Phase 3 Transition and Node Migration

Lava Financial
7 min readSep 28, 2022


From the start, our goal has always been to get to the fabled Phase 3 — where nodes are NFTs and the protocol becomes self reliant from the revenue generated by our sister projects. We’ve been forced to make some difficult decisions along the way, such as the token relaunch and adjustments to the tokenomics. These decisions have always been in the best interest of the project, and for the most part you guys have been very understanding and supportive.

The time has come to finally make the transition to Phase 3, and although it may look a bit different than was initially planned, we’re confident that this is the best move forward and provides the most value for our believers and compounders, as well as compensating those who may still be far off from their ROI.

The major points are outlined below, and each will be expanded upon.

All Novarupta nodes will be converted to our new Venture Pass NFTs at a 1:1 rate

All of your existing Novas (both compounded and regular) will be converted to tradable Venture Pass NFTs, which provide passive income via revenue share, a cut of all seed investments made by Lava, access to seed round opportunities, access to NFT-only presales for Lava’s sister projects, and more.

Rewards will be paid in USDC from the revenue generated by our sister projects

Prism and Divvy have the potential to be serious revenue generation machines, and 20% of profits go directly to NFT holders. Below is a screenshot from our Prism pitchdeck showing the long term potential of the project, based upon 1% of the volume in DeFi being passed through Prism, operating at a 1% fee.

Prism Volume Opportunity

This equates to around $180/year per NFT. And this is at only 1% of the volume of DeFi, assuming no growth. At 2% volume and 100% growth, it comes out to about $715/year per NFT. So a user with 30 NFTs will be bringing home a consistent $1790/month, paid completely from real business revenue. This is just one project in Lava’s pipeline — it doesn’t include any revenue from Divvy or future sister projects, so we expect the real values to be even higher long term.

You may be thinking “but I only have 2 Novas. Hardly anyone has 30+ Novas, those numbers aren’t realistic for most of us”.

Well, let me introduce you to the…

TrueROI incentive bonus

To compensate users who have been compounding and also those who may have paid a pretty penny for their Novas, we’ll be implementing a bonus where your existing TrueROI value will be converted to additional Venture Pass NFTs at a rate of $150/NFT (the current price of 1 Novarupta node).

For example:

John paid $3000 for 2 Novarupta nodes. He has only claimed $100 and compounded 2 more nodes, so his current TrueROI is $2900, with a total of 4 Novas.

John will receive 24 Venture Pass NFTs

4 Novas → 4 NFTs

$2900/$150 → 19.3 → 20 NFTs (uneven values are rounded up)

This system takes care of our compounders because for months, the deduction from your TrueROI was only 5% of the node cost, meaning that even at a LAVA token price of $2, a compounded Nova would cost you $50.

The system also takes care of those who may have purchased at an unfortunate price and been subject to the rapid price decrease (due in part to the rough bear market).

We are also offering an option for users who don’t wish to stick around with Lava for the long term and would rather take a buyout of their current TrueROI value.

TrueROI USDC buyout

The LAVA token will no longer be necessary, and as such, liquidity will be pulled and trading will stop. In an effort to be as fair as possible, we’ll be offering up the remaining LP as an optional USDC buyout for your remaining TrueROI value if you don’t wish to receive the extra NFTs and want to just exit the protocol.

Based on current TrueROI numbers and the amount remaining in the LP, we estimate that we’ll be able to pay out around 21% of current users’ TrueROI value for those who wish to take this option.

Let’s use the same example as above, except John decides to take the USDC buyout:

John paid $3000 for 2 Novarupta nodes. He has only claimed $100 and compounded 2 more nodes, so his current TrueROI is $2900, with a total of 4 Novas. He chooses to take 100% USDC buyout.

John will receive 4 Venture Pass NFTs and 609 USDC.

4 Novas → 4 NFTs

$2900 * 21% → $609

We will also be offering the option of partial buyout, where users can specify how many NFTs they would like, and the remainder will be paid out at the 21% rate.

Any funds that are leftover after the buyout decisions have been made will be sent to the Lava Financial Treasury to further development of our sister projects.

Smaller nodes will undergo Fusion and be converted to higher tier Novas during migration

We know you’ve all been waiting very patiently for Fusion, and while it’s a feature that unfortunately never made it to fruition in practice, we wanted to still offer it as part of the transition. Therefore, all Fuji and Krakatoa nodes will be fused into the respective amount of Novaruptas and converted to NFTs. Your existing TrueROI value will be used to fill in any “gaps” should you not have enough smaller nodes to fuse into a Novarupta. In the case that a user doesn’t have enough TrueROI value to fill in that gap, those smaller nodes will simply be paid out at the 21% rate.

We will have a calculator available to see how many Novarupta nodes you’ll be able to fuse to and how many you would need to have an even fusion.

Let’s bring back John, our example guy:

John has 6 Fuji nodes, 3 Krakatoas, and 2 Novaruptas, with $20 TrueROI.

John will receive 4 NFTs and 20 USDC

5 Fujis → 1 NFT

2 Krakatoas + 1 Fuji → 1 NFT

2 Novas → 2 NFTs

1 Krakatoa remaining → $60/node * 21% → $12.60

$20 TrueROI remaining → $20 * 21% → $4.20

If you wish to have an even fusion, PLEASE use the calculator and figure out how many additional nodes you’d need to create in order to avoid a 21% payout.

Unclaimed rewards and $LAVA leftover in wallets

Users will be given 1 week to claim and sell any LAVA tokens, at which point rewards will stop generating and LP will be pulled in preparation for migration.

When migration begins, any unclaimed LAVA tokens and all LAVA remaining in each wallet will simply be used for the final NFT migration calculation.

Any leftover tokens will simply be paid out at the 21% rate. We want to give users as much time as possible to claim and sell if they wish, but it’s a delicate balance between giving that time and also preserving the LP, and we feel that 1 week is a good compromise.

NFT Boosters

Your NFT booster will not be included in your current TrueROI calculation because…

They’ll be used for the Venture Pass NFT system!

Some of the perks include:

  • Boost to your NFTs’ revenue share (essentially taking it from other users, since it’s a distribution)
  • Higher allocation of seed investment vests
  • Access to exclusive seed/angel rounds for Lava’s sister projects
  • More perks to come

We know that some people have expressed interest in purchasing additional booster NFTs, and we intend to make them as valuable as possible. We’ll also be opening up minting for users who want to purchase some, following migration.

Boosters will now also be tradable on the open market.

Updated dashboard

With the migration will come an updated dashboard where you can view your NFT holdings relative to the total amount minted, and view your percentage claim to the revenue share. We’ll be continually upgrading this dashboard to provide the most relevant and up-to-date info.

We realize this is a lot of information to absorb, and will be active on the Discord for the days and weeks leading up to migration to answer all questions.

For a TL/DR of the migration details:

  • Novarupta nodes (compounded and standard) will be converted to tradable NFTs at a 1:1 rate.
  • Fuji and Krakatoa nodes will be fused to their respective amount of Novaruptas and converted to NFTs.
  • Node NFTs will be tradable on the open market and transferrable.
  • For your remaining TrueROI value, there are three choices:

1) Divide your remaining TrueROI value by $150 to determine how many NFTs you will receive as a bonus. Round the value up to the nearest whole number.

2) Take a USDC buyout of 21% of your TrueROI value, paid for by the existing LP.

3) A combination of options 1 & 2

  • NFT boosters will not be included in your TrueROI calculation and will instead be upgraded to offer perks that align with the new NFTs (boosted rev share, priority investment access, etc)
  • NFT boosters will be tradable on the open market and transferrable.
  • The LAVA token will have its trading disabled and liquidity will be pulled to be used for potential buyouts. Remaining liquidity will be sent to the treasury to further the development of sister projects.
  • Users will be given 1 month to take advantage of the TrueROI bonus/buyout, and an additional 2 months to migrate their nodes (3 months total for migration).
  • Unclaimed rewards and $LAVA leftover in wallets will be used toward migration, with any “spillover” being paid out at the 21% rate.

There will be plenty of time to discuss these changes as a community, and we welcome any suggestions or improvements to the system. We can’t wait to take this next leap toward the growth of Lava 🌋