I get asked pretty much the same set of questions when introducing Nirvana.

The #1 (by a wide margin) being “how can anything guarantee a floor price?”

And then there is the second most common question: “huh - why isn’t this bigger?”

There’s a bewildered frustration at the sad situation we’ve been living with. Once you see a floor price, it’s hard to go back.

It seems so obvious. Like putting wheels on luggage for the first time. Why wasn’t anyone doing this long before? We can have permanent liquidity with absolute transparency plus liquidation-risk-free leverage with mathematical certainty. This model stretches the meaning of “asset” for the better. It combines “asset” with “market” in a powerful grand unification. If regulation ever comes to crypto, and that regulation does not try to torture it into legacy categories, the regulators would probably require crypto-native commodities look a lot like Nirvana. If you want to be classified as a “crypto product,” act like it.

And there we have the reason for Nirvana’s steady trajectory. Rather than rely on artificial racketeering that can give a quick sugar rush to the price chart, the choice has always been to walk in Bitcoin’s footsteps. Allow a core of true conviction to form, establish trust by weathering storms, and then cross the chasm into mass adoption. That time is near.

ANA is not an app that needs new sign-ups to stay operational. It is an instrument for wealth preservation. And while I sometimes wonder whether the inventors of Bitcoin would be happy with what it has become today, the beauty of ANA is that it accomplishes its mission wherever the world takes it. It matters not if ANA becomes the backbone of Solana DeFi, the backend to checking accounts, or gets stockpiled by sovereign wealth. It has one purpose only: to store value. It is a value protocol. Think something as neutral as HTTP.

Over this last year, that proposition has proven itself impressively. Year-to-date, Nirvana has outperformed the larger crypto market. With its present floor price, it doesn’t really have an option not to. In fairness though, lots of assets have outperformed the crypto market. But the way Nirvana stands out from its milieu is impossible to miss.

Proving the soundness of the algorithm is the necessary first step. And as the team enthusiastically rears up for the second, I want to step back to reflect on the past, the present purpose, and the future potential.

In the beginning, there was the thought: what would an ideal “store-of-value” look like?

Three criteria are key:

1. Portability

2. Credit-worthiness

3. And most importantly - that it actually stores value

The portability of ANA is inherited by using a blockchain. You can send it anywhere on Earth in under 30 seconds. Easy to take for granted these days, yet important to remember. If ANA were entangled with regulated assets like tokenized U.S equities, the red-tape would snare its free transfer.

Credit-worthiness is a finance-speak way to say an asset is useful. Can this be put to use elsewhere? If no one accepts it as a collateral, it hardly qualifies as having value. Giving ANA a floor price makes it as simple a collateral as one could hope for.

But, when you think about it, a floor doesn’t necessarily need to stay up. It could change gradually and still be a high-conviction collateral. In ANA’s case, the floor only moves in one direction. That is what it means “to store” value. Like a black hole, once the value goes in, it never comes out.

As the saying goes, “price is what you pay, value is what you get.” I think there is a deep truth to this adage (and it applies to more than just finance). Though they seem like equal opposites at first glance, there is a profound difference between “buying” and “selling.” Just think of the worst case scenarios in either case. When you sell badly, you miss out on opportunity. But when you buy badly, you lose what you had. The price that you buy at and the value that you sell for hit differently.

Substituting from that expression, a “store of value” is a “store of what you get” when you sell. The ideal way to store value is to keep a promise on what it will be worth if sold. This promise must be kept for all tokens equally, so there must be a protocol that carefully keeps the books. And the only way to keep a promise is to make that bookkeeping absolutely algorithmic.

The thesis is the same as crypto’s: algorithms do not require “trust”, which is exactly why they command it. Bitcoin owes its fame to solving trustless settlement; Nirvana solves trustless value. By holding onto crypto’s original principle while the rest of the sector accelerates away from it, Nirvana will stand out.

It’s not overly reductive to say I just want ANA to work. By “work” I mean I want it to store value.

Frankly, very few things on this planet do. You can count them on two hands. Pockets of real-estate, some hard commodities, and a few currencies are about the only candidates – and even they are prone to slipping double-digit percentages in bursts. Being a large-scale store of value is a rare club to join. And due to this rareness, there has been very little innovation over the last 500 years.

I became obsessed with “value storage” shortly after becoming obsessed with “crypto.” The central idea resonated with me: it is worth the experiment to have fully algorithmic systems that can be freely used. At bottom, that’s all “crypto” is. All this blockchain technology is just an implementation detail for how to actually run a purely algorithmic system.

The flashiest thing about crypto is the price of it. I noticed these things called “tokens” (fungible or otherwise), that people were buying despite ridiculous volatility. But did these people sell them? I observed time and again how my friends and friend-of-friends get devastated from not selling in time. The price they paid was not the value they got.

It shocked me. I had never seen anything like it. And it shocked me all the more to peek behind the curtain and see how un-crypto most “crypto” really was. Yes, the blockchains were performing remarkably well at storing numbers with algorithms, but the thing we call “crypto” was hardly storing value. I wanted to apply crypto’s central idea (be algorithmic, not arbitrary) to the problem most direly in need of it: selling.

And so, inspired by algorithmic settlement systems (blockchains), there emerged an algorithmic value system. We call it the Assured Value Machine (AVM). It is just the result of pushing crypto’s guiding principles into the structure of markets. To the motto “not your keys, not your crypto” we add “not your liquidity, not your value.”

The secondary mission is to change the course of crypto’s history itself. In a climate where narratives rise and fall in a matter of months, this is not as wildly ambitious as it sounds. Crypto is having a crisis of motivation at this moment. It is losing touch with what it is for. And, even worse, I’ve heard from countless good actors that they run into headwinds when trying to connect crypto to the outside world because the outside world thinks (rightfully) that “crypto” is latin for “scam.”

The sooner crypto sheds the negative reputation, the better. And I’m calling it now: merging with Wall Street is not the answer. What we need is a healthy “crypto conservatism” – a return to roots, and preserving of the past.

Nirvana is leading by example. It reverses the current playbook, but it is really just what crypto meant to be from the start: algorithmic. You can only have algorithmic value if you have algorithmic liquidity (value is what you get, and all you get is what the market gives). Since the simplest solution is often the best, Nirvana goes all the way on this point: make 100% of an asset’s liquidity and supply algorithmic. Do not print a single token outside the rules of the system.

Algorithms cannot commit fraud. If more crypto projects adopt the algorithmic style, then little by little crypto’s reputation will return to form. The Nirvana protocol is demonstrating that there is another viable path to follow. Now with more new projects voluntarily taking that path, crypto will rehabilitate its image in the public eye.

You could say the goal is to make 2-line price charts common-sense. If they become common-sense, crypto becomes more appealing. It becomes something distinct from conventional finance. Clear out the pollution, and more money will wade into the waters.

Which brings me to the strategy for 2026.

ANA is the store of value, prANA is the life-blood of the system, and all other projects feed into this nucleus.

There are three challenges with being as novel as Nirvana:

1. Legacy infrastructure does not understand it

2. DeFi users do not believe it

3. Retail customers do not know about it

We are solving all three through empire building. The more projects that use the AVM, the more powerful its influence.

1) Before aggregators and dashboards will support the AVM, they need a good reason to do so. Increasing the number of separate projects and assets at stake helps make the case. If a very popular asset is doing well on, say, Samsara, the team behind that asset might make a phone call to the right person to help Samsara markets get hooked into popular tools. Eventually, aggregator dashboards will create a special category for AVM assets, just as they did for “launchpad” memecoins last year.

2) The expansion of the AVM will also have a trickle-down effect into the DeFi userbase. Mindshare matters. Take for example “perpetuals.” In my informal polling, hardly anyone can explain how a perpetuals exchange works top to bottom, and yet over $50T notional flows through them. Trust builds from consensus. As volume flows through Samsara (and other AVM projects), the incredulity about the math will give way to acceptance as a matter of course.

3) The problem of “distribution” is notoriously thorny in crypto. Other teams are now taking this on themselves. They are building their own products on top of the AVM engine. As each one captures their own slice of the market, in their own way, they lay pavement for more roads leading back to Nirvana.

Not to mention that the revenue collected from this empire all goes back to the Nirvana protocol. Like a good empire, there is a tax to use its infrastructure. And that tax goes to the greater good of the empire itself. Today it’s called “SaaS.”

All of the “platform” revenue from Samsara goes to market buy ANA. That ANA is effectively buried, and further development funded from drawing credit on that ANA. On top of this, all of the tax from 3rd-party expansion projects (for example the next killer launchpad) will also be deployed 100% to buy ANA.

To be personally open: the motivation for using 100% of revenue to buy ANA is not exactly to see ANA pump (though that it is a nice way to catalyze organic demand). The reason is more philosophical. I just do not want to be burdened with a balance sheet, and anxious about managing it in the public eye. Some people want that job and set up treasuries & foundations. I find the doom of crypto projects is when humans take control. I want all of this to be as close to a perfectly autonomous algorithm as possible. Eventually, the crank to collect revenue and buy ANA will be permissionless. It’s the same guiding principle at every level.

Speaking of revenue, there will be a greater share to the protocol (token holders). After this year of bootstrapping, it is time to begin transitioning away from being a “startup” and into a “protocol.” Right now 15% of revenue goes to prANA. It will change to 50% to prANA and the floor investment together (governance decides the split). That is an increase in cashflow by 3.33x.

I’d prefer to have all the revenue go to the protocol. I want the protocol to be pure, and not beholden to “a team”. That is where this is heading. The revenue share to the team (to fund audits, engineering, marketing, business development) will be cut in half on a yearly cadence. If things are going well, it will reduce even faster. The highest priority is to make Nirvana successful and self-sustaining. Bitcoin comes to mind as a role model.

This year of bootstrapping had a razor thin budget which would not have sufficed for a less mission-driven, passionate team. I am personally very reluctant to raise private money for Nirvana, because that goes counter to the goal of being a pure protocol. What little money was raised to help get things kickstarted was paid with revenue-share, making the “raise” similar to debt-financing. This decision to DIY has required that the team compensate with sweat and the community with patience. In the long run, I believe it will be for the best to be unencumbered.

A grant would be more aligned than for-profit capital. After all, one of the goals of Nirvana is to improve crypto as a whole. In that spirit, the core team will take over the USDC that remains uncollected from the year-long “restitutions” claim portal. Some background: years ago, a different product was hacked, and millions stolen. In a fortunate turn of events, the United States Court prosecuted the thief (the first such case for them), and as part of the plea deal restored the stolen funds. I thought it most fair to take a snapshot of the Solana blockchain immediately prior to the hack, and return the money to affected users pro-rata based on the dollar-value of their equity at the time of the hack. Additionally, these users received pro-rata shares of perpetual revenue from Nirvana. The claims portal has been open for a year, and now it is most practical to use the remaining money for runway to grow the product, rather than let that capital sit idle.

We’re in the midst of developing the core protocol. Next comes packaging. There will always be two “layers” to Nirvana: a power-user view into the inner workings of the protocol, and a normal-user frontend optimized for parking wealth and watching it grow.

I see Nirvana evolving into a digital savings account. It is a crypto asset that gives zero-interest credit. This is a very powerful backend for very enticing products. In time, a simple app that allows for simple ACH in and out is what will capture mass adoption.

But in order to be a global-scale multi-trillion dollar reserve asset, you must streamline the offering. The basket of 2021-era DeFi “tokenomics” runs contrary to the goal. And so the immediate next phase will be some spring cleaning of the features in preparation for a simpler pitch.

The two themes of these improvements are simplification and sustainability. Some things deal with quality-of-life, others for multi-decade scale.

Progress will be iterative, with changes starting to land this December.

Back when Nirvana was designed, the crypto ethos was a bit more, shall we say, aspirational than it is today. The idea to have a branded “stablecoin” which was going to be used as an eligible collateral all over the world of DeFi was too dazzling to suffer scrutiny. During this era, loads of other projects were creating their own stablecoins which were also really just derivatives of USDC. And then there were higher-level projects that would wrap up these many different stablecoins into one big basket in order to produce . . . yet another stablecoin. Different times.

Suffice it to say, the world needs not another one. And we will gently phase it out. Here’s how:

• Users will be able to borrow USDC directly from the market in just the same way you could borrow NIRV.

• Users will no longer be able to borrow NIRV.

• Users will be able to repay their existing NIRV debt with either USDC or NIRV (after all, NIRV is just wrapped USDC). Repaying either way clears the same debt 1:1. Repaying with NIRV burns the NIRV. Repaying with USDC will replace the NIRV in the market’s liquidity reserve, which also burns that NIRV.

• Shrewd readers will ask: what if there is no NIRV in the market’s liquidity account? Can I still repay my debt with USDC? Yes. The program will simply hold that excess USDC in a spill account. Whenever someone tries to buy ANA with NIRV, the program will intercept that request, burn the NIRV, and complete the purchase with USDC.

• The ability to buy ANA with NIRV will remain intact, as will the ability to sell ANA for NIRV. Although annoying, we must support these operations so that NIRV maintains its 1:1 peg with USDC.

In short, the only feature turned off is the ability to borrow NIRV. So no new NIRV will enter supply. As people repay their debt (either in NIRV or in USDC), NIRV will be burned away. I suspect some dust will always remain as a collector’s item reminding us of times gone by.

To be clear: “phasing out” NIRV does not mean it will lose its peg or cease being supported. It will just stop being created, and so will naturally & gracefully fade away.

Revenue will be settled only in USDC tokens. Today, it is settled in ANA & NIRV, which is overly complicated for delivering revenue. Plus, it is inconvenient that people need to perform swaps to exit. I want revenue to feel more like a classic dividend.

The difference will only lie in how fees are handled.

• Today when buying, the fee is taken off the ANA out. With this change, the fee will be taken off the USDC going in.

• Today when selling, the fee is taken off the ANA in. With this change, the fee will be taken off the USDC out.

• Since NIRV borrowing will be turned off, the same fee will just be applied to the USDC borrowed.

• There will be no fee to “unstake” ANA. That feels like hostage-fi to me, and it should go.

Another side note for the shrewd reader (you know who you are): if fee revenues are settled in USDC, how does that work when people trade with NIRV? Yes, that is a wrinkle. The program itself will handle converting NIRV into USDC (essentially swapping it internally in the market) and then paying the USDC out. No one will notice the difference, and internally swapping NIRV for USDC has no effect on the economics of the protocol.

If you’ve been following Nirvana, you know this has been a long time coming. A portion of revenue (in USDC!) will be sent directly into raising the floor. We’re already seeing this behavior in the Samsara devnet demo, and it is fun watching the floor rise even when prices don’t.

The floor raise from fees is mildly throttled, but effectively continuous. It is on the order of raising the floor at most $0.01 every 10 minutes (not exact numbers, but in the vicinity). Why is there a throttle? It is good to have “potential energy” for future raises stored up like a coiled spring. Even if volume is flat for a period of time, the trickling floor raise keeps going.

In practice, the amount of fee revenue dedicated to the floor is far less effective than price appreciation of ANA when it comes to raising it. But over time the fee revenue adds up substantially. In any case, the amount of revenue going to the floor is up to governance (see below).

There are two rules for Nirvana’s floor raise:

1. Raising the floor shall not make the market insolvent. That is, you must always be able to sell 100% of ANA and receive the floor price for the last token out.

2. Raising the floor shall not change the price of ANA.

You can deduce most of the restrictions around the floor raise algorithm from these two rules. One worth underscoring here is that the floor cannot rise if the price is on the floor. That would break Rule #2. So, you won’t see the auto floor raise happen if an extra $0.01 would overtake the current price of ANA. The “potential energy” stays put until ANA moves high enough to give it room.

File this one again under “Hey 2021 called, and they want their tokenomics back.” There are going to be big changes to prANA to make it more valuable & sustainable. By making prANA harder to get, it makes ANA more valuable as the only way to get it.

The prANA token is about to get a lot more scarce. Think of the preceding year as a protracted “early bird special” where those brave enough to take a risk on Nirvana got a very good deal on their prANA holdings.

The guiding idea of prANA is that it represents ANA multiplied by Time. It is a fungible record of how much ANA you hold and for how long you have held it. Time is incentivized along with size. This is the right goal, but the current implementation is faulty. Here are the fixes:

Bounded prANA emissions

Currently prANA is emitted at a flat rate per ANA. This may seem like dilution (it is!), but the catch is that it does not dilute your “ratio.” There is always a competition to “keep up” with everyone as they earn at the same rate. If you sell your ANA, you end up “left behind” while others keep earning.

That being said, there is a much better system.

Instead of emitting prANA at a flat rate per ANA, it will just be emitted at an independent rate on its own. The amount of new prANA does not depend on the amount of ANA deposited. It is shared out to ANA depositors pro-rata.

With this change, the initial rate of prANA per year will start at roughly half of last year’s. We should keep things somewhat smooth with the past. But right after turning on, it will immediately begin decreasing.

The amount of prANA emitted per year will decay with time, inevitably going near zero in the long run. The supply is effectively capped. The decay rate will start at 15% per year, which is roughly equivalent to cutting the prANA rate in half every 4 years (like Bitcoin’s “halving” schedule). This decay will happen continuously.

The decision to mimic Bitcoin’s decay rate is arbitrary. It is just a place to start. As elsewhere, Nirvana believes in good governance and the governors (who vote with prANA) can change this rate of decay. They can vote to increase the rate of decay or slow it. But they cannot “reverse” the decay (which would increase the rate of prANA emissions). Every time the prANA rate decays, that was the highest it will ever be for the rest of time. If the voters were able to move the decay rate down to 0%, all that means is that the prANA rate stops decaying – until voters raise it and start chipping away at the decay rate again.

Thus, it can’t be predicted what the final supply of prANA will be. But it is guaranteed that its rate of emission will never increase.

Loyalty points

Remember that prANA is meant to reward time. A loyal holder should be rewarded more than someone who buys and quickly sells.

There are myriad ways that crypto projects have tackled this problem of time-based rewards. Nirvana is going to do the simplest and least cumbersome for users. No lock-ups and no penalties on your principal.

While prANA is being emitted continuously, it is shared pro-rata to all the ANA depositors. Your share of the deposited ANA is equal to your share of the emitted prANA. The time reward comes in the form of a boost to your share value. This boost is a flat rate (starting at 100% APR, and this value is governed too!) on the ANA you hold in escrow. As you hold, this boost accumulates with time.

For example: if you have 100 ANA deposited, this amounts to 100 shares of the prANA emissions. With a 100% APR, after 6 months you will have earned a 50 unit “boost” to your share-value. After 1 year, you will have earned 100 boost-shares, raising your total share-value to 200.

Great - but this is happening for everyone else equally, so what difference does it make?

There is a penalty for withdrawing. That penalty is that your boost gets “slashed” proportionately to how much withdrawn. And then you have to start earning that boost all over again.

So, in the previous example you have 100 ANA with a 100 boost you’ve earned over the year. Let’s say another year goes by and you’ve earned another 100 boost, so now your total boost is 200.

If you withdraw 75 ANA (which is 75% of your principle), then your boost gets slashed by 75%. That 200 becomes 50. So now you have 25 + 50 = 75 share power. If you immediately deposit more ANA, it will not bring your boost back. This is the penalty or dis-incentive for withdrawing, which is also the reward for loyalty.

This system is much better than the current. The overall supply of prANA is independent of it all, and yet this method nets the long-term holders more prANA than their peers. There is no extra dilution of prANA, just extra share-power for loyalists.

As a hard policy, the max boost-to-real-ANA ratio one can accumulate is 2.718. There needs to be a ceiling to stop runaway old money.

The more scarce prANA is, the more valuable. The more valuable prANA is, the more value from holding ANA. The value of prANA pulls up the value of ANA.

If prANA keeps being emitted, how can it be scarce?

We need a prANA incinerator. The prANA incinerator is fueled by revenue.

It is not ok with me that someone can buy ANA, hold it for a while, sell, and keep earning revenue with their prANA tokens in perpetuity. If you do not still hold ANA (and are thus not earning prANA), you should not be collecting revenue.

The solution is that prANA must be spent (i.e. “burned”) to receive the revenue. If someone is not still earning prANA, they will eventually run out of their stash. It seems like such an obvious way to balance token emissions, I do not know why more crypto projects don’t do this.

The way the burn-to-earn works is very simple and ever so slightly game-ified. Over a 1 week cadence, a pot of revenue accumulates from fees. We can all watch it fill up with USDC. During that week, people can burn their prANA to lock in a “share” of that pot. At the end of the epoch, the pot will be split among everyone who bought in, pro rata. For example, if the pot is $100k and there have been 50k prANA burned, that amounts to $2 per prANA.

This model is like a “buy-and-burn” in reverse: a “burn-and-buy.” Rather than the project auto-buying prANA on an open market, it lets the market do this actively. The protocol sets aside revenue, which can only be bought with prANA. The prANA economy decides the value of the token by spending it for that pot of money. The pot of weekly revenue is like “liquidity” for a prANA market to sell into. This is perfectly capital-efficient, where exactly the amount of revenue set aside to buy prANA gets used up completely.

Bear in mind that if you burn your prANA you can’t use it for governance. And that’s the point. Governing and revenue sharing are separate concerns. It is ok for “old money” to use their stockpile of prANA to steer the ship (since they are still incentivized by the revenue their prANA can access). But it is not ok for people with no skin in the game to collect revenue in perpetuity from their prANA.

Anti-bot add-on

Dear shrewd readers, I did not forget about you. There is one subtle issue to address: sniping. As we watch the pool fill, we also see the amount of burned prANA grow. We can weigh the dollars-per-prANA ratio in real time. There is thus a minor “sniping” problem where it would be rational to wait until the last minute before deciding whether the dollars-per-prANA ratio is favorable or not. Of course, sniping is not so easy because other people might have the same ambitions - but it is possible, and so should be dealt with.

Enter the game-ification for revenue collection. There is a minor “boost” to early burns to counteract the value of sniping. At the start of the epoch, 1 burned prANA amounts to 2x the “share value” of the pot’s revenue. You don’t know what the pot will actually be at the culmination of the week, and so get rewarded for this risk. At the end of the epoch, there is no boost, and 1 prANA is exactly 1 share. The decay rate is simply linear during the revenue epoch, which makes sense because your information grows roughly linearly over time. Why is the boost 2x at the beginning? Because the variance of the revenue per week should not be much more than 50%, and so a 2x boost for having 0 information about the week is plenty.

In the end, I doubt most users will notice this bot deterrent. It is such a minor bit of complexity that it does not even need to be on the UI. The thing is just: if something can be botted, it will. And a bot would be very unpleasant to live with. So this minor change helps level the playing field for humans and programs alike, which is worth the few paragraphs it takes to explain.

Governance also needs a minor overhaul to make it easier to work with.

First of all, we have new items that need governing. The list of governable parameters is:

• Buy fee

• Sell fee

• Borrow fee

• Revenue-split between floor & prANA burners

• Floor raise amount from price appreciation

• Liquidity buffer for floor raising

• Decay rate for prANA emissions

• Rate of loyalty points for ANA depositors

Some of these items deserve a separate article on their own. Suffice it say, governance will be slightly amended to match the new system for revenue share, floor raising, and prANA emissions. It stays with the principled commitment to let token holders guide the protocol through time, adapting it to different market conditions. And it has safety-rails to protect against runaway extreme values.

Another improvement is how governance quantifies the small changes. The step from one value to the next will no longer be by ratio, but instead absolute values. This change in behavior has trade-offs, but I believe it is for the better. Suppose that the buy fee changes by 2 basis points every week. If it starts at 80bps, it would take about 20 weeks to reduce it by 50% to 40bps. But only 10 weeks to reduce it another 50% to 20bps. Unlike ratio-driven changes, the rate of change accelerates near small values and decelerates near large. There is a certain “naturalness” to ratios rather than absolute steps, but I believe this will be more intuitive for users to see clean changes.

In order to incentivize voting with passive income, a small amount of revenue (e.g. 5%) will be dedicated to the voters. If you vote for an epoch, you receive a share of revenue proportional to your number of votes. This 5% figure is taken off of the revenue dedicated to “prANA” (not the floor), and so the burn-to-earn will always have the remaining 95% for the sake of incinerating prANA.

Why is this share of revenue so small? I actually think it’s borderline too large. The point of the revenue share is to burn the prANA, in order to reduce its supply, increase its value, and thereby increase the value of ANA. Giving revenue to governors without burning their prANA goes against this goal. But, a little incentive won’t hurt.

This is a feature I stumbled on when developing Samsara, and cannot believe I did not notice it until now. The upshot is that the “trigger price” (the price of ANA at which the floor can rise) can safely go lower as the price of ANA goes lower.

Without getting into too many technicals, the buy-depth of ANA can remain fixed when ANA sells back, which requires updating the curve. Thickening the buy-depth of ANA implies that newly purchased ANA will add more liquidity to the market. The added liquidity is what allows the floor to rise.

This feature is included in Samsara and the AVM demo (https://avm.nirvana.finance/).

It’s a minor change. But it does mean that if ANA sells back, the trigger price goes down, which is a nice improvement. ANA “heals” as it goes down, making the next floor raise more easily attainable.

Another feature that was developed for Samsara will be added to Nirvana’s program: one-click leverage. In a single transaction a user can buy ANA, deposit it, borrow USDC, and repeat the cycle.

What is unique about Nirvana is that leverage is free of liquidation risk. That is because the maximum credit is equal to the minimum (floor) price of ANA. What this also means is that the amount of leverage you can take on increases as ANA goes near the floor. If ANA is at the floor, leverage is effectively “infinite” (since equity can be effectively zero), were it not for the fact that purchasing ANA will move it above the floor.

The current price of ANA dictates how much leverage is possible (from repeated buy-deposit-borrow iterations, which approach an asymptotic limit), and a user will be able to open a position easily at any legal leverage value.

The same goes for the reverse. A user can close out a position (withdraw-sell-repay) all in one transaction.

In honesty, I was hesitant for a long time to implement this. My overarching goal is to protect people’s wealth, and I do not want to make it over-easy for everyone to take on extreme risk. But the convenience of one-click edges out my scruples.

If you want to make a Solana DeFi program, I have some free advice: do not pool tokens into 1 master token account. Yes, it is simpler to work with and therefore easier to secure. But the aggregators & dashboards (which are made with mainly meme coins in mind) see this as “concentration of supply” and a red flag.

The program will be altered so that every user gets separate ANA & prANA deposit accounts implemented as separate “SPL token accounts” on the Solana blockchain. After this patch, the ecosystem tooling can actually count how many users there are by counting the token accounts. The team has also made in-roads with Kamino, Titan, and Jupiter to get integrated directly into their aggregators. The Nirvana AMM will be a first-party citizen, discoverable by their routers. These aggregators will be able to “see” the true liquidity inside Nirvana, which is a staggeringly large number for such a young asset.

One problem with ANA is that leaving it deposited is too much of a good thing. The only way to get prANA is through holding ANA in escrow. For a rational holder, there is not much incentive to move ANA elsewhere.

The prANA emission was never meant to restrict ANA liquidity. Oftentimes, token projects employ bribes in order to reduce circulating supply. The incentive to “stake” makes the token more scarce and hopefully more valuable. Not so here. It was an unforeseen accident that ANA got “stuck” in the protocol. The goal was just to reward people for holding ANA over time.

The simple way to solve this is with a “Liquid Staked Token.” People can deposit ANA, collecting rewards, and still have liquid capital which can be used elsewhere.

One note: I do not like the word “staked” since it’s inappropriate in this context. There is nothing “at stake.” But until further notice that’s what we’ll call it.

The ANA LST will work like most others, which is that it grows in value in terms of ANA. At launch, 1 ANA LST is worth 1 ANA. Over time, it grows in value in terms of ANA. It will be a very nice collateral to use elsewhere. And most importantly: it collects value without tying up capital.

The way it collects value is through a simple, automated, zero-management system:

• There is a pool of ANA backing the LST

• You can mint an LST by depositing an ANA into this pool at the current redemption rate

• Or you can redeem an LST for ANA from the pool at that rate

• The redemption rate is simply the quantity of ANAs in the pool divided by the number of LSTs outstanding.

• The rate goes up as ANA is added to the pool, making the LST more valuable in terms of ANA

• The ANA comes from market-buys

• The cash comes from prANA burn

• All the prANA that the pool earns is immediately burned to earn the revenue for that epoch

The convenience of the ANA LST is that you can earn revenue without locking up your capital. And the simplicity of it is that it does not affect the overall design of the system. The LST is basically a 3rd party application built on top of Nirvana.

Why would you not opt to use the LST? There are two downsides:

1. LST holders do not receive prANA tokens. The LST system automatically and constantly burns the prANA it earns for revenue it uses to market-buy ANA. Certain users may rather want the prANA tokens themselves (to use for governance, Samsara, or elsewhere).

2. The LST does not work with Nirvana’s native credit system. Nirvana does not allow an LST to be collateralized in order to draw USDC credit. Only vanilla ANA can be used for that. This is a design decision, not a technical one, since an LST is worth strictly more than an ANA, and would function fine as a collateral. The reason for this design is that the point of the LST is to leave the confines of Nirvana. If the protocol allowed for depositing the LST it would be getting in the way of its goal. The purpose is that other products will accept the LST for yield and credit opportunities.

And, who knows, maybe someone else will build a more sophisticated LST themselves?

On this one year anniversary I am humbled and proud to witness how Nirvana is growing. This all began as a passion project, with a singular mission. That drive has been amplified by an excellent team who inspire me every day, together with a community of stakeholders who push this project forward with brilliant feedback & energizing encouragement.

It’s a privilege and honor to be part of this paradigm shift in the making.

Author:

I get asked pretty much the same set of questions when introducing Nirvana.

The #1 (by a wide margin) being “how can anything guarantee a floor price?”

And then there is the second most common question: “huh - why isn’t this bigger?”

There’s a bewildered frustration at the sad situation we’ve been living with. Once you see a floor price, it’s hard to go back.

It seems so obvious. Like putting wheels on luggage for the first time. Why wasn’t anyone doing this long before? We can have permanent liquidity with absolute transparency plus liquidation-risk-free leverage with mathematical certainty. This model stretches the meaning of “asset” for the better. It combines “asset” with “market” in a powerful grand unification. If regulation ever comes to crypto, and that regulation does not try to torture it into legacy categories, the regulators would probably require crypto-native commodities look a lot like Nirvana. If you want to be classified as a “crypto product,” act like it.

And there we have the reason for Nirvana’s steady trajectory. Rather than rely on artificial racketeering that can give a quick sugar rush to the price chart, the choice has always been to walk in Bitcoin’s footsteps. Allow a core of true conviction to form, establish trust by weathering storms, and then cross the chasm into mass adoption. That time is near.

ANA is not an app that needs new sign-ups to stay operational. It is an instrument for wealth preservation. And while I sometimes wonder whether the inventors of Bitcoin would be happy with what it has become today, the beauty of ANA is that it accomplishes its mission wherever the world takes it. It matters not if ANA becomes the backbone of Solana DeFi, the backend to checking accounts, or gets stockpiled by sovereign wealth. It has one purpose only: to store value. It is a value protocol. Think something as neutral as HTTP.

Over this last year, that proposition has proven itself impressively. Year-to-date, Nirvana has outperformed the larger crypto market. With its present floor price, it doesn’t really have an option not to. In fairness though, lots of assets have outperformed the crypto market. But the way Nirvana stands out from its milieu is impossible to miss.

Proving the soundness of the algorithm is the necessary first step. And as the team enthusiastically rears up for the second, I want to step back to reflect on the past, the present purpose, and the future potential.

In the beginning, there was the thought: what would an ideal “store-of-value” look like?

Three criteria are key:

1. Portability

2. Credit-worthiness

3. And most importantly - that it actually stores value

The portability of ANA is inherited by using a blockchain. You can send it anywhere on Earth in under 30 seconds. Easy to take for granted these days, yet important to remember. If ANA were entangled with regulated assets like tokenized U.S equities, the red-tape would snare its free transfer.

Credit-worthiness is a finance-speak way to say an asset is useful. Can this be put to use elsewhere? If no one accepts it as a collateral, it hardly qualifies as having value. Giving ANA a floor price makes it as simple a collateral as one could hope for.

But, when you think about it, a floor doesn’t necessarily need to stay up. It could change gradually and still be a high-conviction collateral. In ANA’s case, the floor only moves in one direction. That is what it means “to store” value. Like a black hole, once the value goes in, it never comes out.

As the saying goes, “price is what you pay, value is what you get.” I think there is a deep truth to this adage (and it applies to more than just finance). Though they seem like equal opposites at first glance, there is a profound difference between “buying” and “selling.” Just think of the worst case scenarios in either case. When you sell badly, you miss out on opportunity. But when you buy badly, you lose what you had. The price that you buy at and the value that you sell for hit differently.

Substituting from that expression, a “store of value” is a “store of what you get” when you sell. The ideal way to store value is to keep a promise on what it will be worth if sold. This promise must be kept for all tokens equally, so there must be a protocol that carefully keeps the books. And the only way to keep a promise is to make that bookkeeping absolutely algorithmic.

The thesis is the same as crypto’s: algorithms do not require “trust”, which is exactly why they command it. Bitcoin owes its fame to solving trustless settlement; Nirvana solves trustless value. By holding onto crypto’s original principle while the rest of the sector accelerates away from it, Nirvana will stand out.

It’s not overly reductive to say I just want ANA to work. By “work” I mean I want it to store value.

Frankly, very few things on this planet do. You can count them on two hands. Pockets of real-estate, some hard commodities, and a few currencies are about the only candidates – and even they are prone to slipping double-digit percentages in bursts. Being a large-scale store of value is a rare club to join. And due to this rareness, there has been very little innovation over the last 500 years.

I became obsessed with “value storage” shortly after becoming obsessed with “crypto.” The central idea resonated with me: it is worth the experiment to have fully algorithmic systems that can be freely used. At bottom, that’s all “crypto” is. All this blockchain technology is just an implementation detail for how to actually run a purely algorithmic system.

The flashiest thing about crypto is the price of it. I noticed these things called “tokens” (fungible or otherwise), that people were buying despite ridiculous volatility. But did these people sell them? I observed time and again how my friends and friend-of-friends get devastated from not selling in time. The price they paid was not the value they got.

It shocked me. I had never seen anything like it. And it shocked me all the more to peek behind the curtain and see how un-crypto most “crypto” really was. Yes, the blockchains were performing remarkably well at storing numbers with algorithms, but the thing we call “crypto” was hardly storing value. I wanted to apply crypto’s central idea (be algorithmic, not arbitrary) to the problem most direly in need of it: selling.

And so, inspired by algorithmic settlement systems (blockchains), there emerged an algorithmic value system. We call it the Assured Value Machine (AVM). It is just the result of pushing crypto’s guiding principles into the structure of markets. To the motto “not your keys, not your crypto” we add “not your liquidity, not your value.”

The secondary mission is to change the course of crypto’s history itself. In a climate where narratives rise and fall in a matter of months, this is not as wildly ambitious as it sounds. Crypto is having a crisis of motivation at this moment. It is losing touch with what it is for. And, even worse, I’ve heard from countless good actors that they run into headwinds when trying to connect crypto to the outside world because the outside world thinks (rightfully) that “crypto” is latin for “scam.”

The sooner crypto sheds the negative reputation, the better. And I’m calling it now: merging with Wall Street is not the answer. What we need is a healthy “crypto conservatism” – a return to roots, and preserving of the past.

Nirvana is leading by example. It reverses the current playbook, but it is really just what crypto meant to be from the start: algorithmic. You can only have algorithmic value if you have algorithmic liquidity (value is what you get, and all you get is what the market gives). Since the simplest solution is often the best, Nirvana goes all the way on this point: make 100% of an asset’s liquidity and supply algorithmic. Do not print a single token outside the rules of the system.

Algorithms cannot commit fraud. If more crypto projects adopt the algorithmic style, then little by little crypto’s reputation will return to form. The Nirvana protocol is demonstrating that there is another viable path to follow. Now with more new projects voluntarily taking that path, crypto will rehabilitate its image in the public eye.

You could say the goal is to make 2-line price charts common-sense. If they become common-sense, crypto becomes more appealing. It becomes something distinct from conventional finance. Clear out the pollution, and more money will wade into the waters.

Which brings me to the strategy for 2026.

ANA is the store of value, prANA is the life-blood of the system, and all other projects feed into this nucleus.

There are three challenges with being as novel as Nirvana:

1. Legacy infrastructure does not understand it

2. DeFi users do not believe it

3. Retail customers do not know about it

We are solving all three through empire building. The more projects that use the AVM, the more powerful its influence.

1) Before aggregators and dashboards will support the AVM, they need a good reason to do so. Increasing the number of separate projects and assets at stake helps make the case. If a very popular asset is doing well on, say, Samsara, the team behind that asset might make a phone call to the right person to help Samsara markets get hooked into popular tools. Eventually, aggregator dashboards will create a special category for AVM assets, just as they did for “launchpad” memecoins last year.

2) The expansion of the AVM will also have a trickle-down effect into the DeFi userbase. Mindshare matters. Take for example “perpetuals.” In my informal polling, hardly anyone can explain how a perpetuals exchange works top to bottom, and yet over $50T notional flows through them. Trust builds from consensus. As volume flows through Samsara (and other AVM projects), the incredulity about the math will give way to acceptance as a matter of course.

3) The problem of “distribution” is notoriously thorny in crypto. Other teams are now taking this on themselves. They are building their own products on top of the AVM engine. As each one captures their own slice of the market, in their own way, they lay pavement for more roads leading back to Nirvana.

Not to mention that the revenue collected from this empire all goes back to the Nirvana protocol. Like a good empire, there is a tax to use its infrastructure. And that tax goes to the greater good of the empire itself. Today it’s called “SaaS.”

All of the “platform” revenue from Samsara goes to market buy ANA. That ANA is effectively buried, and further development funded from drawing credit on that ANA. On top of this, all of the tax from 3rd-party expansion projects (for example the next killer launchpad) will also be deployed 100% to buy ANA.

To be personally open: the motivation for using 100% of revenue to buy ANA is not exactly to see ANA pump (though that it is a nice way to catalyze organic demand). The reason is more philosophical. I just do not want to be burdened with a balance sheet, and anxious about managing it in the public eye. Some people want that job and set up treasuries & foundations. I find the doom of crypto projects is when humans take control. I want all of this to be as close to a perfectly autonomous algorithm as possible. Eventually, the crank to collect revenue and buy ANA will be permissionless. It’s the same guiding principle at every level.

Speaking of revenue, there will be a greater share to the protocol (token holders). After this year of bootstrapping, it is time to begin transitioning away from being a “startup” and into a “protocol.” Right now 15% of revenue goes to prANA. It will change to 50% to prANA and the floor investment together (governance decides the split). That is an increase in cashflow by 3.33x.

I’d prefer to have all the revenue go to the protocol. I want the protocol to be pure, and not beholden to “a team”. That is where this is heading. The revenue share to the team (to fund audits, engineering, marketing, business development) will be cut in half on a yearly cadence. If things are going well, it will reduce even faster. The highest priority is to make Nirvana successful and self-sustaining. Bitcoin comes to mind as a role model.

This year of bootstrapping had a razor thin budget which would not have sufficed for a less mission-driven, passionate team. I am personally very reluctant to raise private money for Nirvana, because that goes counter to the goal of being a pure protocol. What little money was raised to help get things kickstarted was paid with revenue-share, making the “raise” similar to debt-financing. This decision to DIY has required that the team compensate with sweat and the community with patience. In the long run, I believe it will be for the best to be unencumbered.

A grant would be more aligned than for-profit capital. After all, one of the goals of Nirvana is to improve crypto as a whole. In that spirit, the core team will take over the USDC that remains uncollected from the year-long “restitutions” claim portal. Some background: years ago, a different product was hacked, and millions stolen. In a fortunate turn of events, the United States Court prosecuted the thief (the first such case for them), and as part of the plea deal restored the stolen funds. I thought it most fair to take a snapshot of the Solana blockchain immediately prior to the hack, and return the money to affected users pro-rata based on the dollar-value of their equity at the time of the hack. Additionally, these users received pro-rata shares of perpetual revenue from Nirvana. The claims portal has been open for a year, and now it is most practical to use the remaining money for runway to grow the product, rather than let that capital sit idle.

We’re in the midst of developing the core protocol. Next comes packaging. There will always be two “layers” to Nirvana: a power-user view into the inner workings of the protocol, and a normal-user frontend optimized for parking wealth and watching it grow.

I see Nirvana evolving into a digital savings account. It is a crypto asset that gives zero-interest credit. This is a very powerful backend for very enticing products. In time, a simple app that allows for simple ACH in and out is what will capture mass adoption.

But in order to be a global-scale multi-trillion dollar reserve asset, you must streamline the offering. The basket of 2021-era DeFi “tokenomics” runs contrary to the goal. And so the immediate next phase will be some spring cleaning of the features in preparation for a simpler pitch.

The two themes of these improvements are simplification and sustainability. Some things deal with quality-of-life, others for multi-decade scale.

Progress will be iterative, with changes starting to land this December.

Back when Nirvana was designed, the crypto ethos was a bit more, shall we say, aspirational than it is today. The idea to have a branded “stablecoin” which was going to be used as an eligible collateral all over the world of DeFi was too dazzling to suffer scrutiny. During this era, loads of other projects were creating their own stablecoins which were also really just derivatives of USDC. And then there were higher-level projects that would wrap up these many different stablecoins into one big basket in order to produce . . . yet another stablecoin. Different times.

Suffice it to say, the world needs not another one. And we will gently phase it out. Here’s how:

• Users will be able to borrow USDC directly from the market in just the same way you could borrow NIRV.

• Users will no longer be able to borrow NIRV.

• Users will be able to repay their existing NIRV debt with either USDC or NIRV (after all, NIRV is just wrapped USDC). Repaying either way clears the same debt 1:1. Repaying with NIRV burns the NIRV. Repaying with USDC will replace the NIRV in the market’s liquidity reserve, which also burns that NIRV.

• Shrewd readers will ask: what if there is no NIRV in the market’s liquidity account? Can I still repay my debt with USDC? Yes. The program will simply hold that excess USDC in a spill account. Whenever someone tries to buy ANA with NIRV, the program will intercept that request, burn the NIRV, and complete the purchase with USDC.

• The ability to buy ANA with NIRV will remain intact, as will the ability to sell ANA for NIRV. Although annoying, we must support these operations so that NIRV maintains its 1:1 peg with USDC.

In short, the only feature turned off is the ability to borrow NIRV. So no new NIRV will enter supply. As people repay their debt (either in NIRV or in USDC), NIRV will be burned away. I suspect some dust will always remain as a collector’s item reminding us of times gone by.

To be clear: “phasing out” NIRV does not mean it will lose its peg or cease being supported. It will just stop being created, and so will naturally & gracefully fade away.

Revenue will be settled only in USDC tokens. Today, it is settled in ANA & NIRV, which is overly complicated for delivering revenue. Plus, it is inconvenient that people need to perform swaps to exit. I want revenue to feel more like a classic dividend.

The difference will only lie in how fees are handled.

• Today when buying, the fee is taken off the ANA out. With this change, the fee will be taken off the USDC going in.

• Today when selling, the fee is taken off the ANA in. With this change, the fee will be taken off the USDC out.

• Since NIRV borrowing will be turned off, the same fee will just be applied to the USDC borrowed.

• There will be no fee to “unstake” ANA. That feels like hostage-fi to me, and it should go.

Another side note for the shrewd reader (you know who you are): if fee revenues are settled in USDC, how does that work when people trade with NIRV? Yes, that is a wrinkle. The program itself will handle converting NIRV into USDC (essentially swapping it internally in the market) and then paying the USDC out. No one will notice the difference, and internally swapping NIRV for USDC has no effect on the economics of the protocol.

If you’ve been following Nirvana, you know this has been a long time coming. A portion of revenue (in USDC!) will be sent directly into raising the floor. We’re already seeing this behavior in the Samsara devnet demo, and it is fun watching the floor rise even when prices don’t.

The floor raise from fees is mildly throttled, but effectively continuous. It is on the order of raising the floor at most $0.01 every 10 minutes (not exact numbers, but in the vicinity). Why is there a throttle? It is good to have “potential energy” for future raises stored up like a coiled spring. Even if volume is flat for a period of time, the trickling floor raise keeps going.

In practice, the amount of fee revenue dedicated to the floor is far less effective than price appreciation of ANA when it comes to raising it. But over time the fee revenue adds up substantially. In any case, the amount of revenue going to the floor is up to governance (see below).

There are two rules for Nirvana’s floor raise:

1. Raising the floor shall not make the market insolvent. That is, you must always be able to sell 100% of ANA and receive the floor price for the last token out.

2. Raising the floor shall not change the price of ANA.

You can deduce most of the restrictions around the floor raise algorithm from these two rules. One worth underscoring here is that the floor cannot rise if the price is on the floor. That would break Rule #2. So, you won’t see the auto floor raise happen if an extra $0.01 would overtake the current price of ANA. The “potential energy” stays put until ANA moves high enough to give it room.

File this one again under “Hey 2021 called, and they want their tokenomics back.” There are going to be big changes to prANA to make it more valuable & sustainable. By making prANA harder to get, it makes ANA more valuable as the only way to get it.

The prANA token is about to get a lot more scarce. Think of the preceding year as a protracted “early bird special” where those brave enough to take a risk on Nirvana got a very good deal on their prANA holdings.

The guiding idea of prANA is that it represents ANA multiplied by Time. It is a fungible record of how much ANA you hold and for how long you have held it. Time is incentivized along with size. This is the right goal, but the current implementation is faulty. Here are the fixes:

Bounded prANA emissions

Currently prANA is emitted at a flat rate per ANA. This may seem like dilution (it is!), but the catch is that it does not dilute your “ratio.” There is always a competition to “keep up” with everyone as they earn at the same rate. If you sell your ANA, you end up “left behind” while others keep earning.

That being said, there is a much better system.

Instead of emitting prANA at a flat rate per ANA, it will just be emitted at an independent rate on its own. The amount of new prANA does not depend on the amount of ANA deposited. It is shared out to ANA depositors pro-rata.

With this change, the initial rate of prANA per year will start at roughly half of last year’s. We should keep things somewhat smooth with the past. But right after turning on, it will immediately begin decreasing.

The amount of prANA emitted per year will decay with time, inevitably going near zero in the long run. The supply is effectively capped. The decay rate will start at 15% per year, which is roughly equivalent to cutting the prANA rate in half every 4 years (like Bitcoin’s “halving” schedule). This decay will happen continuously.

The decision to mimic Bitcoin’s decay rate is arbitrary. It is just a place to start. As elsewhere, Nirvana believes in good governance and the governors (who vote with prANA) can change this rate of decay. They can vote to increase the rate of decay or slow it. But they cannot “reverse” the decay (which would increase the rate of prANA emissions). Every time the prANA rate decays, that was the highest it will ever be for the rest of time. If the voters were able to move the decay rate down to 0%, all that means is that the prANA rate stops decaying – until voters raise it and start chipping away at the decay rate again.

Thus, it can’t be predicted what the final supply of prANA will be. But it is guaranteed that its rate of emission will never increase.

Loyalty points

Remember that prANA is meant to reward time. A loyal holder should be rewarded more than someone who buys and quickly sells.

There are myriad ways that crypto projects have tackled this problem of time-based rewards. Nirvana is going to do the simplest and least cumbersome for users. No lock-ups and no penalties on your principal.

While prANA is being emitted continuously, it is shared pro-rata to all the ANA depositors. Your share of the deposited ANA is equal to your share of the emitted prANA. The time reward comes in the form of a boost to your share value. This boost is a flat rate (starting at 100% APR, and this value is governed too!) on the ANA you hold in escrow. As you hold, this boost accumulates with time.

For example: if you have 100 ANA deposited, this amounts to 100 shares of the prANA emissions. With a 100% APR, after 6 months you will have earned a 50 unit “boost” to your share-value. After 1 year, you will have earned 100 boost-shares, raising your total share-value to 200.

Great - but this is happening for everyone else equally, so what difference does it make?

There is a penalty for withdrawing. That penalty is that your boost gets “slashed” proportionately to how much withdrawn. And then you have to start earning that boost all over again.

So, in the previous example you have 100 ANA with a 100 boost you’ve earned over the year. Let’s say another year goes by and you’ve earned another 100 boost, so now your total boost is 200.

If you withdraw 75 ANA (which is 75% of your principle), then your boost gets slashed by 75%. That 200 becomes 50. So now you have 25 + 50 = 75 share power. If you immediately deposit more ANA, it will not bring your boost back. This is the penalty or dis-incentive for withdrawing, which is also the reward for loyalty.

This system is much better than the current. The overall supply of prANA is independent of it all, and yet this method nets the long-term holders more prANA than their peers. There is no extra dilution of prANA, just extra share-power for loyalists.

As a hard policy, the max boost-to-real-ANA ratio one can accumulate is 2.718. There needs to be a ceiling to stop runaway old money.

The more scarce prANA is, the more valuable. The more valuable prANA is, the more value from holding ANA. The value of prANA pulls up the value of ANA.

If prANA keeps being emitted, how can it be scarce?

We need a prANA incinerator. The prANA incinerator is fueled by revenue.

It is not ok with me that someone can buy ANA, hold it for a while, sell, and keep earning revenue with their prANA tokens in perpetuity. If you do not still hold ANA (and are thus not earning prANA), you should not be collecting revenue.

The solution is that prANA must be spent (i.e. “burned”) to receive the revenue. If someone is not still earning prANA, they will eventually run out of their stash. It seems like such an obvious way to balance token emissions, I do not know why more crypto projects don’t do this.

The way the burn-to-earn works is very simple and ever so slightly game-ified. Over a 1 week cadence, a pot of revenue accumulates from fees. We can all watch it fill up with USDC. During that week, people can burn their prANA to lock in a “share” of that pot. At the end of the epoch, the pot will be split among everyone who bought in, pro rata. For example, if the pot is $100k and there have been 50k prANA burned, that amounts to $2 per prANA.

This model is like a “buy-and-burn” in reverse: a “burn-and-buy.” Rather than the project auto-buying prANA on an open market, it lets the market do this actively. The protocol sets aside revenue, which can only be bought with prANA. The prANA economy decides the value of the token by spending it for that pot of money. The pot of weekly revenue is like “liquidity” for a prANA market to sell into. This is perfectly capital-efficient, where exactly the amount of revenue set aside to buy prANA gets used up completely.

Bear in mind that if you burn your prANA you can’t use it for governance. And that’s the point. Governing and revenue sharing are separate concerns. It is ok for “old money” to use their stockpile of prANA to steer the ship (since they are still incentivized by the revenue their prANA can access). But it is not ok for people with no skin in the game to collect revenue in perpetuity from their prANA.

Anti-bot add-on

Dear shrewd readers, I did not forget about you. There is one subtle issue to address: sniping. As we watch the pool fill, we also see the amount of burned prANA grow. We can weigh the dollars-per-prANA ratio in real time. There is thus a minor “sniping” problem where it would be rational to wait until the last minute before deciding whether the dollars-per-prANA ratio is favorable or not. Of course, sniping is not so easy because other people might have the same ambitions - but it is possible, and so should be dealt with.

Enter the game-ification for revenue collection. There is a minor “boost” to early burns to counteract the value of sniping. At the start of the epoch, 1 burned prANA amounts to 2x the “share value” of the pot’s revenue. You don’t know what the pot will actually be at the culmination of the week, and so get rewarded for this risk. At the end of the epoch, there is no boost, and 1 prANA is exactly 1 share. The decay rate is simply linear during the revenue epoch, which makes sense because your information grows roughly linearly over time. Why is the boost 2x at the beginning? Because the variance of the revenue per week should not be much more than 50%, and so a 2x boost for having 0 information about the week is plenty.

In the end, I doubt most users will notice this bot deterrent. It is such a minor bit of complexity that it does not even need to be on the UI. The thing is just: if something can be botted, it will. And a bot would be very unpleasant to live with. So this minor change helps level the playing field for humans and programs alike, which is worth the few paragraphs it takes to explain.

Governance also needs a minor overhaul to make it easier to work with.

First of all, we have new items that need governing. The list of governable parameters is:

• Buy fee

• Sell fee

• Borrow fee

• Revenue-split between floor & prANA burners

• Floor raise amount from price appreciation

• Liquidity buffer for floor raising

• Decay rate for prANA emissions

• Rate of loyalty points for ANA depositors

Some of these items deserve a separate article on their own. Suffice it say, governance will be slightly amended to match the new system for revenue share, floor raising, and prANA emissions. It stays with the principled commitment to let token holders guide the protocol through time, adapting it to different market conditions. And it has safety-rails to protect against runaway extreme values.

Another improvement is how governance quantifies the small changes. The step from one value to the next will no longer be by ratio, but instead absolute values. This change in behavior has trade-offs, but I believe it is for the better. Suppose that the buy fee changes by 2 basis points every week. If it starts at 80bps, it would take about 20 weeks to reduce it by 50% to 40bps. But only 10 weeks to reduce it another 50% to 20bps. Unlike ratio-driven changes, the rate of change accelerates near small values and decelerates near large. There is a certain “naturalness” to ratios rather than absolute steps, but I believe this will be more intuitive for users to see clean changes.

In order to incentivize voting with passive income, a small amount of revenue (e.g. 5%) will be dedicated to the voters. If you vote for an epoch, you receive a share of revenue proportional to your number of votes. This 5% figure is taken off of the revenue dedicated to “prANA” (not the floor), and so the burn-to-earn will always have the remaining 95% for the sake of incinerating prANA.

Why is this share of revenue so small? I actually think it’s borderline too large. The point of the revenue share is to burn the prANA, in order to reduce its supply, increase its value, and thereby increase the value of ANA. Giving revenue to governors without burning their prANA goes against this goal. But, a little incentive won’t hurt.

This is a feature I stumbled on when developing Samsara, and cannot believe I did not notice it until now. The upshot is that the “trigger price” (the price of ANA at which the floor can rise) can safely go lower as the price of ANA goes lower.

Without getting into too many technicals, the buy-depth of ANA can remain fixed when ANA sells back, which requires updating the curve. Thickening the buy-depth of ANA implies that newly purchased ANA will add more liquidity to the market. The added liquidity is what allows the floor to rise.

This feature is included in Samsara and the AVM demo (https://avm.nirvana.finance/).

It’s a minor change. But it does mean that if ANA sells back, the trigger price goes down, which is a nice improvement. ANA “heals” as it goes down, making the next floor raise more easily attainable.

Another feature that was developed for Samsara will be added to Nirvana’s program: one-click leverage. In a single transaction a user can buy ANA, deposit it, borrow USDC, and repeat the cycle.

What is unique about Nirvana is that leverage is free of liquidation risk. That is because the maximum credit is equal to the minimum (floor) price of ANA. What this also means is that the amount of leverage you can take on increases as ANA goes near the floor. If ANA is at the floor, leverage is effectively “infinite” (since equity can be effectively zero), were it not for the fact that purchasing ANA will move it above the floor.

The current price of ANA dictates how much leverage is possible (from repeated buy-deposit-borrow iterations, which approach an asymptotic limit), and a user will be able to open a position easily at any legal leverage value.

The same goes for the reverse. A user can close out a position (withdraw-sell-repay) all in one transaction.

In honesty, I was hesitant for a long time to implement this. My overarching goal is to protect people’s wealth, and I do not want to make it over-easy for everyone to take on extreme risk. But the convenience of one-click edges out my scruples.

If you want to make a Solana DeFi program, I have some free advice: do not pool tokens into 1 master token account. Yes, it is simpler to work with and therefore easier to secure. But the aggregators & dashboards (which are made with mainly meme coins in mind) see this as “concentration of supply” and a red flag.

The program will be altered so that every user gets separate ANA & prANA deposit accounts implemented as separate “SPL token accounts” on the Solana blockchain. After this patch, the ecosystem tooling can actually count how many users there are by counting the token accounts. The team has also made in-roads with Kamino, Titan, and Jupiter to get integrated directly into their aggregators. The Nirvana AMM will be a first-party citizen, discoverable by their routers. These aggregators will be able to “see” the true liquidity inside Nirvana, which is a staggeringly large number for such a young asset.

One problem with ANA is that leaving it deposited is too much of a good thing. The only way to get prANA is through holding ANA in escrow. For a rational holder, there is not much incentive to move ANA elsewhere.

The prANA emission was never meant to restrict ANA liquidity. Oftentimes, token projects employ bribes in order to reduce circulating supply. The incentive to “stake” makes the token more scarce and hopefully more valuable. Not so here. It was an unforeseen accident that ANA got “stuck” in the protocol. The goal was just to reward people for holding ANA over time.

The simple way to solve this is with a “Liquid Staked Token.” People can deposit ANA, collecting rewards, and still have liquid capital which can be used elsewhere.

One note: I do not like the word “staked” since it’s inappropriate in this context. There is nothing “at stake.” But until further notice that’s what we’ll call it.

The ANA LST will work like most others, which is that it grows in value in terms of ANA. At launch, 1 ANA LST is worth 1 ANA. Over time, it grows in value in terms of ANA. It will be a very nice collateral to use elsewhere. And most importantly: it collects value without tying up capital.

The way it collects value is through a simple, automated, zero-management system:

• There is a pool of ANA backing the LST

• You can mint an LST by depositing an ANA into this pool at the current redemption rate

• Or you can redeem an LST for ANA from the pool at that rate

• The redemption rate is simply the quantity of ANAs in the pool divided by the number of LSTs outstanding.

• The rate goes up as ANA is added to the pool, making the LST more valuable in terms of ANA

• The ANA comes from market-buys

• The cash comes from prANA burn

• All the prANA that the pool earns is immediately burned to earn the revenue for that epoch

The convenience of the ANA LST is that you can earn revenue without locking up your capital. And the simplicity of it is that it does not affect the overall design of the system. The LST is basically a 3rd party application built on top of Nirvana.

Why would you not opt to use the LST? There are two downsides:

1. LST holders do not receive prANA tokens. The LST system automatically and constantly burns the prANA it earns for revenue it uses to market-buy ANA. Certain users may rather want the prANA tokens themselves (to use for governance, Samsara, or elsewhere).

2. The LST does not work with Nirvana’s native credit system. Nirvana does not allow an LST to be collateralized in order to draw USDC credit. Only vanilla ANA can be used for that. This is a design decision, not a technical one, since an LST is worth strictly more than an ANA, and would function fine as a collateral. The reason for this design is that the point of the LST is to leave the confines of Nirvana. If the protocol allowed for depositing the LST it would be getting in the way of its goal. The purpose is that other products will accept the LST for yield and credit opportunities.

And, who knows, maybe someone else will build a more sophisticated LST themselves?

On this one year anniversary I am humbled and proud to witness how Nirvana is growing. This all began as a passion project, with a singular mission. That drive has been amplified by an excellent team who inspire me every day, together with a community of stakeholders who push this project forward with brilliant feedback & energizing encouragement.

It’s a privilege and honor to be part of this paradigm shift in the making.

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