation either executes at the recovered price or cancels outright because the position healed itself.
By allowing liquidations to pause or cancel during temporary market dislocations, this logic avoids forced execution at irrational prices. The result is fewer unfair liquidations, less collateral destruction, and improved protocol safety. Nolus waits for conditions to normalize before executing, rather than reacting to transient volatility.
Real-world validation: In mid-October 2025, the crypto market experienced the largest single-day deleveraging event in history. Within just 24 hours, nearly $20 billion in value was wiped out through liquidations, more than 1.6 million accounts were forcibly closed, and many altcoins plunged between 30% and 70%. During this stress test, roughly 81% of Nolus' portfolio remained intact after the crash. MAG protected approximately 24% of the portfolio from unfair liquidation.
How Lenders and Borrowers Interact
Nolus is a fully automated money market, connecting lenders and borrowers directly. No custody. No intermediaries. All transactions happen between the two parties through the protocol - nothing else.
Lenders: The Liquidity Engine
Capital providers deposit assets (USDC, ATOM, or others) into Liquidity Providers' Pools (LPPs), each denominated in a single currency. Interest from DeFi Leases is collected and immediately distributed to lenders based on their share of the pool. If interest isn't paid when due, it's automatically deducted from the borrower's collateral. This keeps yields flowing to lenders without delay.
If you are a lender, your deposit feeds all the leveraged positions borrowers open in that currency. In exchange, you receive nLPN tokens, interest-bearing receipts that represent your ownership stake in the pool. These tokens grow in value automatically as borrowers repay their loans. The value accumulation happens through an index-based mechanism: borrowers' interest payments increase the nLPN exchange rate, so you own a growing share without lifting a finger.
Your yield depends on demand. High borrowing = higher yields. Low borrowing = lower yields. But there's a safeguard: if the protocol isn't being used efficiently, new deposits are capped, so existing lenders don't get diluted.
On top of interest, the protocol distributes a percentage of the total NLS token supply among lenders from the Lenders Incentives Pool. The rewards start generous and decline over time as the protocol matures. This creates urgency for early participants.
Withdrawing is straightforward: redeem your nLPN tokens whenever you want. You get your original capital plus accumulated interest. Partial withdrawals are fine, just pull what you need and keep the rest earning.
Borrowers: Access to Leverage
Borrowers deposit collateral and tap pools for loans. You can borrow up to 150% of your deposit, giving you 2.5x total position size. The borrowed stablecoins combine with your collateral to buy real assets - SOL, ATOM, or other approved tokens.
Here's what separates Nolus from other leverage platforms: you lock in an interest rate the day you open a position. That rate never changes for the life of your lease. No funding rate volatility. No surprise costs. If you borrow at 8% APR, you pay 8% APR, period.
The initial rate depends on how much liquidity the pool has available. More available liquidity = lower rates. Less liquidity = higher rates. Once you open, you're protected from further changes.
Your collateral and borrowed amount sit in a smart contract escrow. If prices turn against you, the protocol doesn't wipe you out. It sells just enough collateral to restore the position to health. You keep your remaining exposure. This partial liquidation approach preserves your upside if prices recover.
The NLS Token
NLS is the backbone of the Nolus network. It secures the blockchain through staking, enables governance voting, and captures value from protocol activity.
The total supply is capped at 1 billion tokens.
What NLS Does
Validators receive NLS rewards for securing the network, while delegators earn a share by staking with them. This keeps the network decentralized and creates natural demand for the token. NLS holders vote on protocol changes: risk parameters, fee structures, network upgrades. Transaction fees collected on the network flow directly to stakers as rewards. As protocol activity increases, staking becomes more profitable.
Protocol revenue comes from three sources: interest spreads on leverage, swap fees, and transaction fees. Rather than sitting idle, this revenue is used to buy NLS tokens from the open market. These tokens then are removed from circulation and held in a reserve that can be allocated to governance-approved initiatives. Staking rewards grow as the network is used more. This aligns incentives: network growth directly benefits token holders.
NLS Token Allocation
The 1 billion supply is distributed across: Community Treasury (24%), Token Sale (20%), Team & Contributors (19%), Staking Rewards (15%), Lender Incentives (12%), Strategic Partners (5%), and Liquidity & Bug Bounty (5%).
The protocol originally planned steep emission decline. The community voted to change this via governance vote #163. The new model starts with lower emissions and increases gradually over 8.5 years, aligning token supply with ecosystem growth. Inflation is expected to stabilize between 3.1% to 4.3% annually, providing predictability while ensuring liquidity when needed.
Fee Abstraction: Pay with Any Supported Asset
Fee abstraction is a user experience innovation. Instead of needing to hold NLS or the native gas token to pay for transactions, you can pay fees in any protocol-supported asset: USDC, ATOM, OSMO, NTRN, or others.
These fees are redistributed to secure the network: 40% goes to a community-governed treasury, while the remainder incentivizes validators and stakers through staking rewards. This means the protocol still benefits, lenders still earn, and you get flexibility. You don't need to convert your holdings to NLS first or maintain a NLS balance just to interact with the protocol. You can use whatever asset you already have, and the protocol handles the conversion transparently.
Where To Buy NLS
The simplest way to acquire NLS is through Keplr Wallet's built-in swap feature. Open Keplr, navigate to the Swap section, select source asset OSMO, choose NLS as the destination, and confirm. Keplr routes through Skip API to find the best price across integrated DEXs. Fees are transparent and shown before you confirm.
For other options, MEXC is the primary centralized exchange offering the liquidity on NLS/USDT pairs. Osmosis on Cosmos hosts the USDC/NLS pair as the primary DEX venue within the ecosystem.
NLS also trades natively on Nolus App and is bridged to Osmosis and Neutron via IBC, and to Ethereum via Axelar, allowing you to acquire on your preferred chain and move between networks without custodial risk. Once you have NLS tokens, you're ready to delegate with validators and earn staking rewards.
How to Stake NLS
You have two paths to staking. The Nolus Web App offers the simplest approach: navigate to the "Stake" section, enter your amount, and confirm the transaction. This is ideal if you want straightforward staking without worrying about validator selection.
If you want more control, use Keplr Dashboard, which lets you browse all active validators, review their commission rates, bonded amounts, and voting power before delegating.
1. Open Keplr Dashboard and navigate to the Nolus chain. In the "Your Validators" section, click "Start Staking" to begin.
2. The next step is selecting a validator. Browse the validators list: Coinage x DAIC and others are displayed with their commission percentages. Choose the validator you want to delegate with and confirm your selection.
3. After selecting a validator, enter the amount of NLS you want to stake. The dashboard shows your available balance and displays the transaction fee upfront: usually under 0.01 NLS, less than $0.01. You'll also see the current APR (around 3.63%) and the 21-day unstaking period. Then, as usual, click "Stake" button.
4. Review your staking details and approve the transaction in Keplr wallet to finalize. Once confirmed, your NLS will be staked and begins earning rewards at the displayed APR.
To unstake, return to the Staking section and click "Unstake". Your tokens enter a 21-day unbonding period where they don't earn rewards. After 21 days, they become available in your wallet again. You can switch validators instantly while staked, but once you restake, you cannot change validators for another 21 days.
Rewards accumulate in multiple assets depending on how users pay transaction fees. You might earn NLS, USDC, ATOM, OSMO, NTRN, or other supported assets. Claim rewards manually or restake them to compound your earnings.
Nolus Interoperability and Cross-Chain Liquidity
Interoperability is central to how Nolus works. Built on Cosmos and powered by the Inter-Blockchain Communication (IBC) protocol, Nolus sources liquidity and executes positions across multiple blockchains. Currently, it accesses liquidity primarily from the Cosmos ecosystem, connecting to DEXs on Osmosis, Neutron, and other IBC-enabled chains. But the team is working on expanding beyond Cosmos.
Project X: Reimagining Cross-Chain Infrastructure
Project X is Nolus's research initiative to solve these limitations. Instead of waiting for the broader ecosystem to develop the tools, Nolus is building them. Project X extends IBC v2 and adds components tailored to Nolus's needs: custom light clients that verify messages from non-Cosmos chains in a trust-minimized way, multiplexed ICA accounts that route multiple accounts through a single channel (reducing complexity), and enhanced relayer support that makes cross-chain communication reliable and efficient.
Why it matters: With Project X, Nolus isn't locked into Cosmos. The protocol can connect to any blockchain using the same security principles it relies on today. No multisigs, no bridge operators, no added trust assumptions.
Solray: IBC Comes to Solana
Solray is the first concrete implementation of Project X's vision. It brings IBC directly to Solana by implementing IBC's verification and messaging semantics inside a Solana program. This creates a symmetric, trust-minimized connection between Solana and the entire Cosmos IBC network.
Here's how it will work: Solray lets Nolus execute trades on Solana natively without wrapping assets through intermediaries. A light client on Solana will verify messages and proofs originating from any Cosmos chain. A Solana light client hosted on Cosmos networks will verify messages from Solana. When you open a long SOL position, Nolus sends an IBC instruction to Solana, a Solray gateway performs your swap, and holds the SOL in a position-scoped account. When you close the position, the reverse happens - all verified by both blockchains, and non-custodial.
Solray also includes Hermes-lite, a streamlined relayer that efficiently forwards packets between Cosmos and Solana. Unlike traditional bridges that rely on multisigs or external operators, Solray uses on-chain verification: each chain validates the other's block headers, proofs, and signatures before accepting any message.
Currently, Solray is under active development and remains closed source until it reaches production maturity. Once development concludes and the implementation undergoes a structured verification cycle to confirm its operational soundness and protocol conformance, the repository will be open sourced.
But Solray's reach extends beyond Nolus. It will be available to all 120+ IBC-enabled Cosmos chains. Any network can deploy the Solana Light Client and interact with Solana using the same trust-minimized guarantees that Cosmos chains rely on today. This unlocks entirely new applications: native cross-chain swaps, lending markets accessing Solana's liquidity, liquid-staking and restaking flows across chains, multi-chain yield routing strategies, and high-performance execution pipelines that combine Solana's throughput with Cosmos's composability.
What This Means for Users
Right now, Nolus can access Cosmos ecosystem liquidity. With Solray live and Project X expanding further, you'll be able to open positions sourcing liquidity from multiple chains. A long SOL position with USDC collateral, a long ETH position with ATOM collateral, a long OSMO position with funds from Solana - all from one interface, all with the same fixed rates and predictability Nolus offers.
The infrastructure work is happening behind the scenes. From your perspective, it's simple: deeper liquidity pools, better execution prices, more opportunities. The complexity of cross-chain coordination disappears.
Conclusion
2025 was the year Nolus proved its design. The protocol evolved from a niche leasing product into a full margin engine, refined its risk controls, and stayed stable through some of the most violent market moves of the cycle.
That groundwork now points in a clear direction. As Nolus taps deeper liquidity and expands beyond Cosmos, it is building for larger positions, more active traders, and a broader user base, without stepping away from fixed rates, partial liquidations, or self‑custody.
The story going into 2026 is simple: Nolus is not experimenting with leverage anymore. It is operating a margin system that has already been tested, and is now preparing to run it at a bigger scale.
