Kashi NMR Borrowing: Stake on Your Model Without NMR Price Exposure

4 min readJul 14, 2021

With the creation of NMR contracts on Sushi’s lending platform Kashi, it is now possible to borrow NMR by depositing (stablecoin) collateral. By staking that NMR on a model in the Numerai tournament, you are effectively participating using your collateral and not NMR. This can be interesting in case you want to participate without exposing yourself to NMR price action, or for example when you do not want to sell your ETH for NMR.

This article describes the benefits and risks of the Kashi platform from a borrower’s perspective and contains instructions on how to get started borrowing NMR.

I wrote about using Kashi to lend out your NMR in my previous article. But what if you are on the other side of the deal; you don’t have NMR, but want to borrow NMR?

Most of Kashi’s features explained in that article (isolated market, elastic interest rate) are just as important to understand as a borrower. Instead of rehashing those concepts, I will start with the biggest risk on every borrower’s mind: liquidation. Again I will focus only on the USDC-NMR pair (https://app.sushi.com/borrow/0x7bee2161afa1aee4466e77bed826a41d5a28db46).


Kashi allows you to borrow against a collateral, which is valued in USD. The reason the USDC-NMR pair is so popular, is because your collateral of, let’s say 1000 USDC, will very likely always maintain its value of 1000 USD. An ETH-NMR or even a SUSHI-NMR market also exists, but complicates the valuation of your collateral.

Kashi’s standard contract does not allow for borrowing more than your collateral, since the lender has no guarantee you will pay back the NMR to recover your collateral. You’d simply be buying NMR at a discount. Instead, your borrowed position can never be worth more than 75% of your collateral. Note that this is not only the case when opening the borrow position, but also at any point in time thereafter! So if the NMR you borrowed gains in value, you still have to stay under this 75% of your collateral. You could do this by adding more USDC to your account or, better yet, to allow for some price movement and borrow against a fraction of 75% of your collateral.

Note that the ‘normal’ solution to preventing liquidation — closing your position by repaying the loan as fast as possible — will probably not be an option, since the NMR will be staked in the tournament. Even if you’d decide to withdraw from the tournament, it would still take weeks for the prediction rounds to unwind and release your funds.

Liquidators can monitor any position at any given time and are able to liquidate whenever the borrowed position is >75% of the collateral. A swap is then initiated to trade the collateral for the outstanding amount of NMR. Your loan is effectively paid back, ensuring that the lending pool is not affected and maintains its NMR balance. In case the borrowed position exceeds 77% of the collateral value, the collateral is also charged with a 12% liquidation bonus which is collected by the liquidator.

Different sources for NMR’s price are combined into one trusted answer by Chainlink’s oracle. [source]

Liquidations cannot be reversed, not even when the NMR price drops again afterwards. So if you do not stay under 77% of your collateral, you effectively end up buying NMR at a 12% premium. Be wary of price spikes when calculating a safe margin, but also know that consulting NMR’s price oracle is part of every liquidation process. This is sourced by averaging a lot of different price feeds, and thus should always reflect the NMR market at large and ignore “flash spikes” occurring on a particular market.


After staking the borrowed NMR on your model, a successful participant of the tournament will end up with more NMR than borrowed. Let’s say with our collateral of 1000 USDC, a safe 10 NMR was borrowed at 35 USD. After three months, successful predictions resulted in a payout of 3 NMR. We withdraw 13 NMR, pay back the loan of 10 NMR plus interest, get our collateral of 1000 USDC back and pocket the rest.

Now as long as the price stayed under 75 USD (which would have created the possibility of being liquidated), we were not exposed to NMR in any other way (except for the profit being in NMR). It might have gone up, it might have gone down, we still get our 1000 USDC back and are left with a profit. We have reduced the risk to our own model’s predictions and not external factors.