High yields are the reason why so many investors are switching to staking. However, with traditional PoS coins, attractive rewards come at the price of high volatility. Stablecoin USDN proposes an efficient solution with its combination of decentralized staking at 8-15% a year and a stable USD price peg.
Yield and safety: what matters most to stakers
In a recent series of interviews, the team of the stablecoin project Neutrino USD team asked investors what they look for in a staking platform. They all said that a high yield is a priority. But most also mentioned safety, saying that the ability to get one’s money back is just as important as the APR (annual percentage rate).
Indeed, what is the point of having a high default yield rate if the platform won’t release your stake once you want to withdraw it, or if it’s impossible to cash out?
Volatility was another factor named by the survey participants. Staking coins tend to be very volatile, and this can have a negative effect on the real APR. For instance, ATOM lost 20% between February and August 2020 So even though you’d have earned circa 4.1% in staking rewards, your whole investment would have depreciated.
USDN: combining high yield with complete transparency
The idea behind Neutrino USD (USDN) is that you should be able to stake your assets without worrying about the effects of volatility. But in the world of crypto, the only type of assets whose price doesn’t fluctuate are stablecoins, such as USDT, DAI, and USDC. Would it be possible to create a stablecoin that one could stake?
Some of the best Waves blockchain developers worked on this issue, and the result was Neutrino protocol – an algorithm for creating stackable stablecoins backed by other crypto assets. Dollar-pegged USDN is the first coin based on Neutrino, with more stable assets coming soon.
A dynamic rate: how can you earn 8-15% with USDN?
Many investors who encounter Neutrino USD for the first time are worried that the reward rate is too high. Indeed, stablecoins like USDT and USDC yield no more than 9% on crypto lending platforms. How can a stake in USDN earn you up to 15%?
The answer is a fluctuating rate. The underlying asset – WAVES – itself yields rewards through its LPoS (Leased Proof-of-Stake) algorithm, and these rewards are converted into USDN. The higher the price of the underlying asset WAVES, the more you earn.
It also matters how many USDN are staked as a percentage of the total number of coins in circulation. Here the relationship is reversed: when more people stake their Neutrino USD, the rate goes down.
For example, between July and August 2020 WAVES appreciated by over 50%, and the share of USDN in staking went down. As a result, the APR increased from 10% to 15.5%.
If the price of WAVES were to go down, the built-in stabilization algorithm would ensure that USDN is still worth $1. Since Neutrino USD was launched, the APR never went below 8%.
Buy with a bank card and cash out any time
USDN is designed as a perfect staking tool even for first-time crypto investors. On Waves. Exchange, you can buy USDN with MasterCard or Visa with a 0% fee in just a few minutes: for each $1 you get 1 USDN. Of course, you can also buy Neutrino USD for BTC, USDT, or ETH.
Once you deposit USDN in staking, you’ll get daily reward payouts. If you decide to withdraw the stake, you can do so any time without penalties. The easiest way to cash out USDN is to sell them for Bitcoin on Waves. Exchange and then use the integrated fiat on-off ramp to convert BTC into USD.
Why is decentralization so important?
Like DAI, USDN is decentralized and transparent. It’s backed by the cryptocurrency WAVES. You can use the Waves Explorer to verify the current state of the smart contract (collateral, recent transactions, etc.). Stakers have full control over their coins at all times.
Even if the Waves. Exchange interface was to go down, USDN staking would still work normally. It doesn’t depend on any specific company or entity to work – only on its network of nodes. You can always interact with the smart contract directly to withdraw your stake, reinvest the rewards, and so on.
Neutrino USD is the first dollar-pegged stablecoin that fully supports staking. The combination of high rewards (up to 15%), price stability, and transparency make USDN one of the most interesting cryptos staking assets. To learn more and create a stake, see the official staking page.
Disclaimer: This is a paid post and should not be considered as news/advice.