What is Nest?
Nest is an on-chain financial protocol built around nUSD, a dollar-denominated token on Solana. Users can obtain nUSD by borrowing against supported collateral or converting USDC on the protocol. They can also stake nUSD to receive snUSD or stake NEST to participate in funded reward distributions. These mechanisms serve different purposes and carry distinct risks. Borrowing creates debt, conversion does not, and staking introduces exposure to pool performance.
What Is nUSD?
nUSD is Nest’s dollar-denominated token. It is used for borrowing, debt repayment, conversion, rewards, and staking deposits.
There are two primary ways to obtain it:
- Borrow nUSD: Deposit supported collateral and mint nUSD against its value. This creates a collateralized debt position.
- Convert USDC: Exchange USDC for nUSD through the Peg Stability Module. This is a direct conversion and does not create debt.
nUSD should not be confused with snUSD. While nUSD is the protocol’s dollar token, snUSD represents a share of the nUSD staking pool.
Stability Fees and Position Health
A stability fee accrues on outstanding nUSD debt. When a user makes a repayment, accrued fees are settled before the principal is reduced. Position health can deteriorate when collateral prices decline, additional debt is created, or stability fees accumulate. Adding collateral or repaying debt improves the position. If the liquidation threshold is reached, the protocol may sell collateral to settle the debt and apply a liquidation penalty.
The Peg Stability Module
Nest’s Peg Stability Module (PSM) enables conversion between USDC and nUSD without opening a collateralized debt position.
Using Nest
This section provides a practical overview of the Nest application, explaining how to navigate its interface, use its core features, and understand what to expect when completing transactions.
Converting USDC to nUSD
Users can purchase nUSD by entering a USDC amount, reviewing the quoted output, and approving the transaction. The amount available for conversion depends on the PSM’s current capacity. The reverse process allows users to exchange nUSD for USDC. Conversions on Nest and borrowing positions remain separate. Converting USDC into nUSD does not create a loan, while converting nUSD into USDC does not repay existing debt.
Staking nUSD
snUSD is the share token for Nest’s nUSD staking pool. Users receive snUSD when staking nUSD and burn those shares when unstaking. snUSD is not a rebasing token, and its balance does not automatically increase as the pool earns revenue. Instead, the amount of nUSD represented by each share may change and, as a result, depositing 20 nUSD will not necessarily produce exactly 20 snUSD.
Borrowing Against Collateral
Nest allows users to unlock nUSD liquidity while retaining exposure to supported collateral. Each borrowing position is associated with one wallet and one collateral market.
The process involves:
- Selecting a supported market;
- Depositing collateral into its on-chain vault;
- Minting nUSD within the market’s borrowing limit;
- Monitoring collateral value, debt, and fees;
- Repaying nUSD and accrued fees before withdrawing all collateral.
After selecting the collateral to use for the loan on the page above, input the amount to deposit as collateral and also type in the value of nUSD you want to borrow. By clicking “Confirm deposit and borrow”, Nest initiates the transactions after wallet approval, and the stablecoin will appear in your wallet.
Your positions section displays the total debt and value of the collateral used to take the nUSD loan. It also shows the liquidation threshold based on the current value of the collateral. To open a new position, click “New position.”
Borrowing allows you to access liquidity without selling your assets, but it introduces debt and liquidation risk.
Unstaking snUSD
snUSD does not have a seven-day withdrawal period. Users can burn their shares and receive nUSD in the same transaction. Immediate redemption is subject to an exit fee equal to one day of growth at the current target annual percentage rate. At a 6% target APR, the fee is approximately 0.01644% of the gross nUSD redemption value, and this fee is burned.
NEST Staking
NEST holders can stake their tokens to participate in nUSD rewards funded into the staking pool. Actively staked NEST also participates in the Nest points program. Rewards are distributed through a cumulative index. Each active position receives a proportional allocation based on how much NEST it had staked when rewards were added.
This structure means:
- New positions do not earn previously distributed rewards
- Rewards earned while a position is active may be claimed immediately
- NEST stops earning new distributions once unstaking begins
- Adding more NEST does not retroactively change prior rewards.
Available nUSD rewards can be claimed through the staking interface.
NEST Unstaking Cooldown
Unstaking NEST follows a two-step process:
- Submit an unstaking request, after which the selected NEST immediately stops earning rewards;
- Withdraw the NEST after the cooldown period ends.
The cooldown is configured on-chain and may be changed by an authorized protocol administrator. Users should confirm the displayed unlock time before submitting an unstaking request.
Some Key Risks with Nest
Nest users should consider liquidation, market, liquidity, smart-contract, oracle, and administrative risks. Stability fees can increase debt over time, while target APRs and staking rewards are not guaranteed. Protocol statistics may also lag the latest on-chain activity, so you should verify current conditions before transacting.
Conclusion
Nest is a new application that combines collateralized borrowing, stablecoin conversion, and staking within its nUSD-centered system on Solana. Borrowers can access liquidity while maintaining collateral exposure, while the PSM provides a debt-free route between USDC and nUSD. Staking nUSD produces snUSD shares whose redemption value may evolve with pool performance, and NEST staking distributes funded nUSD rewards to active participants.
