Nemo Protocol is a decentralized finance (DeFi) yield infrastructure protocol built on the Sui blockchain. It is designed to allow users to trade, hedge, and leverage future yields through a process known as yield tokenization. ^[1]

Overview

Nemo Protocol was developed to provide a suite of tools for interacting with and managing the yield generated by crypto assets. The platform's core function is to separate a yield-bearing asset into two distinct derivative tokens: a Principal Token (PT), which represents the initial capital, and a Yield Token (YT), which represents the future yield generated by that capital.

This separation allows for the creation of new financial strategies, such as securing fixed-rate returns or speculating on the fluctuation of future yields. The protocol operates on the Sui network, leveraging its architecture for performance and scalability. ^{[1] [2]}

The project positions itself as a foundational layer for yield in the DeFi space, offering what it terms "Yield as a Service" (YaaS). This model is intended to allow other decentralized applications (dApps), particularly in sectors like blockchain gaming, to integrate DeFi-native yield streams into their own ecosystems with minimal technical overhead.

By providing this infrastructure, Nemo Protocol aims to create more sustainable economic models for other platforms, such as a "Play-AND-Earn" system where in-game economies are supported by real, on-chain yield. The protocol is an alumnus of the Sui Hydropower accelerator program and has received support from Sui Grants, indicating a close relationship with the underlying Sui ecosystem. ^{[1] [3]}

History

The official X (formerly Twitter) account for Nemo Protocol was established in June 2022. The project gained more visibility after being announced as part of the first cohort to complete the Sui Hydropower Accelerator program on January 9, 2025. This eight-week initiative provided guidance from Web3 and Sui ecosystem experts. ^[3]

Throughout 2025, the protocol initiated several community and ecosystem-building efforts.

On May 14, 2025, it launched a loyalty campaign in partnership with GiveRep, which allowed users to earn "Nemo Points" for their activity on the platform. This was followed by the announcement of an ambassador program on June 9, 2025, aimed at recruiting community members to assist with promotion, content creation, and event representation.

On August 22, 2025, Nemo Protocol integrated MMTFinance Bricks into its Point Market, a feature that allows users to trade points from various ecosystem protocols. This integration enabled traders to earn "Momentum Bricks" as rewards. ^[3]

Technology

Nemo Protocol's infrastructure is built on several key technological components designed to facilitate efficient yield trading.

Blockchain

The protocol is built and operates exclusively on the Sui network. Sui's object-centric data model and parallel transaction processing capabilities are intended to provide the high throughput and low latency required for complex DeFi operations like those offered by Nemo. The platform supports all mainstream assets within the Sui ecosystem, including SUI, USDC, and USDT. ^[1]

Yield-Concentrated AMM

At the core of its trading infrastructure, Nemo Protocol utilizes a specialized Automated Market Maker (AMM) designed specifically for yield trading. Unlike standard AMMs that distribute liquidity evenly across a price curve, a Yield-Concentrated AMM focuses liquidity around the expected price of the derivative tokens.

For Principal Tokens (PT), the price is expected to converge towards its face value as its maturity date approaches. This specialized design aims to provide higher capital efficiency, resulting in lower slippage for traders and more fee generation for liquidity providers from a smaller amount of locked capital.

The protocol's design also claims to minimize the risk of impermanent loss, a common issue for liquidity providers in traditional AMMs where the value of their deposited assets diverges from the value of holding them. ^[1]

Products and Features

Nemo Protocol offers a range of products centered around the tokenization and trading of yield.

Yield Trading

The primary feature of the protocol is the splitting of a yield-bearing asset into two derivative tokens, enabling distinct investment strategies. ^[1]

• Principal Tokens (PT): PTs represent the principal component of the original deposited asset and are redeemable for the full underlying asset at a future maturity date. Users can purchase PTs on the open market at a discount to their face value. By holding a PT until maturity, the holder is guaranteed to receive the full value of the underlying asset, effectively locking in a fixed rate of return. This strategy appeals to risk-averse users who want to earn a predictable yield without being exposed to the volatility of fluctuating market Annual Percentage Yields (APYs). ^[1]
• Yield Tokens (YT): YTs represent the right to claim all the future yield generated by the underlying asset until the maturity date. These tokens allow users to speculate on future APY changes. If a user believes that the APY of an asset will increase, they can purchase its YT to gain leveraged exposure to that yield. Conversely, users can sell YTs to hedge their positions or lock in current high yields. The protocol has offered leverage options of up to 150% for purchasing YTs. ^{[1] [3]}

Other Products

In addition to its core yield trading market, Nemo Protocol has developed other features to support the broader Sui DeFi ecosystem.

• Nemo Vaults: These are automated investment strategies designed to generate compound interest on user-deposited crypto assets. The vaults automatically deploy capital into various yield-generating opportunities across the Sui ecosystem to optimize returns for users. ^[4]
• Nemo Swap: The protocol includes a decentralized exchange (DEX) aggregator that sources liquidity from multiple platforms on the Sui network. It is designed to find the most favorable trading rates for users by splitting orders across different liquidity sources to minimize price impact. ^[4]
• Liquidity Provision: Users can contribute assets to the protocol's AMM liquidity pools, known as "Market Pools." In return for providing liquidity, they earn a share of the trading fees generated from swaps and may receive other incentives. This was the component of the protocol targeted in the September 2025 security breach. ^{[1] [2]}
• Point Market: This feature allows users to trade points issued by various protocols within the Sui ecosystem, creating a secondary market for loyalty and engagement rewards. ^[3]

Security Incidents

September 2025 Flash Loan Attack

On September 7, 2025, Nemo Protocol experienced a significant security breach that resulted in the loss of approximately $2.4 million in user funds. The incident was first identified by blockchain security firms PeckShield and Cyvers and was later confirmed by the Nemo Protocol team. ^{[4] [2]}

Attack Mechanism

The exploit was executed using a flash loan attack, a common vector for DeFi exploits that involves borrowing and repaying a large amount of cryptocurrency within a single blockchain transaction.

The attacker borrowed a substantial sum of assets from a lending protocol on the Sui network. These borrowed funds were then used to manipulate the prices of assets within one of Nemo Protocol's "Market Pool" liquidity pools.

By creating a significant, albeit temporary, price imbalance, the attacker was able to drain the pool of its assets—primarily SUI, USDC, and USDT—at an artificially favorable rate. After securing the profit, the attacker repaid the initial flash loan in the same transaction, completing the exploit. Following the attack, the stolen funds were reportedly bridged from Arbitrum to the Ethereum network. ^{[4] [2]}

Team Response and Aftermath

The Nemo Protocol team publicly acknowledged the "security incident" on September 8, 2025, via announcements on their official X account and community Telegram channel, confirming that the Market Pool was the affected component.

In an initial message, the team stated:

"Dear Nemo Community, a security incident occurred last night, impacting the Market pool. We are investigating the matter and have suspended all smart contract activity for the time being. We plan to share when more information becomes available." ^[2]

In response to the attack, the team took several immediate actions. They suspended all smart contract activity on the protocol to prevent further losses and secure any remaining funds.

They also announced that a full investigation was underway in collaboration with security firms. The team publicly offered the attacker a 10% white-hat bounty, stating that if 90% of the stolen funds were returned, they would cease their investigation and not pursue legal action. ^[4]

The team assured the community that all assets held in the separate "Nemo Vaults" were secure and unaffected by the exploit. However, following the incident, some users in the project's Discord and Telegram channels expressed frustration over a perceived lack of detailed communication from the team. Some community members also reported being unable to view their assets deposited in the vault feature, despite the team's assurances of their safety. ^[4]

Team

Public information about the Nemo Protocol team is limited. According to a report from Decrypt, the founder and CEO is Alex Yeung, who maintains a limited online presence. ^[4]

Partnerships and Investors

Nemo Protocol has established several partnerships and received support from various entities within the Sui ecosystem. Its backers include Scallop, Bucket Protocol, Comma3 Ventures, AlphaFi, and Elevate. The project is also a recipient of Sui Grants and an alumnus of the Sui Hydropower accelerator program. Additionally, the protocol has collaborated with GiveRep for a loyalty campaign and MMTFinance for an integration with its Point Market. ^{[1] [3]}