What is Neutrino USD?

Neutrino is an algorithmic protocol built on the Waves platform that enables the creation of stablecoins pegged to specific real-world assets, such as national currencies or commodities. The Waves platform is responsible for its development and collateralisation. Neutrino stablecoins may vary based on the asset they are pegged to, such as EUR-Neutrino, BTC-Neutrino, and S&P 500-Neutrino.

The protocol’s token, USDN, is a US-dollar-based stablecoin backed by the protocol's WAVES tokens, which are locked in smart contracts to mint USDN. USDN is described as fully collateralised by WAVES tokens and pegged 1:1 to the US dollar.

A brief history of Neutrino USD

Neutrino USD was released in 2019 by Waves, which migrated Neutrino USD to the Ethereum network in August 2020 to improve access to liquidity for its product and to provide more choices in the decentralised finance (DeFi) industry.

After its first year, the protocol had amassed a market value of more than US$120 million USDN. The protocol enables crop farming by using a completely new approach introduced to the Ethereum blockchain, and within three months of its deployment, Neutrino USD became one of the most popular decentralised apps (dapps) on Waves' mainnet.

Neutrino introduced its decentralised foreign exchange (DeFo), an extension on top of the Neutrino protocol that facilitates instant swaps of stable-price assets tied to popular national currencies or commodities. DeFo is an open-source solution that can also be integrated into any other interface and is aimed at providing a frictionless bridge between fiat and crypto.

USDN is one of Neutrino's nine assets: Neutrino EUR (EURN) is pegged to the Euro, Neutrino CNY (CNYN) is pegged to the Chinese yuan, Neutrino JPY (JPYN) is pegged to the Japanese yen, Neutrino RUB (RUBN) is pegged to the Russian ruble, Neutrino UAH (UAHN) is pegged to the Ukrainian hryvnia, Neutrino NGN (NGNN) is pegged to the Nigerian naira, Neutrino BRL (BRLN) is pegged to the Brazilian real, Neutrino GBP (GBPN) is pegged to the British pound, and Neutrino TRY (TRYN) is pegged to the Turkish lira.

In April 2022, USDN depegged during accusations of WAVES price manipulations. The following month, the stablecoin TerraUSD (UST) tumbled on 11 May 2022 to as low as US$.023. USDN dropped 12% to US$.088 that day, despite its intended stability to maintain its price at US$1.

How Neutrino USD works

USDN is the stablecoin of the Waves protocol and similar to Terra’s algorithmic stablecoin UST. Users need to lock the WAVES token into Neutrino's smart contracts to mint USDN.

The target price of the token is US$1.00 and is maintained by the Neutrino System Base Token (NSBT). USDN can be exchanged back for WAVES tokens at a 1:1 ratio. If the WAVES price rises, a reserve fund is set aside as a safeguard against any sudden drops. If the reserve fund is not enough to offset a price drop, NSBT is issued and sold at a discount, allowing users to sell them in the future for a profit.

Neutrino USD transforms Leased Proof of Stake (LPoS) block rewards to USDN staking interests. Aside from incentivising LPoS to USDN stake interests, the protocol ties extra collateral to its smart contract. Staking NSBT for a certain period creates gNSBT, and the more gNSBT that holders have, the more passive income they get from transaction fees. Additionally, the community of NSBT holders votes on additional assets.

What is Neutrino USD used for?

The Neutrino protocol consists of three core tokens: WAVES, USDN, and NSBT. WAVES is a core token of the Waves blockchain that is used for paying transaction fees; it serves as a collateral for USDN. NSBT is a recapitalisation and governance token of the Neutrino protocol that ensures the USDN collateral reserves’ stability. Additionally, its holders have a say in the Neutrino protocol, product, feature roadmap, and governance parameters.

The three tokens may be staked for LPoS rewards, the USDN equivalent of the converted LPoS, and smart contract gas costs. Neutrino USD holders can stake their assets on the platform for annual yield, and traders may purchase NSBT in an open auction and set the price based on their predictions. Traders may profit from price differences if the market coin rate changes. To gain passive money from mining, Neutrino tokens may be frozen.

USDN is utilised for payments in the Waves platform-based apps, such as DAO and WaveFlow. It is available in the Ethereum and Binance Smart Chain ecosystems through gateways launched by Waves.