Neutron: A new cross-chain DeFi blockchain on Cosmos

Current Status of Cosmos

The Cosmos ecosystem was hot for a while in 2022 due to the stake and airdrop model, and early stakers benefited greatly from it. However, the neutrality of ATOM and the lack of any form of “value capture” has led to the ecosystem not attracting too many users and funds. But this has also contributed to the development of the cosmos ecosystem artifact, the IBC protocol. Currently, more and more projects are joining the Cosmos ecosystem, including well-known DeFi projects DYDX and recent trending project INJ. The concept of L2 is also to some extent inspired by Cosmos.

On March 15 of this year, the Cosmos Hub tweeted that the Cosmos Hub will use Replicated Security (originally named Interchain Security). This mechanism allows other Cosmos ecosystem blockchains to use the Cosmos Hub’s validators to ensure their security without maintaining their own validators. These blockchains will be called consumer chains. This represents the real meaning of “Cosmos entering the Atom 2.0 fusion era”. Neutron will be the first chain to be launched on Replicated Security.

What is Neutron

• Neutron is supported by Tendermint and built using Cosmos SDK. It is the safest permissionless smart contract platform for cross-chain DeFi.

• Neutron allows developers to launch smart contracts.

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• Neutron provides tools to interoperate with other protocols and application chains.

• Neutron is incubated by industry leaders and Cosmos OG P2P (Lido core team).

Neutron is the first chain to be launched on Replicated Security (RS), making it a top 10 PoS chain in terms of economic security. Launching an application chain in the Cosmos ecosystem (an interconnected blockchain network) can be resource-intensive and costly due to the need for complex infrastructure. In addition, a diverse set of validators is critical to the success of an application chain, and smaller, newly launched application chains may have difficulty achieving this.

Neutron aims to solve this problem by deploying various smart contracts on the Cosmos Hub. It provides convenience and saves resources for project parties.

Neutron: Bringing Interchain Growth and DeFi Innovation to Cosmos

Neutron is a permissionless CosmWasm platform. Smart contract applications can be deployed on Neutron without requiring whitelist validation through governance voting. By leveraging the security of the Hub, Neutron will become the most secure CosmWasm platform in Cosmos. To provide security, Cosmos Hub will receive:

• 25% of transaction fees;

• 25% of MEV revenue;

• 7% of NTRN supply as initial distribution;

• Help strengthen ATOM as a cross-chain reserve currency.

Cosmos Hub not only has security but also the largest interchain community. Applications on Neutron will be open to a wider audience. Neutron can enable Hub to horizontally expand DeFi, thus making it the execution layer of Cosmos Hub.

In addition to generating long-term revenue for the Hub, Neutron also describes how it will help strengthen ATOM as the reserve currency of the Interchain:

• ATOM in DeFi: Neutron aims to host a DeFi product ecosystem built around NTRN and ATOM, generating utility and demand for the token. Applications built on Neutron will allow cosmos to provide liquidity, borrowing, exercising governance, stripping bonds, etc., using native and liquid staking ATOM. They will drive demand for ATOM and reduce circulating supply by allowing cosmos to earn rewards by locking its tokens in DeFi protocols.

• ATOM in Treasury: Neutron provides cross-chain infrastructure and a flexible execution environment to serve large treasuries in the IBC ecosystem. With primitives like DAODAO, Timewave, and Gitcoin launching on Neutron, the Hub will eventually have tools for secure, programmatic agreements with other chains, protocols, and treasuries: token swaps, secondary fundraisings, loan protocols, protocol-owned liquidity, and so on.

$NTRN

• Total supply: 1 billion

1) 54% allocated to the Neutron DAO (tokens held in the DAO’s reserve and treasury. They are mostly liquid and can only be used or transferred with the approval of a majority of voters).

2) 34% will be allocated to the Genesis team and early supporters, with a 1-year lock-up and a 3-year linear unlocking (Founder: locked for one year, linearly awarded within three years without voting rights. Early supporters: locked for one year, linearly vested within three years with voting rights during the vesting period.)

3) 12% will be allocated to the community for airdrop (distributed to the community through Neutron’s airdrop and release activities. 3-month unlocking period and optional lock-up period, with voting rights during the unlocking period.)

Initial supply of 120 million

1) 70M $NTRN will be used for airdrop, including: 40M allocated to $ATOM stakers before 2022-11-19, and 30M allocated to users who have participated in proposal 72. The received tokens will have an unlocking period of approximately three months, which will start nine days after the platform goes live.

2) Phase 2: Within 5 days after the airdrop is claimed, 40M $NTRN will be used to guide $NTRN-$USDC/$NTRN-$ATOM pool liquidity.

3) Phase 3: Lasts for 3 days, and LP from Phase 2 can lock up for an additional 10M $NTRN for one year.

The above initial allocation process is expected to take 9 days.

Roadmap

Benefits of Neutron

Although Cosmos has its own traffic and market value to provide some help for the projects joining the ecosystem, the difficulty of operating the whole chain is huge, and only the core participants know how to operate. This has already blocked the participation of most users. Of course, compared to the BTC ecosystem, the handling fee is indeed cheaper, but the complexity is far greater than the currently popular brc20 and BTC NFT. For example, if I need to short a token, due to the serious centralization of $OSMO, in extreme cases, I may need to go through 3-4 projects to achieve the need for shorting a token.

This is also an important reason for the upgrade of Replicated Security, the joining of dydx, and the launch of Neutron’s mainnet. As the leading derivatives product, dydx largely makes up for the demand for derivatives, and Neutron’s deployment of smart contracts without permission brings revolutionary progress to the cosmos ecosystem. It also solves the problem of difficult operation and cumbersome trading for ordinary users.

Proposal 790 of Cosmos has also passed the upgrade of the LSD module, which has a certain narrative for the upgrade of Cancun in the second half of the year.

Summary

• The Cosmos ecosystem has appeared relatively quiet since the explosion of L2. From the OP’s vision, it is clear that it is still in the shadow of Cosmos. With the coming of the ATOM2.0 era, Neutron has received a lot of attention. In theory, it can solve the idea of Cosmos fighting separately until a unified front is formed. It also brings a new narrative and flywheel to the previously “impractical value” of $ATOM1.0. It also solves the fatal problem of Cosmos itself – complicated transactions, difficult operations, and only core players know how to operate.

• Compared with the ETH ecosystem’s three-pronged burning, staking, and destroying, it can be said that Ethereum’s ecosystem has done very well. However, imitators who follow the development of the three-pronged approach ultimately bring themselves endless selling pressure. In contrast, the Cosmos ecosystem favors a model that combines defi with a secure lock-up of native tokens to reduce circulation for development, and may once again usher in a cosmos airdrop craze in the future. Neutron may become the economic center of this explosion and may also become the status of Uniswap on ETH.

Currently, from official information, it can be seen that there will soon be a public sale, and it is worth paying attention to whether it can become a hot topic.

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