Recently, the market for most cryptocurrencies has experienced noticeable volatility. This scares investors and hinders the growth of the cryptocurrency market. Stablecoins have been developed to solve this problem; one of them is Neutrino USD. Neutrino USD is among the most attractive and interesting stable coins to consider today. In a volatile marketplace, stability remains a valuable and necessary resource for investors. Stablecoins combine the traditional reliability of fiat currencies with the versatility of digital assets.
What Is the Neutrino?
Neutrino USD (USDN) is an algorithmic stablecoin pegged to the US dollar and backed by WAVES. Unlike other fiat-backed stablecoins, Neutrino USD demonstrates a significant difference. The system uses cryptocurrency (WAVES) as a backup. All mechanisms of checks and balances are calibrated so that Neutrino USD aims to maintain a stable price, which provides users with confidence in stability and absolute transparency.
What Is the Neutrino Protocol?
The Neutrino protocol is an algorithmic asset fixing protocol that enables the development of stable coins tied to real-world assets or cryptocurrency. The Neutrino protocol is a set of interacting smart contracts written in the Ride programming language and deployed on the Waves blockchain. For the current period of time, most operations with the Neutrino protocol are possible through the Waves.Exchange interface. Neutrino system is based on three main tokens: WAVES, USDN and NSBT.
It is the essential token of the Waves blockchain, serving to pay transaction fees. In addition, it is the collateral of USDN, Neutrino’s main stack coin.
USDN coin is an algorithmic stablecoin pegged to the US dollar. It serves as collateral for other Neutrino stable assets.
This is the Neutrino protocol token for recapitalization and management, ensuring the stability of USDN collateral reserves.
How Does It Work?
USDN is algorithmically released via a smart contract to provide WAVES tokens as collateral at a 1:1 ratio to the US dollar. Users must call swapWavesToNeutrino() on the main Neutrino smart contract to receive the USDN. This exchanges WAVES for USDN at the current price in the smart contract.
To request an exchange in the opposite direction (USDN to WAVES), the user will need to call the swapNeutrinoToWaves() function. After the Waves blockchain creates the BalanceLockInterval blocks, the tokens will be ready for withdrawal by the withdrawal method at the actual price (account: Chain) when the BalanceLockInterval height is reached.
The minimum amount is 1 USDN to exchange USDN for WAVES. Timeout is 1 440 blocks (about 24 hours). Therefore, it is impossible to start a new swap while a previous swap is in progress.
A protocol fee is charged for each swap sent to the NSBT team to keep the system stable. The commission is distributed to NSBT holders who stake their shares.
Neutrino USD Characteristics
With the transfer, Neutrino USD will quite possibly gain Ethereum member status. Furthermore, USDN entitles Ethereum users to receive incentives in the form of USDN storage in an Ethereum wallet. In addition, thanks to the new combination, Ethereum developers will be able to use USDN in decentralized financial applications.
Neutrino USD pegged 1:1 to the US dollar is used as a payment token in various decentralized programs. In addition, it can be traded in various markets. Waves state that the token moves between 8% and 15% a year at stake.
Neutrino System Base Token (NSBT)
NSBT is a useful token of the Neutrino protocol, which aims to provide stabilization of the reserve that provides USDN supply. NSBT tokens can be created only through smart contracts and with the help of a special auction algorithm, the parameters of which depend only on the value of the reserved gap for USDN. Similarly, NSBT tokens can be liquidated via the Neutrino smart contract during a significant increase in capitalization and reserve balance of WAVES.
NSBT tokens serve as payments in the Neutrino system (i.e., accumulating reserves, creating new types of Neutrino tokens) and provide voting rights to their holders in an approved voting system. Therefore, there is no pre-distribution or pre-release of these tokens. Instead, the market price of NSBT is determined by the dynamics of supply and demand on cryptocurrency exchanges and Neutrino smart contracts, where tokens can be purchased for as little as $1 equivalent.
USDN Price Stability System
Stability Token Rises in Value
As the value of the underlying asset (WAVES) has increased, the capitalization of Waves has gradually started to go beyond the capitalization of the stability token USDN. In such cases, the smart contract recognizes the presence of excess reserves. Therefore, it generates the necessary amount of USDN to implement orders to liquidate NSBT. If there are no tokens in the liquidation queue, the condition that Waves capitalization exceeds Neutrino supply is maintained.
Token With a Discount Reserve
When the price of the underlying WAVES falls, the capitalization is no longer sufficient to cover the capitalization of the stable USDN token. A smart contract that finds a reserve deficit can be liquidated through an auction where a unique NSBT token is created and WAVES is sold.
NSBT can be liquidated for an amount of USDN when the capitalization of the reserve increases again. Traders can purchase NSBTs through the Auction Panel in an open auction where anyone they instruct can buy a set of NSBTs at a different discount (NSBT/WAVES price). Orders for basic Neutrino tokens are executed by market order (at NSBT/USDN price).
Neutrino USDN crypto is a curious and exciting project that simplifies the creation of stable coins supported by fiat currencies, various commodities, and similar real valuable assets. Consequently, it could greatly influence the adoption of the crypto industry, with the public still using decentralized cryptocurrencies that are stable and secure. People will no longer fear what will happen if they switch to cryptocurrency payments and a bear market period ensues. Stable coins are not subject to volatility because other valuable assets back them, and this removes a major obstacle to the broader adoption of cryptocurrency.