so, as promised, here's an annoyingly long thread on why $NXM / $wNXM is pretty much fucked for a while and how it is going to go down https://twitter.com/DegenSpartan/status/1322937825227018243

i was exploring NXM quite deeply earlier this year as it was sprinting to ramp up its capital pool

NOTE: NXM should only ever be thought of in ETH pricing

it was at 0.16 ETH earlier this year and at 160%++ MCR% when i talked about it

wait, wtf is MCR%? https://twitter.com/DegenSpartan/status/1296837518445301762

well, even some holders of NXM have no idea how the MCR% works

it's kinda complicated, but there is a formula to it

if that confuses you, it essentially links the amount in the capital pool to the price of the NXM token

once you figure that part out, everything else is pretty simple.

more NXM buyers as cover demand or speculative demand? basically, higher price

there's more complicated stuff but that doesnt really affect the main point that i want to talk about, which involves the MCR%

today, the price of NXM is 0.056 ETH and the MCR% is currently sitting at 113% and it is slowly dropping, day by day

what does a dropping MCR% mean?

hey, wait, isn't MCR% part of the price formula?!?!

and this is where the problem comes in

simply put

a dropping MCR% means a dropping $NXM price

and both are dropping very very steadily

data from https://nexustracker.io/ 

why is the MCR% and $NXM dropping?

who knows, but my guess is that very early buyers (0.02 - 0.03 ETH) are taking profits

and when they take profits, they do so by burning the NXM into the bonding curve and taking back ETH

the capital pool drops, the MCR% drops, price drops

initially, i had posted that i thought the 130% MCR% would act as a price "floor" for the NXM token, making it a "safe" entry point

and also recognizing the thicc ETH profits most existing players were sitting on https://twitter.com/DegenSpartan/status/1296841284506628101

but i later changed my mind (early oct at ~0.09 ETH)

my hypothesis was that early NXM holders are so deep in profits, if a liq crunch comes, they'd happily exit their NXM positions for thicc ETH profits

*the proposal bit by delphi isnt very important anymore

and basically from both the MCR% and the $NXM price, you can see that clearly happening

people are burning their NXM and leaving the system

now, question time:

"if the 130% MCR% didn't hold and it broke through, why didn't the MCR% just accelerate to 100% then?"

good question

the answer to that question is that here

after you decide to unstake to later sell, it takes 90 days to get your NXM for you to burn

90 days eh.... so when did NXM spike that people might've wanted to take profits at? let's see hmmm

ah, there we go, the first spike over 0.15 ETH was 21 aug

90 days later would be... 19 nov

hey, that's in about 2 weeks time!

do you reckon supply will be coming online from NXM that was unstaked then? and that it would be sold?

absolutely.

but why?

liquidity cuck, that's why

as per the NXM whitepaper, redemption from the bonding curve can only happen when the MCR% is over 100%

basically, once it drops to 100%, anyone who hasnt redeemed is STUCK

so yes, people will be redeeming their NXM for ETH til the liquidity is gone

if the MCR is 162k ETH, at 100% MCR%, the implied token price of $NXM considering the A and C constants would be..

~0.0382 ETH

which is -32% from the current price

once the bonding curve is jammed up at MCR% of 100%, it shifts from being the primary venue of price discovery to being useless

instead, the alternative non-bonding curve exchanges will take over for price discovery

this means, the $wNXM markets over at binance and uniswap

and if you understand what no bonding curve means, that means no price floor of the implied MCR% 100% of 0.0382 ETH

in fact, with the bonding curve cucking everyone, it becomes highly likely that wNXM will trade at discounts, implying sub 100% MCR%!

NXM gets wrapped, then sold

of course, this cannot be arbed since you need another venue to close the arb and the bonding curve has cucked everyone

discount then becomes a function of seller's demand for liquidity

maybe a good time to lowball bids?

idk, but i probably wouldnt

at this point, im basically just assuming that the MCR% just grinds to 100% now while holders midway of unstaking just watch price crumble and exit liquidity dry up

this might not necessarily happen

maybe lots of cover demand
maybe an NXM-related liquidity mining farm pops up

maybe i've completely misunderstood how $NXM works and this entire thread is nonsense - possible, im quite ruhtarded ya know

but idk maybe psyops

anyway, it'll be interesting to watch to see if this scenario plays out, and what their community does to deal with it

happy to hear why i might be wrong considering i only talked to a few NXM holders about my hypothesis on how things could play out

the main feedback is that they all wished they weren't in the midst of unstaking, lol