Neutron Deep Dive: Ushering in a New Era of Modular Blockchains and Building the Future DeFi Ecosystem
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Neutron Deep Dive: Ushering in a New Era of Modular Blockchains and Building the Future DeFi Ecosystem
Smart contract applications and rollapps supported on Neutron's network can scale across more than 50 interconnected networks through IBC technology.
Navigating Web3 tides with focused insightsAuthor: Greythorn
In the latest developments within blockchain technology, Celestia's modular blockchain concept has opened a new path for scaling and optimizing blockchains. A notable example is Manta's application: by adopting Celestia as its data availability layer instead of the traditional Ethereum platform, Manta achieved over 99% cost savings—a development that has drawn significant industry attention (see related materials).
Looking ahead, we anticipate thousands of rollups will choose Celestia as their data availability layer, laying the foundation for a new, scalable rollup ecosystem. Currently, $TIA’s price appreciation benefits from its unique position in the modular narrative, offering the only liquidity exposure available on the market with no token unlocks scheduled over the next year.
As the modular narrative continues to grow, we expect venture capitalists (VCs) to increasingly seek investments in Celestia or other high-quality modular projects. Under this trend, Celestia has the potential to become the next Cosmos hub. Therefore, key developmental projects within the modular ecosystem—such as Dymension and Neutron—deserve close attention from markets and investors alike.
Project Overview
When examining the background of the Neutron project, its leadership role in the IBC (Inter-Blockchain Communication) ecosystem becomes evident. Neutron serves not only as a crucial gateway connecting the Cosmos network with other systems—especially Ethereum and the modular world—but is also specifically designed as the preferred platform for deploying cross-chain smart contracts.
Neutron enters the modular blockchain space through its Nexus component. Nexus is jointly developed by the teams behind Neutron, Hyperlane, and Mitosi, integrating modular security technologies from both IBC and Hyperlane. This platform bridges Cosmos, Ethereum, and modular ecosystems, enabling fast and secure asset transfers. It supports asset movement to any rollup (e.g., Arbitrum, Manta, Eclipse), allowing cross-chain applications rapid access to liquidity across various domains within the Cosmos and Celestia ecosystems.
Thus, Neutron provides interoperability across multiple blockchain ecosystems, making it a high-risk, high-reward investment opportunity relative to $TIA. It plays a pivotal role not only in the Ethereum and Celestia ecosystems but also holds strategic importance within the Cosmos ecosystem.
Smart contract applications and rollapps supported on Neutron can scale across more than 50 interconnected networks via IBC technology, including both Cosmos and EVM chains. This feature positions Neutron at the forefront of IBC traffic volume within Cosmos, surpassing well-known chains such as Injective, dYdX, and Kujira.
Notably, Neutron has established strong ties with the Cosmos Hub and the broader IBC ecosystem. By sharing 25% of transaction fees and miner extractable value (MEV) revenue with the ATOM community, it has formed a powerful alliance. This strategic move not only strengthens Neutron’s standing within the Cosmos ecosystem but also adds momentum to its development across the wider blockchain landscape.
Financial Ecosystem
A key initiative in Neutron’s ecosystem development is its grant program, which allocates 20 million NTRN tokens—2% of its total supply—to fund innovative decentralized applications (dApps). This strategy aims to stimulate innovation and growth on the Neutron network.
Several prominent dApps with strong user bases and network effects have already begun building on the Neutron platform, including:
● Lido: Developers at Lido have released an innovative framework aiming to bring its liquid staking protocol to the Cosmos ecosystem via Neutron—an important step in expanding Lido’s cross-chain capabilities.
● Mars Protocol: As a cross-chain money market, its collaboration with Neutron reflects joint efforts toward advancing financial decentralization.
Additionally, Neutron collaborates with multiple projects within the Cosmos economic zone, including Catalyst, Pulsar Finance, Amulet Finance, Duality, Astroport, and Shogun. These partnerships enhance Neutron’s position within the Cosmos ecosystem and lay a solid foundation for its influence and scalability in the broader blockchain domain.
Tokenomics
Market Cap & Rank: Neutron currently has a market cap of approximately $385 million, ranking 150th globally among cryptocurrencies.
Fully Diluted Valuation (FDV): Assuming all tokens are in circulation, the fully diluted valuation reaches $1.3 billion.
Total Value Locked (TVL): According to DeFiLlama, Neutron’s total value locked in decentralized finance (DeFi) stands at $50 million.
Circulating Supply vs. Max Supply: The current circulating supply of NTRN tokens is 278.68 million, representing 27.87% of the maximum supply (1 billion).
Regarding token unlocks, there are no significant unlock events planned for major stakeholders—including team members, investors, and advisors—as of June 2024. Instead, 1.67 million tokens (0.17% of max supply) will be unlocked monthly, primarily to enhance market liquidity. This regular unlocking mechanism may be viewed as a “bullish unlock,” as it improves liquidity and attracts large investors and institutions to accumulate tokens at scale.
Primary Use Cases for Neutron Token (NTRN):
● Fuel currency for dApps: NTRN is used to activate and run decentralized applications on the network.
● Governance participation: Holders can stake NTRN tokens into voting vaults to participate in network governance and decision-making processes.
● Foundational DeFi asset:
○ Paired with other tokens in liquidity pools and yield vaults to boost liquidity.
○ Used as collateral in money markets.
○ Serves as payment currency within decentralized autonomous organizations (DAOs) on the network.
Inflation and Token Flow Management:
The Neutron network manages token flows through its distribution module, sourcing revenue from multiple channels, including transaction fees, MEV-Tendermint bids, and dApp revenue sharing.
It allocates 25% of token revenues to the Cosmos Hub as compensation for security provision.
The remaining NTRN tokens are burned, creating a deflationary asset model.
Fees collected in currencies other than NTRN are allocated to the DAO reserve fund, supporting network growth and operations.
Token Allocation Strategy:
Treasury: 27.00% of total supply, liquid assets controlled by governance. Of this, 10% has already been transferred to the foundation via governance vote.
Reserve: 24.00% of total supply, unlocked based on on-chain activity—the higher the activity, the faster the unlock rate.
Team: 23.00% of total supply.
Investors: 11.00% of total supply.
Airdrop: 7.00% of total supply.
Liquidity Bootstrapping: 5.00% of total supply.
Binance Launchpool: 2.00% of total supply.
Advisors: 1.00% of total supply.
Token Unlock Schedule:
Source: https://cryptorank.io/price/neutron-ntrn/vesting
Fundraising Details:
● In a seed round held on June 21, 2023, Neutron raised $10 million at a token price of $0.09, achieving a current return on investment of 15.39x.
● A total of 110 million tokens were sold during this round, representing 11.00% of the total supply.
● The round was led by several prominent investment firms, including Binance Labs, Delphi Digital (Delphi Labs), CoinFund, LongHash Ventures, Semantic Ventures, and Nomad Capital.
● This comprehensive tokenomic structure not only provides Neutron with a solid financial foundation but also establishes its unique position in the cryptocurrency market through its close integration with the Cosmos Hub.
Bullish Factors:
● Within the Cosmos decentralized finance (DeFi) ecosystem, Neutron plays a foundational role. Compared to its main competitors (ATOM, TIA, SEI, and INJ), Neutron offers a range of compelling features while maintaining a relatively low valuation, suggesting it may be undervalued by the market.
● Neutron is poised to provide settlement services for Celestia rollups and act as the primary bridge for $TIA liquidity, a development of major significance in the modular DeFi space.
● Over the next six months, no major token unlocks are scheduled for any stakeholder group, ensuring market stability.
● NTRN is listed on multiple major centralized exchanges (including Binance), enhancing its liquidity and market accessibility.
● NTRN features attractive tokenomics: the system is non-inflationary and deflationary in nature, with 75% of transaction fees being burned.
Bearish Factors:
● With the emergence of a new wave of modular blockchain protocols, Neutron may face increasing competitive pressure from these emerging players, potentially diverting attention away from itself.
● Although Neutron initially followed TIA’s price movements, community interest subsequently waned, leading to a decline in its market influence.
● On-chain ecosystem activity remains relatively low, with a TVL of $50M concentrated mainly in Astroport, indicating limited engagement within the DeFi sector.
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Greythorn
