Neutrino’s algorithmic stablecoins project launches staking for its governance token
8. Dezember 2020
The Waves-based project will share part of the protocol fees with the NSBT token holders.
The Neutrino Protocol, a multi-platform algorithmic stablecoin creation project, announced on Tuesday the launch of participation rewards for its governance and utility token, NSBT.
Neutrino uses an innovative combination of collateral support and algorithmic delivery changes to create a wide range of stablecoins linked to a fiat currency. The flagship stablecoin, USDN and NSBT are available at Ethereum (ETH) as ERC-20 tokens.
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The USDN generation mechanism is based on WAVES, the native token of the Waves platform. Generating the stablecoin is as simple as using your smart contract to exchange WAVES for USDN. Oracles will read the price of the asset and create an amount of USDN based on the current price of WAVES.
Therefore, the assets form a pool of collateral that supports stablecoin USDN. The reverse process can be performed at any time, reimbursing USDN per WAVES according to its current market price.
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However, this mechanism is only valid as long as the price of WAVES is growing or remains stable. If it were to fall, stablecoin reserves would eventually be less than the amount of tokens in circulation. This is where the mechanism based on NSBT, or the base token of the Neutrino system comes into play.
To recapitalize the system, smart contracts will auction new NSBTs in exchange for WAVES, similar to the „flop“ auction used by MakerDAO after Black Thursday.
Once the price of WAVES is recovered, or the system recapitalised in another way, the NSBT token can be exchanged for USDN at a rate defined by the stablecoin reserve index. For example, if there are $130 million WAVES tokens for $100 million USDN, the price of NSBT will be approximately 1.3 USDN. The formula is exponential and is set so that the price of NSBT based on smart contracts will start to increase rapidly once the reserve factor grows above a certain threshold of over-guarantee. The smart contract mechanism only sets lower and upper limits to the price through arbitration mechanisms, while the market price can float freely between those values.
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Both NSBT and USDN tokens are available for staking right now. The former entitles holders to 2% of the smart contract operation fees, but staking is only possible directly on the Waves platform. The latter earns rewards from Waves‘ treasury, and can also be staked at the Ethereum simply by keeping it in a wallet. Staking is also possible through exchanges.
Sasha Ivanov, founder of Waves, said that the Ethereum „is just the beginning“. The Neutrino protocol is configured to expand to Solana, IOST, Ontology and others, using its Oracle-based Gravity bridge protocol. The team is also pushing proposals to integrate the token into existing DeFi protocols such as Compound and Aave.