While experts are increasingly confident that decentralised finance will become an established force within Web 3.0, doubts remain about how decentralised finance can scale effectively while maintaining a truly independent governance model. Rather than begin from scratch, Nereus is a lending and borrowing market based on the AAVE open-source code. The aim is not to reinvent decentralised finance, but rather to improve existing protocols in anticipation of mass market adoption. Two interlinked issues are frequently cited as barriers to decentralised growth: the imperfections of existing governance models, and the role of actors within the protocol to shape governance decisions against the best interests of the majority of users. These problems have been mentioned explicitly by luminaries such as Vitalik Buterin and other influential industry figures. Nereus seeks to address these issues directly, while building on the established best practises of existing protocols such as AAVE, Compound and MakerDAO.
Most existing DeFi projects use token-based governance models, which lead to the formation of plutocracies (Greek: ploutos, ’wealth’ + kratos, ’power’) which don’t provide equal rights to protocol participants. Nereus uses non-coin-driven governance in order to give meaningful voting power to protocol users. Many of today’s most successful protocols are paradoxes: decisions are influenced by a small number of individual investors (whales) or institutions (such as venture capital firms) despite their ‘decentralised’ status.