Neutrino Protocol FAQ

Neutrino Protocol
Nov 21, 2019 · 5 min read

What is Neutrino protocol?

It is a specification that lays out the principles of implementation of a token tied to an asset, such as the US dollar. The core aim of the protocol is to release a token which is backed by so-called collateralization — the process of locking an amount of Waves tokens equivalent to the capitalization on a smart contract.

What is Neutrino dApp?

It is a decentralised application with a user interface that can be used to communicate with the smart contract.

What is Dollar’s Neutrino (USDN) stable coin?

It is a token collateralized by the Waves native token, which price stability is supported by market makers in the ratio of 1 USDN : 1 US Dollar. This token is used as a payment token in various dApps and services and is also traded on different markets.

Any deviations from the 1:1 ratio can be counteracted by arbitration bots, given that every USDN token is backed by WAVES.

How is USDN collateralized by WAVES tokens?

The backing of the USDN token is stored on the smart contract of Neutrino and can be replenished (“issuing USDN”) or exchanged back (by “redeeming WAVES”) for Waves tokens at a price corresponding to the 1 USDN : 1 US Dollar ratio.

How does price stability algorithm work?

When the price of Waves against USD rises, a special reserve fund is formed to maintain backing in the event of a waves token price drop. When the reserve fund is not large enough to compensate for the decline in price, the smart contract issues special tokens called bonds (USDNB). These tokens can be purchased at any price with USDN (e.g. 10 bonds for 8 USDN) and then liquidated in the ratio of 1 USDNB : 1 USDN in order of priority (FIFO — First in — First out).

Market makers and arbitration bots, which can be launched by volunteers from Neutrino community, also help to keep the rate stable at different exchanges.

What is the difference between buying USDN via Neutrino dApp (smart contract) and buying it on exchanges?

The price on the smart contract corresponds to 1 USDN : 1 USD relatively to Waves at the moment of withdrawal of USDN to the user’s account. Buying USDN on a smart contract takes two steps: 1: You send an order to buy USDN for a certain amount in Waves tokens. 2 — The smart contract releases USDN to the buyer’s account at the rate at the moment of withdraw (after about one block/one minute).

Buying USDN via the smart contract is more advantageous, as it allows you to buy any amounts of USDN without spread-related loss.

What is USDN staking and how many USDNs I can earn from this?

In the current implementation, all WAVES from collateral are leased to a Neutrino node. Those WAVES tokens mined by LPoS are transferred back to the Neutrino smart contract and automatically converted to USDN tokens. Finally, those new Neutrino tokens are transferred to the USDN stakers.

The amount of earnings in USDN depends on when the staking started, on the amount of staked USDNs out of the total USDN supply, and on the changes in Waves market capitalization.

Example: at the moment, Waves has 6.5% annual yield for leasing. Only 30% of total USDN supply is staked by USDN holders. For 1000 WAVES in leasing, there are 65 WAVES earned back from miner activity. According to a simple formula, 1000*0.065 == 300*x, so in this situation we arrive at x = 21.7% annual yield for staking USDN. Let’s assume that Waves price has been increasing gradually and has doubled during this year, so the average price is 1.5x compared to the beginning of the year. In this instance, the average staking reward is also multiplied by 1.5, which makes the estimated annual yield for staking equal to 32.6%. In the opposite situation, the reward would be decreased accordingly. Thus, USDN staking is overall profitable within USDN terms in all possible cases.

Where can I use USDN as a payment token?

Neutrinos can be used as a payment token on exchanges for buying another crypto, or in dApps built on Waves Platform, such as DAO, WaveFlow and others.

What does “decentralized” stablecoin mean?

As distinct from the centralized fiat-collateralized stablecoins, where all holders have to trust the issuer, an algorithmic (decentralized) stablecoin is issued by a smart contract. Its stability is also maintained by algorithms and various stakeholders from the community.

Who is maintaining price oracles and other oracles?

All system actors including price oracles or emergency oracles are managed by Neutrino stakeholders and open-source community. There is a special DAO-like process called Neutrino Enhancement Proposals (NEP) designed to let community contribute to the decision making about oracles, parametric limits, and smart contract’s logic.

Who is maintaining the source code and servers of Neutrino dApp?

The first versions (alpha/beta) of Neutrino dApp will be developed and maintained by Neutrino team incubated by Waves Labs. Next versions will be maintained and modified by the community and main USDN stakers via Neutrino Enhancement Proposal (NEP).

From which nodes will I receive USDN staking rewards? Can I choose a custom node?

There is a node dedicated specifically to USDN staking: 3PLosK1gb6GpN5vV7ZyiCdwRWizpy2H31KR. This is a temporary solution, and USDN stakers will have an ability to select a node they want to stake with later.

What are Neutrino bonds tokens (USDNB) and how are they used?

When the reserve fund is not large enough to compensate for the decline in price, the smart contract issues special tokens called bonds (USDNB). These tokens can be purchased at any price with USDN (e.g. 10 bonds for 8 USDN) and then liquidated in the ratio of 1 USDNB : 1 USDN in order of priority (FIFO — First in — First out).

Bonds can also be transferred to another account or sold on exchanges.

Are there any risks associated with smart contracts and cryptocurrencies?

Yes. The development team is not responsible for any malfunctions or attacks that will result in the loss of assets by Neutrino dApp users. However, all source code as well as the code of the smart contract are open for monitoring and auditing. Please read our Terms of Service on for more information.

If your question has remained unanswered, we will be happy to see you in the Telegram group of the Neutrino Protocol.

Neutrino Protocol

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Neutrino is an algorithmic price-stable cryptocurrency protocol collateralized by WAVES token.

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