Further steps in the Neutrino protocol’s development
Neutrino is moving towards richer functionality and greater decentralization. This is a short-term plan of further updates and steps aimed at fully decentralizing the protocol’s governance and adding the Speculative Decentralized Forex (sDeFo).
Over the past year, the Neutrino protocol has achieved an outstanding success, passing and surpassing all major milestones. Today, USDN is among the top 10 largest stablecoins by market capitalization, with about 38 million WAVES locked in a smart contract, which is approximately $360 million at the time of writing. Nine assets pegged to various national currencies are traded in Decentralized Forex, bringing high returns to stakers and liquidity providers. Our community has grown manyfold and we receive a lot of constructive feedback and suggestions for further protocol development.
The community already influenced several important aspects of DeFo and Neutrino enhancements, such as launching new stablecoins and even crucial changes to the NSBT workflow.
Now we are going to level up. Our next steps include further decentralization of the governance mechanism by passing significantly more control over the Neutrino system to the community and the launch of the Speculative Decentralized Forex (sDeFo), which will enable the tokenization of various volatile assets — from commodities to stock indices.
Pre-governance: NSBT staking in DeFo pools
First, we would like to increase motivation for the community to own and stake NSBT — Neutrino protocol’s governance token. Currently, NSBT stakers earn on fees for all operations with USDN issuance, and DeFo pool makers earn on fees for all operations with Neutrino stable assets. Our proposal is to redistribute fees from DeFo operations in favor of NSBT stakers. Fees are going to be divided between all NSBT stakers and DeFo pool makers evenly in proportion 1:1. If this is implemented, DeFo operation fees will increase. We will launch a vote to let the community decide to what extent fees should be changed or should remain untouched.
Global governance: protocol decentralization
We are planning to systematically finetune the Neutrino protocol. Currently, due to conceptual limitations, smart contracts are technically updated by a multisignature of major Waves ecosystem maintainers. With protocol decentralization enabled, this situation is going to change. Decentralized governance will enable the community to accept or reject changes to the system. The system contains a large number of parameters that could be selected through voting by all Neutrino stakeholders, let it be constants in smart contracts or various timing parameters. The community’s duty will also be voting for mining nodes that should support the leasing of WAVES coins that back USDN.
All that would be achieved after implementing a new system of smart contracts governance, WavesGov. It could also be implemented beyond Neutrino tech. WavesGov is a new and independent governance solution with which any smart contracts could be integrated and governed.
DeFo pools governance
NSBT becomes a DeFo protocol governance asset. We aim for a fully decentralized approach to new pools’ and new stable assets’ launching processes.
Upon successful implementation, there will be no need to set up an additional centralized voting process to define what asset will be next to launch and then wait for the actual launch by the team. Instead, anybody could propose a new pool, and there could be many of them. Subsequently, NSBT holders could use their voting power and define what pool is prioritized to be launched first. They vote on selected pools with their NSBT in a similar way to how it is done now, but there will be one major difference. Everything will be managed by smart contracts. Once a pool has won, it will automatically be launched with its new stablecoin.
The process is initialized when someone decides to create a pool for a new stablecoin and puts a predetermined minimum amount of USDN into it. Then, other participants can also support this idea with additional USDN tokens. When the amount of USDN becomes sufficient, a vote with NSBT tokens begins on whether to issue this asset. If the majority votes in favor, the pool of the new asset is activated. After that, a new voting process can be initiated.
sDeFo: Volatile synthetic assets
Tokenization of real world assets is the main objective of the Neutrino protocol. Whereas stablecoins pegged to national currencies may serve as a safe haven for hedging risks, tokenized volatile assets may attract volatility traders and thus more liquidity that would enhance overall stability of the system.
The sDeFo (speculative Decentralized Forex) enhancement stipulates a new collateralization mechanic enabling the launch of highly volatile assets, taking into consideration their impermanent nature. sDeFo will open Neutrino ecosystem’s doors to hundreds of volatile assets. That could be commodities, assets pegged to gold (GLDN) or oil (OILN), as well as stocks (AAPLN, TSLAN, etc.) or indices (SPXN, NSDQN, etc.) and even crypto (BTCN, ETHN, etc.).
Apart from being a volatile trading instrument, these assets will provide users with an additional opportunity to earn yields through various forms of staking, liquidity providing and aggregated swaps fees.
The issuing of new volatile synthetic assets will be initiated by the community and passed through a decentralized voting procedure. This approach will naturally lead to selecting the most demanded assets, attracting even more liquidity and laying the foundations for self-sustaining ecosystem growth.
Enhancements to the Neutrino protocol
Coinciding with the release of the node version 1.3.0 and enabled feature #16 “Ride V5, dApp-to-dApp invocations, Continuations,” we plan to enhance the Neutrino protocol, using newly opened-up opportunities.
Due to limitations of Ride Smart Contract language and specifically its non-turing completeness, we utilize so-called Pacemakers. Pacemaker is a special software that could be written in any programming language, like Java, Go, etc. Its primary role is to fulfill the turing completeness gap for Waves Smart Contracts and calculation complexity limits.
We target the maximum level of self-sufficiency of the system, reducing the quantity of necessary pacemakers needed for system operation. With the release of the new dApp-to-App Invocation feature, we could achieve more autonomous operation.
We would also add new community opportunities to make profits from running their own versions of remaining pacemakers. E.g. Due to increased flow of system invocations, it would be a competition of a community pacemaker which performs, say, a ‘withdraw’ operation and thus takes profit from it.
Upon the launch of all mentioned above, we expect Neutrino to become a truly decentralized and self-sustainable protocol that could provide unlimited use cases and opportunities for different categories of users, traders and liquidity providers. Stay tuned and follow Neutrino social media channels!
Neutrino website: https://neutrino.at
Medium: https://medium.com/neutrinoteam
Twitter: https://twitter.com/neutrino_proto
Telegram : https://t.me/neutrino_group
