Neutrino Index Token

Neutrino Index Token (XTN) is an algorithmic crypto-collateralised asset operating within the Neutrino Protocol on the Waves blockchain. It was introduced as a replacement for Neutrino USD (USDN) after its peg to the US dollar became unstable. Instead of maintaining a fixed value, XTN derives its price from a basket of ecosystem tokens, with its backing ratio (BR) playing a critical role in price dynamics.

XTN functions as an index token representing the value of multiple assets within the Waves ecosystem, including WAVES, WX, VIRES, NSBT, and SURF. Its value is influenced by supply and demand as well as the BR, which is the ratio between the collateral held and the circulating supply of XTN. The protocol aims for a BR of 100%, meaning the token price gravitates toward $1 when fully collateralised. Unlike traditional stablecoins, XTN does not have a fixed peg but instead follows an algorithmic model for price stability.

Neutrino Protocol retains the decentralised governance model used in its earlier iterations. Holders of NSBT (Neutrino System Base Token) can participate in governance, voting on protocol updates, collateral asset modifications, and economic parameters. The rebranding from USDN to XTN was aimed at reducing risks associated with single-asset collateralisation and improving long-term sustainability.

XTN plays multiple roles within the Waves ecosystem and DeFi platforms:

• Medium of Exchange: XTN facilitates transactions within the Waves ecosystem, functioning as a relatively stable asset for payments and settlements.
• Collateralisation: It serves as collateral for various DeFi applications, including lending, borrowing, and liquidity provision.
• Staking and Yield Generation: Users can stake XTN within the protocol, receiving staking rewards based on collateral dynamics.
• Decentralised Finance (DeFi) Integration: XTN is used in decentralised exchanges (DEXs), lending platforms, and liquidity pools, providing further utility for traders and investors.
• Backing Ratio Mechanism: The price of XTN is influenced by the BR, and when it exceeds 115%, a portion of reserves is converted from SURF to XTN to stabilise the market.
• Governance Participation (NSBT): NSBT holders can vote on protocol decisions, including collateral adjustments and stability mechanisms.

The transition from USDN to XTN initiated in early 2023 due to the challenges USDN faced in maintaining its 1:1 peg to the US dollar. USDN's reliance on WAVES as a single collateral asset made it vulnerable to market fluctuations. To address this issue, the Neutrino team and its community proposed a restructured model based on multiple collateral assets.

XTN was introduced as a non-pegged, algorithmic asset backed by a diversified basket of tokens. The protocol’s goal is to maintain an optimal BR, ensuring sufficient collateralisation while allowing price discovery through market demand. The governance structure of the Neutrino Protocol was maintained, enabling community participation in key decisions regarding collateral adjustments and protocol changes.

The role of SURF as a recapitalisation token remains integral under the new system. When the BR reaches 115%, 10% of reserves are automatically converted from SURF to XTN, helping to stabilise the token’s value.