🔍 DeFi behind the scenes | Ep: 3 Nuo Network's interest rates

Getting accurate crypto data is HARD and continues to be an adoption blocker. In this episode, we look at a surprising discrepancy of interest rates for a popular lending platform Nuo Networks.

Why is bad data harmful to adoption?

Bad data:

  • ❌ misleads users
  • ❌ company has no recourse
  • ❌ financial opportunity missed
  • ❌ adds trust deficit

Check out this video comparing interest rates between Nuo and Loanscan:

Transcript

[music]

Speaker: A couple of days ago, I happened to be on this site loanscan.io, which has a list of borrowing and lending interest rates for various DeFi platforms. I was scrolling through the interest rates, I noticed this small footnote by Nuo and this footnote says, “Nuo’s earn and borrow interest rates are estimates only and may significantly vary from actual interest paid or earned.” What does that actually mean? Does that mean that these numbers are incorrect? Does that mean that Nuo perhaps has data off-chain so it’s not truly decentralized? Was it a magical equation that they were not willing to disclose? That got me curious, so I took a look at the smart contracts using Covalent.

What we’ve done is built an interest rate model for Nuo networks that can look into their smart contracts and calculate interest rates. Let’s look at the daily interest rate for a specific token. Let’s add a filter for the DAI market and let’s look at the reserve in US dollars, the daily gains, gains as a percentage, and then the weekly gains annualized based on the seven-day rolling average. As we scroll down, what we’re able to see is that the reserve has been dropping, the interest rates were double-digit which happens to also stabilize and what we see here for the 17th is 5.85.

Going back to LoanScan, it says here for the DAI market is 3.79. This is completely off. It’s not clear when this rate was updated.

We’ve done one calculation that’s a little different from other people. What we’ve done is we’ve calculated a rolling window of the last seven days worth of gains, taking the average of that, multiply that by 365 to get the annual rates. This model is going to be shipped as an API endpoint within the next couple of days and all of our wallet partners will have real-time immediate access to Nuo’s interest rates for all of their lending and borrowing pairs.

[00:03:12] [END OF AUDIO]

Posted in Defi

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