NIP: $BTCN, $GLDN and sDeFo assets design

The Neutrino protocol is designed to be a universal toolkit for tokenization of real world financial assets. A potential way forward for the protocol is to make it easier for holders to diversify their portfolios, introducing assets pegged to financial instruments other than national currencies, such as stocks or indices. Whereas USDN stablecoin is likely going to remain the most popular Neutrino-based asset due to its sheer stability and a wide potential scope of application, the integration of a different collateralization mechanic would allow for the creation of hundreds of synthetic assets with a more extreme volatility profile. This idea was first proposed in the vision for Neutrino 2020 and was called Collider. It was then speculated that Collider could open ways to tokenize such popular assets as BTC, GOLD, SNP500 etc. Today, we present more details on the concept based on new utility of NSBT (Neutrino Base Token).

Intro

Let’s overview the algorithm using BTCN as an example. The system uses three tokens: USDN, NSBT, and nVault — an NFT token that signifies a right of ownership for locked USDN and NSBT.

Issuance

Staking

The USDNs & NSBTs that form the collateral are also staked.

The process of generating new BTCN for staking payments is as follows:

  • all staking payouts for USDN & NSBT are converted to USDN.
  • 1/5 remains in USDN, 4/5 are converted at the current exchange rate into NSBT, diluting the share of NSBT in all nVaults and replacing it with USDN
  • new BTCNs are issued via the mechanism described above, ready to be paid out to stakers
  • nVaults that were received automatically remain on the smart contract, where they can be redeemed by any user for USDN
  • USDNs received from the sale of nVaults are again credited to the contract as a staking reward

Redeem

Motivation for Participants

Holders of BTCN bought on the market can simply store it as regular bitcoin, receiving staking payments in BTCN.

The proposed scheme has a number of advantages:

  • BTCN is backed by a liquid token, USDN
  • BTCN has large quantities of excess collateral, protecting against BTC’ volatility
  • NFT tokens and Waves infrastructure that will support them is going to develop rapidly
  • The algorithm is suitable for any type of speculative assets: GLDN, TSLN, SNPN, etc.
  • With the Waves blockchain, it is simpler to implement and maintain such an algorithm, however, BTCN can also be issued as an ERC20 token by analogy with ERC20 USDN.
  • A significant demand for NSBT is expected, which stimulates the growth of its market cap and secures its role as the token of Neutrino recapitalization

Tech Ξntrepreneur, Lobster