Ecosystem Analysis of Neutrino Stablecoin and Waves

Apr 26, 2022

By TinyHand


This article starts with an introduction to the origination, market, and major applications of Waves’ ecosystem. Then, it focuses on the design of the USDN stable coin. We strongly believe that stable coins are necessities for the launch of future projects, while USDN will still be a killer tool used by Waves to seize the market in the future.




Many people associate the rise of the price of Waves tokens with the Russian-Ukrainian war. Putting aside the hype brought about by the news; based on the pure analysis of the product functions, Waves at present can indeed meet people's demand for hedging and the expectations of other demands.

Price of Waves skyrocketed during the Russian-Ukrainian War


Reasons are as follows:


  1. Waves has its own Waves Exchangewhere people can directly purchase the USDN stable coin. This exchange assembled functions of both CEX and DEX, allowing traders to have comfortable experiences trading fiat directly with USDN.


  2. The design of the Waves stable coin system is relatively complete. Introducing NSBT has greatly resolved the tough issue of insufficient USDN reserves. When SWIFT or other transaction-related infrastructure is not used/ functioning, USDN could be used to transfer the value of fiat currencies.


  3. Waves has DeFo (Decentralized Foreign Exchange Market). People in different countries can exchange USDN with various algorithmic stable coins such as EURN, RUBN, CNYN, JPYN, UAHN, NGNN, BRLN, GBPN and TRYN through tools in DeFo, which meets the need to transfer various stable assets.


  4. Other than transferring of assets, the ecosystem of Waves public chain is also complete with secondary markets, loaning and depositing, NFT, games, etc. Developers can also build up more application scenarios using developing tools in Waves. These would meet the financial service and entertainment needs of people.


  5. There were incidents earlier in which assets in Russian trading accounts were frozen by exchanges, on the contrary, the probabilities of such incidents happening on Waves are infinitesimal. Waves Enterprise, an enterprise service platform under Waves, has been working with multiple Russian industrial assets companies. Their business involves both enterprise and government level, from transferring of assets to recording office finances. Waves Enterprise is the only blockchain platform that possesses the abilities to undertake such business services. To an enterprise service blockchain platform, Waves would not easily engage in activities that could cause panic in enterprise and government clients.


  6. Other than providing enterprise services to huge corporations such as Microsoft through private chains, Waves is also relatively complete in the development of its ecosystem in the public chain, allowing it to develop multiple applications facing the general public like DeFi, NFT, games wallets.


Therefore, Waves is a logical choice of asset-hedging public chain. Even though there is an influx of new public chain concepts at the current state, Waves is among the few financial public chain projects that has endured years of testing.



Waves was founded by a Ukrainian scientist, Sasha Ivanov, in 2016 Ivanov majored in theoretical physics for 7 years during his university years. After his graduation, he embarked on a career in Artificial Intelligence for another 7 years. During his free time, he has been active in an internet community that mainly consists of scientists. When the blockchain community gained more and more hype, Ivanov indulged himself in it, which then led him to the decision of developing enterprise blockchain applications.


Founder of Waves, Ivanov


Ivanov had clear goals for Waves – to bring the application of blockchain into the finance and finance-related fields such as securities, crowdfunding, and fiat transferring, in order to build a finance public chain.


Today, the Waves ecosystem has achieved mini circulations within the ecosystem, and at the same time accomplished fabulous achievements in resolving cross-chain methodologies, which allows a huge circulation of interaction with other public chains. Its stable coin, USDN, also supports major chains such as ETH and BSC, and is circulating in the market.


  1. Market Value and Price

Waves launched its ICO in 2016 through Bitcoin donations, where it received 30,000 Bitcoins (equivalent to 16 million USD) and became the third largest blockchain crowdfunding project after The DAO and Ethereum.

By 17 March 2022, according to the data from, Waves had a market capitalization of $3,422,333,753.19, ranked 45 in total market capitalization — the largest public chain project in the Russia region.

Waves market capitalization chart

Waves price chart


Waves token reached its all-time high of $41.86 in May 2021. It then experienced a ten-weeks drop from October 2021, from $32.44 to $8.02. Although on 21 February 2022, the whole market experienced a drop, Waves started to rebound strongly, with huge price hikes for 3 consecutive weeks, from $8.02 to $32.93 — a 300% rise. It is now at a historical resistance of around $32-$34.

  3.  Stable Coin USD-Neutrino (USDN)

   1. Market value and distribution situation

USDN is 8th in the stable coin ranking. Compared to another similar algorithmic stable coin which also has its own ecosystem, Terra USD, USDN only has half their market value.


USDN tokens in ETH and BSC chains are almost all used to provide liquidity in the Curve protocol. Moreover, ETH holds much higher amounts of USDN than BSC.


USDN Wallet Ranking Distribution for ETH and BSC respectively (from left to right)


(Note: is an authorization branch of, providing Curve’s StableSwap protocol for users on the BNB chain.)


Comparison of the amount of USDN wallets between ETH and BSC

  1. Design of the stable coin system

The biggest issue of the most common stable coins on the market, such as USDT and USDC, is the reliance on assets in the physical world as reserves, which is not decentralized enough. The Neutrino protocol is mainly designed to resolve such issues.


First of all, unlike Tether’s USDT, Neutrino does not use fiat currencies as reserves. Instead, it uses an algorithmic stable coin protocol, and makes use of assets on the chain as collaterals to serve as reserves. The main collateral asset at the moment is Waves. Secondly, the principle that Neutrino relies on to resolve the issue of insufficient reserve is still making use of the profit-seeking characteristic of markets to automatically adjust itself. However, what’s different from Terra’s UST is that Neutrino’s launch of NSBT achieved a Secondary Marketization of reserves.


This system of stable coins is constructed by Waves, USDN and NSBT:


  1. Waves

As the core token of the Waves ecosystem, Waves is used to pay transaction fees. It is based on a consensus mechanism called lPoS (Leasing Proof of Stake) which allows it to be used as a collateral for USDN in the Neutrino system.


  1. USDN

An algorithmic stable coin pegged to USD. It can be used as a collateral for other assets.

The maximum supply of USDN depends on the max value of the capitalization of the Waves token.

USDN cannot be pre-allocated or pre-mined. Its demand and supply is controlled by the market.


  1. NSBT

Governance token of Neutrino, minted through smart contracts. Its parameters depend on the deficit of USDN reserves, which mechanism could protect the stability of USDN. The market value of NSBT depends on the dynamics of demand and supply in crypto exchanges, and Neutrino’s smart contracts.


Other than being the stabling medium between Waves-USDN, NSBT token can also be used to operate the protocol for payments and collateral (focusing on Waves to mint USDN), and pay off fees to form a “hedge fund” to create new types of synthetic assets such as GLDN (gold), EURN (Euro), etc.

Waves token operations diagram


  4. How can USDN maintain stability

     1. Equilibrium state

USDN is minted automatically through smart contracts. When a certain value of Waves token is locked in the smart contract account, an equivalent value of USDN would be minted. In ideal situations, when the market values of USDN and the locked assets are equal, market value equilibrium is achieved.


  1. Arbitrage mechanism

As the demand of USDN increases, its value will be higher than 1 USD. Then, traders could use Neutrino protocol to exchange Waves token into USDN and sell USDN at a higher price in exchange to make a profit. Such arbitrage actions will increase the market supply of USDN and drive the price back to 1 USD.

Arbitrage mechanism


On the other hand, the supply of USDN in the market will significantly increase, causing its price to drop below 1 dollar. Traders could then make profits by purchasing USDN from the market, and exchanging it into Waves through the Neutrino protocol.


This is similar to the Terra UST arbitrage mechanism, but the difference is that the Neutrino protocol solves the fluctuation issues in reserve assets by issuing NSBT.


  1. How to resolve the effects of fluctuations in the prices of reserve assets on USDN

When the price of Waves rises, the market value of the reserve asset, Waves, starts to exceed that of the USDN stable coin. In such situations, the smart contract will detect a surplus in reserve assets. As a result, it will mint an equivalent amount of USDN to buy back NSBT to increase the supply of USDN.


When the price of Waves drops, the value of reserves will be lower than that of USDN. In such situations, the smart contract detects the deficit in reserves. As a result, it will mint NSBT through auctions, where purchase is made only with Waves (NSBT/ Waves trading pair) to reduce such problems.


Let’s consider the following illustration to help us better understand the NSBT mechanism:


If USDN has a value of 1 million USD, and the price of reserve currency, Waves, has dropped 10%.

Hence, the Neutrino protocol only has 900k USD in reserves to pay USDN.


In order to fill the 100k USD gap, the smart contract will issue NSBT. The amount of NSBT issued depends on the order book orders and discounts from traders.


For example, if only one trader has made an order at 20% discount, this means paying 100k USD worth of Waves could get back 125k USD worth of NSBT.


When the price of Waves rises again, traders could order to close NSBT with 125k USD or even higher. As such, the profits of traders is 25k USD or even more. Through this process, arbitrageurs made profit, and Neutrino has filled the 100k USD gap in reserve value.

  1. Influence of USDN on reserves

As USDN becomes more liquid in the market, Neutrino’s mechanism would in turn influence tokens used as reserves (such as Waves).


  1. Deflation

The scale of Waves’ reserves decides the issuance quantity of USDN. When the supply of USDN is unable to meet the demand, Waves as reserves will increase due to the adjustment of the Neutrino mechanism. Hence, the liquidity supply of Waves in the market will decrease, resulting in a deflation in Waves, driving its price up.



It is worth noting that the Neutrino protocol is not just suitable for Waves, but it could also provide such deflationary mechanisms to DeFi-facing chains such as Ethereum, EOS, Cosmos etc.


 2. Zero-loss trades


In traditional token swapping, Waves swapping to USD and then back to Waves could cause a certain amount of drop in the price. The difference from other third party exchanges is that Waves’ inherent ecosystem has smart contracts that could avoid price changes driven by spreads or low liquidity.


  6. Risk factors and solutions


The following table lists down some known risks and their respective solutions:



7. Brief summary


Waves achieves an equilibrium in the market value of USDN and reserve tokens by bringing in NSBT, resolving the issue of insufficient reserves. We have also expanded our thoughts in designing an algorithmic stable coin. Even though Waves has its own self-protection mechanisms, it still faces the risks stated above.


The reason why the market capitalization of USDN is below that of a similar algorithmic stable coin, UST, is not only due to the market cap of USDN having strong correlations with the market cap of Waves, and hence its limit is determined by the value of Waves. It is also due to the application scenarios and narratives. Similar to Terra’s UST, when the application of Waves ecosystem becomes wider, and the narratives of USDN becomes stronger, both of their values will spiral up.


  4. Waves ecosystem and major applications


     1.Basic introduction


As of now, applications on Waves are mainly built for DeFi and finance related fields such as Waves enterprise service platform, Neutrino protocol, Gravity protocol etc. Other than these, it also has NFT collections and game applications.


Overview of Waves ecosystem


At the same time, Waves provides developers with its own Ride programming language and relevant developing tools.


Waves developer tool kit


  2. Waves locking of asset distribution


The amount of protocol on Waves ecosystem is far behind the top 9, but its TLV is ranked top 10. Its assets locked are mainly concentrated in the ETH chain, followed by Terra chain. (Data from


Overall ranking of assets locked in public chains 


Ranking of assets that Waves has locked in other chains


TVL ranking of major protocols on Waves


It is observable that the assets locked in the Waves ecosystem are mainly distributed in Neutrino (NBST) and Vires Finance (VIRES).


  3. Waves Enterprise


Waves Enterprise is a platform that is devoted to providing blockchain technology for enterprises and governments.


Waves Enterprise uses a hybrid model. Hybrid means a fusion of public chain and private chain into a single ecosystem, merging both of their strengths. As such, Waves remain decentralized, have secured data storage and privacy, and at the same time meet legal expectations.



Many people cannot distinguish from the relationship between Waves Enterprise and Waves. Waves Enterprise is an independent project with an independent team. It has the same ideology as the Waves ecosystem, and it can share the Waves ecosystem through Gravity protocol. The technologies of Waves Enterprise were once a branch of the Waves protocol, with a different target audience. Thus, the overlapping techniques would disappear in time.


The application fields of Waves Enterprise blockchain services include manufacturing, retail goods, arts, healthcare, oil & gas, fintech, education, etc. Enterprises are able to purchase based on their needs.


Major cooperating partners include Alfa bank (biggest private bank in Russia), RUSAL (top 10 Aluminium company in the world), X5 RETAIL GROUP (Russian consumer goods giant who owns 16,500 retail shops), ROSNEFT (biggest telecom company in Russia), Rosseti (Russia national grid), etc. Additionally, a national electronic voting system partnership with the Russian government was also launched.


Waves partnering with Microsoft


Most of these partners are traditional heavy manufacturing and communications giants in Russia, but their business does not just end with Russian industries. On 16 July 2020, Waves Enterprise signed a memo with Microsoft Russia Office regarding a cooperation in blockchain development in Russia. They have come to an agreement to provide solutions for enterprise blockchain and cloud technologies through a strategic cooperation. The list of assets in relation is wide ranging, from heavy machines to basic office equipment.



2017 — Waves team announced to develop a private chain platform based on the existing public chain technologies. This platform was the prototype of Waves enterprise platform.


2018 — The development of the Waves enterprise platform is officially launched, and the first version of the white paper was published in the first quarter. By the end of the same year, the team had supported customization of its encryption algorithms in version 0.8 to adapt to regulatory requirements.


2019 — Version 0.9 was launched. Waves' enterprise platform updated user interfaces to be more user friendly and assembled smart contract modules to support almost all programming languages, and it was able to run in Docker.


2019.11 — v1.0 was officially launched and soon it was updated into v1.1, symbolizing a maturing of Waves enterprise-level blockchain. In the update of v1.0, the team achieved the connection of data in private chains to the mainnet through adding of anchor points. This greatly increased the reliability of data storage in private chain networks.


2020 — The team launched Data Oracle Service, which helps with the connection between mainnet and external data sources, and added new functions to dApps on the mainnet.


2020.3 — The team activated the data anchor points in Waves Enterprise mainnet, in order to store the data hash from private networks to the mainnet. This could significantly increase the reliability of data security in private networks.


2020.4 — A Pakistani lab published a security report regarding Waves Enterprise, symbolising a mainstream recognition of its security. In the same month, Waves Enterprise was added to Russia’s computer and database software registration list.


2020.7 — Waves signed a five-year memo with Microsoft’s Russia branch to cooperate strategically on providing enterprise blockchain solutions.


Product timeline


 4. Vires Protocol


Vires Protocol is a borrowing and lending protocol on the Waves chain. Users, wallets and dApps can participate in the protocol as depositors or borrowers. Depositors earn passive income by providing liquidity to the market, while borrowers can obtain loans with over collateralization.



In, all the deposits enjoy equal interest. When the demand for assets for loaning increases, the APY of depositors increases too. The following are the tokens that users can borrow and lend: WAVES, USDN, USDT, ETH and BTC. Moreover, also supports a direct cross-chain of assets, which the technology is supported by Waves Exchange.


Previously, the founder of Waves tweeted that can provide more than 25% APY. This allows people to correlate that while Terra's Anchor attracts users with a 20% APY in their Terra UST-Anchor Protocol ecosystem, Waves also builds capital flow of the Waves ecosystem with USDN-Vires Protocol.



5. Waves Exchange


Waves exchanges is the first decentralized exchange application (DEX) built on the Waves chain. It not just integrates the functions of centralized exchanges, but at the same time adopts the programmes of decentralized Automated Market Maker (AMM). In Waves exchange, users can use the price limit trading mode commonly used by CEX or the AMM mechanism of DEX.



Functions of Waves Exchange:


On Waves Exchange, in addition to using the wallets, users can also exchange cryptocurrencies, trade stable coins and obtain passive income through investment. Users can even issue their own cryptocurrencies with one click. It can be said that it is a powerful tool that works with Waves Protocol to provide many functions.


Some functions of Waves Exchange generates a 12-15% yield by staking USDN, with profits calculated daily and ability to exit any time.



  6. Waves Keeper


Waves Keeper is a wallet tool in the Waves ecosystem. It currently could be used as an extension in all major browsers including Google Chrome, Firefox, Opera and Microsoft Edge.


Waves Keeper page display


Users can view the account assets and NFT through Waves Keeper, transfer funds on the Waves Keeper interface, and directly exchange assets through the Waves Keeper.


 7. Gravity Protocol


Gravity protocol is a forecasting mechanism protocol in the Waves ecosystem, which is used to achieve data interaction on and off the chain and communication between multiple chains.


    1. Real world data


Gravity does not issue native tokens, which provide great convenience for other applications to integrate Gravity forecasting services. If an application wants to integrate, they can use the protocol’s token itself to pay, and Gravity's nodes will share these revenues. Due to the interest binding relationship, this node will provide real and effective data.


     2. Open ecosystem


Gravity has created a more inclusive and open ecosystem, which solves the problems of scalability and stability. Gravity protocol not only provides data for nodes, it also provides asset liquidity and cross-chain exchange.


At the same time, Gravity protocol is able to link any blockchain to the external world, allowing the construction of a fully centralized gateway to lock assets and transfer the lock information to another blockchain network, completing the cross-chain transfer of assets.


Gravity improves the liquidity and capital efficiency of crypto assets and provides a variety of application scenarios for building various DeFi products.


  8. Waves Ducks


Waves Ducks is a digital duck blockchain game about the collection of NFT. All characters, items, resources and achievements in Waves Ducks are in the form of NFT.


At present, the average number of active users per month has reached 296,000, becoming the main game of the Waves Community. The game also encourages the community to promote the Waves ecosystem together.



Gameplay includes:


(1) Fighting: fight for different farms and obtain tokens as rewards


(2) Growth: cultivating ducklings and growing them into higher grade NFTs, which increase the price.


(3) Breeding: incubate NFT ducks to expand its collection and profiting opportunities. Unlike most NFTs, ducks can produce EGG tokens that can be extracted or used in the game. Staking NFT generates passive income.


(4) Guild: Waves Ducks has set up telegram groups and other community groups for each organization.


Waves Ducks community events


 9. is an AMM which allows users to exchange their tokens instantly without the need to create orders or wait for execution. Waves chain ensures that every transaction could be done within seconds, and the utilization fee for the smart contract is only 0.005 Waves.



This project is open to liquidity providers: any user can replenish the liquidity pool and earn SWOP as rewards. Current total value locked (TVL) in the project is $21,471,027 USD.


Users can get part of the transaction fees of each pool by putting liquidity into the capital pool. Except for the Waves-BTC pool, all other pools take USDN or EURN as one of the transaction assets. The annualized USDN staking yield is about 8-15%.


In addition to mining, swapping and governance, can also be used as the launch pad for projects. Stakers can purchase tickets according to the amount of SWOP staked to access different projects. IDO project details


 10. Waves Association


Waves association is a non-profit organization dedicated to promoting Web 3.0 all over the world. It is mainly used to promote research in the Waves ecosystem, provide funding for projects on the Waves Protocol and support the Waves technology.



Similar to the Ethereum Foundation, Waves Association launched a grant program to support individual developers, teams and start-ups who serve the Waves ecosystem.


The amount of funding is determined on a case by case basis, taking into account the technical complexity, details of the proposed solutions, the needs of developers/ teams, the scale and importance of the Waves project, and other criteria.


All grants are made in the Waves system, and the grant issuance and awarding processes are implemented through DAO.


Waves Association Grants Program


The Waves Association recently announced a $1 million Waves grant program for projects developed on the Waves infrastructure. As the core and binding part of Waves Tech, Waves Association provides governance and support for the whole Waves ecosystem and trains more Web 3 talents for Waves.


11. Future plans


Waves social media accounts all have an extension of *the emoji* (1 → 2)


Waves has planned out the specific updates from the 1 → 2 version update, including:


(1) Supporting Ethereum Virtual Machine


By providing a wide range of infrastructure for development and analysis tools, Waves can be more easily accepted by external teams.


(2) Opening a new DAO governance model


Provide extra rewards to participants and have “skins" in games. Waves DAO will upgrade the old futarchy concept, so it will launch a new general governance model. It is said that its application will be far ahead of the current blockchain technology.


(3) Cross-chain finance


Expand Gravity into a bridge to all industrial chains and create an integrated combination of universal bridges.


(4) More business in the United States


Waves has established an American company, Waves Labs, headquartered in Miami in the first quarter of 2022. The team is currently recruiting experienced engineers, business developers and marketing leaders.


In version 2.0, Waves announced that the United States is a key market to promote a large-scale adoption in 2022. The main KPI is the number of products built by the US team on Waves.


A $150 million fund and an incubation plan were announced this spring. This is to meet the expansion demands as it continues to develop and cultivate talents and market opportunities. In addition, an independent DeFi fund will be launched in the first quarter of 2022 to invest in selected DeFi products on Waves.




The Waves ecosystem is huge, but just like the positioning of the Waves public chain, it focuses on financial and finance-related applications.


In terms of product composition, Waves ecology starts from the DeFi application, from to the game Waves Ducks, they are connected by the stable coin USDN. At the same time, they have their own Gravity forecasting mechanism to realize the functions of stable coin exchange rate reading, cross chain data interaction, and off-chain to on-chain data transition etc. In terms of product interaction, Waves Exchanges and DeFi applications are interrelated, and the ecological experience is relatively smooth.


In terms of business choices, Waves public chain serves the general public, and Waves Enterprise serves enterprises and governments, providing a variety of demand scenarios for the Waves ecosystem, which is an advantage that other public chains do not have.


From the perspective of public chains, from DEX to DeFi to stable currency, Waves has been following up on hot technologies and has certain technical advantages. The accumulation of these technologies can add value to other ecological applications. For example, Waves has accumulated cross chain technology for many years, allowing USDN and NSBT tokens to be used in other ecosystems such as Ethereum and Binance Smart Chain.


In terms of stable currency, the design of USDN’s algorithmic pegging mechanism with the value added from Neutrino Protocol is relatively complete. However, it is worth noting that the ranking in market value of USDN still needs improvement. As mentioned above, the influence between USDN and Waves is mutual. When the application of Waves ecosystem widens and the narrative of stable coin gets larger, USDN will attract more capital inflow for Waves, and people will have a stronger consensus on USDN and Waves.