Neutrino USD Review: Everything About USDN Explained in Detail
Recently, the majority of cryptocurrencies have been experiencing a high rate of volatility. This instability scares investors and discourages crypto market growth.
However, stablecoins have risen to salvage this issue. One of the very interesting and attractive stablecoin you shall consider today is Neutrino USD. But before that, let’s look at the Waves protocol and what connects it to Neutrino USD.
The Waves protocol is an all-encompassing cryptocurrency that enables users to mine cryptocurrency on its blockchain. It allows users to tokenize assets, whether cryptocurrencies or fiat, and perform transfers with them. Waves protocol was established in 2016 by Sasha Ivanov, a Russian Tech Entrepreneur and CEO of Vostok Project.
The Waves protocol soon developed the Neutrino USD for blockchain interoperability, DeFo, and other strategic profitability.
- 1 What is Neutrino USD?
- 2 What is the Neutrino USD (USDN)?
- 3 What is NSBT?
- 4 How Does it Work?
- 5 Blockchain Interoperability
- 6 Neutrino USD Digital Assets
- 7 Neutrino USD and Decentralized Forex (DeFo)
- 8 Staking USDN Tokens
- 9 Staking Incentives sharing
- 10 Backing Ratio (BR)
- 11 Auction and Liquidity Mechanisms
- 12 How to Store Neutrino USD
- 13 Advantages of Neutrino USDN
- 14 Conclusion of Neutrino USD Review
What is Neutrino USD?
The Neutrino protocol is a multiple-asset price-stablecoin that stands as a toolkit for intermainnet DeFi transactions. It uses complex algorithms to create stablecoins.
Stablecoins are cryptocurrencies that have their price values pegged to real-life assets such as fiats and commodities. The first neutrino stablecoin that existed was the USD Neutrino (USDN), which the $WAVES token collateralize
The Waves network powers the Neutrino USD. It was created as a beta version in 2019 by Ventuary Lab, partnered with KozhinDev and Tradisys.
After its first year, the protocol had successfully minted over $120M worth of USDN in market capitalization. The protocol allows yield farming through an entirely novel technique added to that of the Ethereum blockchain.
Yield farming in Ethereum is done by either providing liquidity and protocol rewards or lending and borrowing. But Neutrino USD converts Leased Proof-of-Stake (LPoS) block incentives to the USDN staking interests. Smart contracts handle the general operations of the coin. Neutrino USD sustains its stablecoin’s ($USDN) stability using a means of recapitalization of reserved tokens in the smart contract.
The protocol’s smart contract enables users to create new USDN tokens using WAVES tokens. Once they send it, they can’t own the WAVES token; the smart contracts hold them.
As earlier stated, the USDN tokens are collateralized by WAVES. These WAVES are themselves staked by the contracts, and this provides incentives as a result of Waves’ LPoS Algorithms.
Within three months after deployment, Neutrino USD evolved into being amongst the most used dApps on Waves’s mainnet. From dAppOcean records, the platform grew to over 3,000 monthly active users. The TVL in smart contracts also grew to over $5M.
What is the Neutrino USD (USDN)?
The USDN is the algorithmic stablecoin that is pegged to the US Dollar and backed up by the $WAVES token.
It maintains a 1:1 ratio with its pegged USD value, and upon any distortion in price, the contract balances it. If the price should drop below $1, the mechanisms sell the NSBT token at a cheaper price to users. This allows users future profitability.
And if the price rises above $1, the contract provides a reserved fund for the protocol when the price decreases.
While staking in WAVES provides users up to 6% annual profitability. The USDN provides up to 8-15% annual profit. Since Neutrino USD is on Waves’ blockchain, staked WAVES will turn to USDN, minimizing the volatility in the market.
What is NSBT?
Neutrino System Base Token is the governance token used for users to have the ability to contribute to the platform. It is a synthetic asset that provides stable reserve funds for the Neutrino USD using the Recapitalization mechanism. Also called the Neutrino USD token, it enables users to speculate upon the Backing Ratio (BR). This BR is the ratio of reserve WAVES token to the entire USDN tokens in circulation.
The BR is so important when performing a transaction. So, a user must evaluate the amount of WAVES collateralizing the $USDN tokens in the main contract. After that, the user should convert the amount to its current dollar equivalent.
How Does it Work?
Asides from incentivizing LPoS to USDN staking interests, the protocol restores stability by locking more collateral backing to its smart contract. This also makes it unique, as opposing to the Ethereum blockchain.
You can stake the three tokens for LPoS incentives, USDN equivalent of the converted LPoS, and the smart contract gas charges.
The protocol acts as a decentralized financing toolkit as it has numerous Lego blocks acting as the base layers and standing in for multiple repetitions. These blocks must be available in various blockchains and other digital products.
Both WAVES and USDN were ported to the Etheruem and Binance Smart Chain successive. One of the aims of the protocol is interchain operability. Therefore, having a stablecoin that provides one of the most rewarding yield farming deployed into multiple chains was the objective.
It is no doubt noting that the protocol celebrated its first anniversary with a whopping $120. This success can largely be traced to its integration with other mainnets.
The protocol is now being accessed by multiple liquidity pools and applications in the Ethereum blockchain. Developers are making arrangements to integrate Neutrino USD into chains like Tron, Solana, IOST, and many others.
Waves and Neutrino USD links with Ethereum blockchain using the Gravity price oracle to track real-time crypto prices. Gravity is a permissionless price oracle and inter-blockchain network protocol. Since its inception, the Neutriton has connected with up to 15 other mainnets.
Neutrino USD Digital Assets
These are synthetic assets that have their values pegged to various fiat currencies through algorithmic tracking. The ratio of each asset to its fiats is a 1-to-1 value, and USDN collateralizes it. We must also understand that each asset has its unique liquidity pool, which amounts to up to 10-15% average APY daily. Currently, there are 9 digital assets in the USDN protocol. You can find the list is below:
EUR (EURN) — Pegged to the Euro
TRY (TRYN) — Pegged to the Turkish Lira
JPY (JPYN) — Pegged to the Japanese Yen
CNY (CNYN) — Pegged to the Chinese Yuan
BRL (BRLN) — Pegged to the Brazilian Real
GBP (GBPN) — Pegged to the British Pound
RUB (RUBN) — Pegged to the Russian Ruble
NGN (NGNN) — Pegged to the Nigerian Naira
UAH (UAHN) — Pegged to the Ukrainian Hryvnia
These assets are determined by the community through a voting process. The voting process is considered further below as we proceed.
Neutrino USD and Decentralized Forex (DeFo)
DeFo is a dApp integrated with Neutrino USD that allows seamless conversion of fiats currencies and stable-price assets. The exchange is executed in the Neutrino USD smart contract as it provides openness, reliability, and abundant liquidity at accessed price rates.
DeFo digital assets make use of Waves’ mechanism, allow staking, and provide awesome interest rates. Its DeFo extension is open source and can be supported upon other interfaces.
The goal of DeFo is to ensure a reliable exchange between fiats or commodities and cryptocurrencies. It also provides banking services for regions where banking is inefficient and unreliable.
Swop.fi is an Automated Market Maker (AMM) that aggregates two different pools using two price formulas. The first is UniSwap’s CPMM (Constant Product Market Maker). Used to enable decentralized swapping of digital assets.
The second is the flat curve gotten from Curve.fi. This AMM is used to minimize slippages for tokens with familiar prices, e.g., stablecoins. Its token is the SWAP token used for controlling and liquidity rewarding. The SWOP aims at effectively utilizing Waves’ cheap and instant transactions while adopting USDN’s attributes.
Staking USDN Tokens
Staking is a recent update of the NSBT token, which provides more stability to the token. While Staking USDN token on the Ethereum blockchain is an autonomous process.
You just need to store the tokens in your Ethereum wallet, and you will be paid daily. There are two ways to stake NSBT. First, you can issue it through a smart contract, or you can purchase it from an open market.
Issuing it through a contract involves the conversion of WAVES and NSBT. Buying it from a smart contract carries only a fixed transactional charge of 0.005 WAVES, notwithstanding the amount you want to buy.
However, the issuance price is greatly affected by the present backing ratio (BR) and can vary from the selling price on different exchanges.
Secondly, you can purchase it on an exchange. The NSBT token can be purchased in Swop.fi or Waves.exchange, whereas the ERC20 NSBT can be gotten on Uniswap and transferred to the Waves platform. However, you will be paid ERC equivalents of your USDN tokens.
The staking process arises from transaction fees that users pay for swaps. Then those whose stakes are already running will get a share of the fees in percentages. You can stake in the following platforms:
Waves.exchange, Kucoin, Hotbit, MXC, Mycontainer, etc.
Staking Incentives sharing
The lucrativeness of the NSBT is determined by the amount of USDN-WAVES conversion and the users’ balanced share in the overall NSBTs stakes. There are three factors to consider—the calculating period (CP), the income per block (IPB), and total period income (TPI).
The calculating period (CP) is evaluated to be 1,440 blocks and 24 hours. The Total Period income (TPI) is the overall income for the calculating period. Meanwhile, IPB is calculated to be:
IPB = TPI/CP.
Then the IPB share—share of income per block—is calculated. The sharing system evaluates each user’s staking balance and then divides it by the total value of all staked balances.
Backing Ratio (BR)
As we said earlier, the Backing Ratio is the ratio of the number of locked WAVES to the overall NSBT in circulation. It’s an important perimeter and is evaluated by considering the number of WAVES backing the Neutrino USD on the main contract. The value should also be converted to dollars using the current exchange rate.
The BR perimeter can be calculated as:
BR = $R / S
BR% = 100 * (R $ / S).
The relationship between the Neutrino USD price deficit and the BR is calculated using the formula:
D = 1 — BR
D% = 100 — BR%.
The backing ratio can assume any number (0-∞, zero to infinity). However, in an ideal state of balanced reserve and supply, it is equated to 1 or 100%. If the reserves are only up to an exact half of the overall NSBT in circulation, the BR is equaled to 0.5 or 50%. But, if the volume in reserve is up to 50% more than the total Neutrino USD in supply, the BR is calculated to 1.5 or 150%.
To trade Neutrino USD profitably, a trader must ensure to note the three determinants of the BR growth. They include:
- Increase in the number of WAVES tokens available in reserve due to WAVES/USDN transactions.
- An increase in the Waves’ open market value.
- Increase in the number of WAVES tokens in reserve due to issuing the NSBT token.
Also, there are three determinants of BR depreciation.
- Decline the WAVES market value.
- Decrease in the number of reserve WAVES due to USDN/WAVES transactions. And lastly.
- Surplus state.
An emission curve can be used to link the BR to Neutrino’s price. This emission curve focuses on over-collateralization and a BR equal to 1.5. If the BR reaches 1.5, the token’s price will also rise proportionally.
The Neutrino USD token’s price formula is evaluated as:
Nsbt2usdnPrice = ea.(BR-1) = e a*([wRES.price/usdnSupplpy]-1)
Auction and Liquidity Mechanisms
Analyzing both limit orders and market orders, we know that the Neutrino USD allows two operation modes. The first is the “Instant” mode, which is the immediate performance of a transaction although the present BR situations. The second “on condition” is the execution of a transaction on the condition that a BR situation is fulfilled.
The Auction mechanism creates NSBT tokens by swapping them for WAVES tokens, which come in as collaterals for USDN. At the same time, the Liquidation token swaps the NSBT tokens for the USDN stablecoins in a base-stablecoin exchange in the ratio of 1:1. Liquidation only occurs if the BR is 100% or more than the total Neutrino USD in supply.
How to Store Neutrino USD
Users can store the USDN on the Trustwallet or Metamask wallets.
How to Vote in Neutrino:
Neutrino USD base token provides the Neutrino USD community the ability to vote and contribute to the roadmap of the protocol. With it, they can vote on which digital asset should be deployed into the protocol. So, how can one vote in USDN?
- Purchase the Neutrino base token, NSBT. It can be purchased either on the token’s smart contract or on a supporting crypto exchange.
- Vote for the desired asset. You click on this link Neutrino and choose an amount to vote for assets that are about to be deployed.
- Retrieve your base tokens. A user can recover staked tokens after the voting process is over.
Advantages of Neutrino USDN
The Neutrino USD protocol as a Defi toolkit has many distinguishing factors that make it unique in the Waves blockchain. Here are some of the advantages of Neutrino USD.
Creation of USDN for WAVES through 1:1 Dollar Value
The use of a smart contract in USDN enables the creation of USDN. This new USDN has the same dollar value of WAVES. Thus, it’s used for the exchange of the WAVES in a 1:1 ratio.
Generates Waves Block Rewards
Neutrino USD project help to generate block rewards for stakers in the Waves blockchain. It does that through the consensus mechanism of the Waves’ LPoS. When a user sends in $WAVES, the Neutrino USD smart contract will own the tokens.
It will then automatically stake the tokens and will generate the rewards for the stakers. The payment of the rewards is usually in $USDN. It accounts for an average of 8-15 APY. Combining the lending/borrowing yield, the stake rewards, and liquidity mining put Neutrino USD as a strong DeFi.
USDN governance and Reserve Recapitalization Mechanism promote the NSBT token
The NSBT token of the USDN is at the center of all the development-related activities of the protocol. The token has a very role in the protocol. It maintains the collateral reserves of the $USDN in the form of WAVES.
This happens through the connection between $NSBT’s price and the collateralization from an emission curve. The collateralization ratio is 1.5. This implies that over-collateralization gives an exponential increase to $NSDT’s price
Interconnectivity Among the Tokens
You can stake any of three assets. Their staking generates $WAVES LPoS rewards. You can convert these rewards to $USDN. The rewards sometimes can be in $NSBT, which is also the protocol’s contract swap fees. This swap fee usually applies when there’s a swap between $USDN and $WAVES. The swap fee is paid in $NSBT and to $NSBT stakers.
Conclusion of Neutrino USD Review
The Neutrino USD protocol provides a great avenue for any investor. Its tokens can be used interchangeably and provide balanced and less volatile stablecoins. Unlike the Ethereum blockchain, the Neutrino USD uses a more sophisticated model of yield farming and reserve recapitalization mechanism.
For a user who desires a DeFi protocol with high profitability, the Neutrino USD protocol should be a first choice consideration.