Many different forms of cryptocurrency exchanges exist today. Waves Exchange, built on top of the Waves blockchain, is a hybrid-based approach. In the latest update, the team introduces decentralized staking for the Neutrino Dollar.
Decentralized Staking is Crucial
The concept of staking is very simple to explain. By owning cryptocurrency assets, eligible blockchains will let users earn “stake rewards” for not spending their balances. This is a method to incentivize the holding of coins, rather than trading. Not all cryptocurrencies provide this functionality either, however.
Trading platforms and exchanges have noted the growing popularity of staking. As such, most of the main platforms provide custodial staking support. Users still lose control of their coins, as they need to reside in exchange wallets. A convenient solution, but one that erodes the true purpose of decentralization.
Waves Exchange maintains a different model. Their non-custodial staking solution is very powerful. Users can retain ownership of their funds while collecting the rewards. As such, any potential risk associated with exchange-based staking is removed from the equation.
For now, this functionality is limited to one crypto asset. The rise of stablecoins in cryptocurrency cannot be ignored. It appears as if new contends come to market every other week. The Neutrino Dollar is a relatively unknown coin in this regard.
It too is pegged to the US Dollar. However, there is a small twist. Its stability is guaranteed through an algorithm and it can be collateralized with WAVES. By leveraging the open-source Neutrino protocol, USDN is designed for the Waves community first and foremost. Those who prefer less exposure to volatility can take a look at USDN.
High Neutrino Dollar Staking Rewards
It has become apparent that stablecoins are often a good source of “income”. They provide very high interest rates within the DeFi ecosystem. In terms of decentralized staking, the Neutrino Dollar is also appealing. Its current annual yield sits at over 13%, albeit this number will fluctuate over time.
The issuance of USDN is also crucial. More of these tokens are minted when the price of WAVES goes up. Those funds are allocated in a special reserve fund to cover the exchange rate difference if traders push the price down again. Combined with a network of oracles to feed price information, a stable peg can be maintained.
The team also adds:
“If this coverage is insufficient, the smart contract will instead generate a type of bond token, known as USD-NB which can be bought at the current market rate on Waves.Exchange with USDN. This USDN will be used to correct the market deficit, whereas USD-NB can be liquidated based on first-in, first-out (FIFO) principles to help correct the value of USDN.
Since USD-NB can be traded at a floating exchange rate, the bond token also presents an attractive financial instrument for high-risk traders, as USD-NB purchased at below USD parity can be later redeemed to USDN at a 1:1 rate. For example, even if 10 USD-NB are purchased for 8 USDN, these 10 USD-NB can later be liquidated to 10 USDN, a trade that would yield 25% profit.”
Unlike most other stablecoins, the Neutrino Dollar is all about transparency. Its smart contract can be viewed by anyone on the public blockchain. Aspects like these can certainly work in its favor over time. Other USD-pegged tokens are often subject to controversy or suspicions.