Nemesis prices collateral, debt, and LP using an onchain EMA oracle, normalizing everything into a single quote asset and then into LP terms for LTV and health checks. Positions are subject to strict margin limits; once health falls below the threshold, they become eligible for partial or full liquidation that repays debt and returns remaining collateral after a fixed bonus to liquidators.

In a standard AMM, LPs earn only swap fees while wearing all directional and volatility risk. On Nemesis, the same liquidity simultaneously earns swap fees, borrow fees from leveraged traders, and liquidation premiums, so fee density per unit of TVL increases with utilization and volatility without fragmenting liquidity or relying on emissions.

LPs supply liquidity to OMM pools that is used for both swaps and leverage, and earn a utilization-based borrow rate on top of swap and liquidation fees. They remain exposed to the underlying pool’s price and IL profile, and to protocol and liquidation risk, while risk is bounded by LTV caps, health-factor-based margining, and automated liquidations.

Leverage comes from posting collateral, borrowing LP against that collateral, unwinding LP into the desired asset, and holding the resulting spot exposure. The effective leverage is determined by the ratio of position size to collateral and is bounded by pool-level borrow caps and margin thresholds enforced onchain.

Nemesis relies on each pool’s native cumulative price data and an EMA observation buffer, forcing attackers to sustain manipulated prices over time to move the oracle. Additional checks ensure valid EMA and LP prices and re-evaluate position health before allowing extra borrowing or collateral withdrawals, keeping risk aligned with current market conditions.

If markets move against you and your health factor breaches the liquidation threshold, your position becomes liquidatable, with support for partial liquidations to restore health while minimizing unnecessary unwinds. Dedicated liquidation capital executes these liquidations, repays LP-side debt, captures a predefined bonus, and returns any residual collateral to the trader.

Traders pay interest on borrowed LP plus funding when they sit on the crowded side of open interest; funding is a closed transfer between long and short sides and does not accrue to LPs or the protocol. LPs earn utilization-driven interest and trading-related fees, and face only the economic risks of their LP exposure and protocol execution, alongside normal gas and slippage costs.