Module 4.3｜How GMS Strategy Works

The Gold Mining Strategy (GMS) operates through 4 essential steps that allow users to maximize their bullish airdrop points. Here’s a detailed breakdown of each step, making it easy to understand.

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Step 1: Lenders Provide Liquidity

Lenders begin by depositing SOL into the liquidity pool. The deposited funds are used to support lending and leveraging activities within Gold Mining Strategy.

• What happens: This creates a source of capital that can be accessed by borrowers while providing liquidity providers with an opportunity to earn interest on their deposits.

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Step 2: Leveragers Borrowing from the Lending Vault

This borrowing mechanism allows leveragers to leverage their positions, meaning they can control more assets than they own outright.

• What happens: By taking out loans from the lending pool, the leverage vault multiplies its point-farming efficiency in selected protocol.

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Step 3: Leveraging Points for Enhanced Yields

Users can choose to leverage their accumulated points to amplify their earning potential, NX contracts will automatically stake the leveraged amount on corresponding protocol.

• What Happens: By leveraging points up to 10x, users can farm points 10 times more efficiently with the same amount of funds. This allows them to maximize their potential rewards on point while potentially incurring some interest costs associated with borrowing.

Reminder: Some users may misunderstand how leveraging works within NX Finance. Unlike traditional lending protocols where borrowed funds are sent directly to the user's wallet, NX Finance operates differently. The borrowed funds are managed by smart contracts and directly utilized for earning yields or purchasing additional assets. As a result, users will not have direct access to the borrowed funds during this process.

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Step 4: Earning Lending Yield & Point

The GMS strategy compensates liquidity providers (lenders) with a real-time APR based on the utilization rate of the liquidity pool; Meanwhile: Leveragers earn the leveraged points from protocol they choose.

• What Happens: As more users deposit into the pool and participate in lending or staking, the APR offered increases. This incentivizes further deposits while providing borrowers with opportunities to achieve boosted yields on their leveraged amounts. The dynamic creates a win-win situation where liquidity providers earn attractive yields on their deposits while borrowers can leverage their positions for potentially higher returns.

Summary

The Gold Mining Strategy operates through four clear steps—providing liquidity, earning points, leveraging those points for enhanced potential rewards, and earning real-time APR compensation. By integrating these operations, NX Finance enhances yield opportunities and intangible rewards for both liquidity providers and borrowers, creating a synergistic environment that promotes capital efficiency and maximizes returns in the DeFi ecosystem.