Waves pushing the limits of Stablecoins with Neutrino and Decentralized Forex
Waves founder Sasha Ivanov recently spoke to Forbes in an interview, outlining how he believes Neutrino will become the go-to DeFi protocol for issuing stablecoins. Along with powering all forms of synthetic pegs such as stocks, indices, cryptocurrencies, and Decentralized Forex.
We foresee Neutrino-based stablecoins as an integral part of people’s day-to-day payment routines, with Decentralized Forex, and a global Neutrino-based stablecoin exchange system, also playing a major role…
Great time to recap the key features of Neutrino issued stablecoins compared to other popular options such as BUSD or DAI. And how the protocol enables decentralized forex trading.
Advantages of Neutrino Stablecoins
Neutrino USD is a decentralized and algorithmic stablecoin. Meaning USDN is minted without any involvement with fiat currencies or any traditional finance systems. Firstly, users do not have to trust the issuer has some form of a US dollar reserve in a bank. Secondly, USDN is the first stable crypto asset that is not based on lending.
How is USDN issued?
- The equivalent amount of USDN is issued when a user sends Waves into the Neutrino smart contract.
- Waves is a stakeable asset and the Neutrino smart contract will automatically start staking the Waves tokens.
- Block rewards are roughly 6% APY on Waves blockchain, which is paid daily.
- Neutrino will automatically use the block rewards to mint more USDN. Which it distributes proportionally to all USDN stakers over the past 24 hours.
- USDN is also a cross-chain stablecoin, living on Ethereum and Binance Smart Chain.
As a result, Neutrino’s stablecoins enable high yield which remains stable. It’s APY will not fluctuate largely as seen on Venus Protocol. Currently, one of the main use cases is in emerging markets in Africa or Latin America. Because in these regions we find national currencies that face high devaluations. For example, we see NGNN (a peg for Nigerian Naira) is popular on Waves exchange because the in-built yield generation can protect users against inflation.
Furthermore, the platform enables diversification into other stablecoins pegged to the US dollar or Euro which are less volatile. This has led to Waves using the Neutrino protocol to launch a Decentralized Forex or DeFo trading.
Decentralized Forex (DeFo)
Neutrino protocol also enables users to trade national currencies on a decentralized exchange. You can instantly swap to algorithmic stablecoins pegged to popular national currencies such as EURN (Euro), GBPN (UK), CNYN (China), JPYN (Japan), TRYN (Turkey), UAHN (Ukraine) NGNN (Nigeria), BRLN (Brazil), and RUBN (Russia).
Each asset is pegged to its fiat equivalent through a secure system of oracles powered by Band Protocol. Essentially, users have access to Decentralized Forex trading secured by Waves blockchain.
By estimates the Forex market exchanges over $5 trillion on a daily basis. As a result, there have been many attempts for cryptocurrency and blockchain to break into this traditional market. But, as of yet we have never seen a clear winner evolve. Will Neutrino be the one to crack Decentralized Forex? Even scooping up a small percentage of this market would be a big win. It’s definitely removing many of the barriers between crypto technologies and people but for the moment trading volume on fiat pairs remain low – time will tell!