Neutron In-Depth Analysis: Pioneering a Modular Blockchain Era, Building the Future DeFi Ecosystem

In the latest blockchain technology arena, Celestia’s modular blockchain concept has opened up a completely new path for blockchain expansion and optimization. One notable case is the application of Manta: by adopting Celestia as its data availability layer instead of the traditional Ethereum platform, Manta has achieved over 99% cost savings, garnering widespread industry attention (See relevant information for details）. Looking ahead, we foresee that thousands of rollups will choose Celestia as their data availability layer, laying the foundation for a new and scalable rollup ecosystem. Currently, the rise in the price of $TIA is attributed to its unique position in the modular narrative, providing the only market liquidity exposure without any token unlock plans in the coming year. As the modular narrative continues to grow, we expect venture capitalists to increasingly seek investment opportunities in Celestia or other high-quality modular projects. In such a trend, Celestia has the potential to become the next Cosmos hub. Therefore, for key projects in the developmental stage of the modular ecosystem, such as Dymension and Neutron, the market and investors should pay close attention.

Project Overview

When discussing the background of the Neutron project, we can see its leading position within the IBC (Inter-Blockchain Communication) ecosystem. Neutron serves not only as a vital gateway for connecting the Cosmos network with other systems, especially Ethereum and the modular world, but it is also purposefully designed to be the preferred platform for deploying cross-chain smart contracts.

Through its Nexus component, Neutron enters the world of modular blockchains. Nexus is jointly built by developers from Neutron, Hyperlane, and Mitosi, integrating IBC and Hyperlane’s modular security technology. This platform establishes a bridge between Cosmos, Ethereum, and the modular ecosystem, enabling swift and secure asset transfers. It supports asset transfers to any rollups, such as Arbitrum, Manta, Eclipse, and more, providing quick access to liquidity across various domains in the Cosmos and Celestia ecosystems for cross-chain applications.

Therefore, Neutron offers interoperability across multiple blockchain ecosystems, making it a high-risk, high-reward investment choice for $TIA. It plays a pivotal role not only in the Ethereum and Celestia ecosystems but also holds a significant position within the Cosmos ecosystem.

Neutron’s supported smart contract applications and rollups on its network can achieve scalability across more than 50 networks through IBC technology, encompassing both Cosmos and EVM chains. This feature positions Neutron as a leader in IBC traffic within the Cosmos, surpassing well-known chains like Injective, dYdX, and Kujira.

It’s worth mentioning that Neutron has established a close connection with Cosmos Hub and the IBC ecosystem. By sharing 25% of transaction fees and miner-extractable value (MEV) revenue, it has forged a robust alliance with the ATOM community. This strategic move not only strengthens Neutron’s position within the Cosmos ecosystem but also adds momentum to its development in the broader blockchain landscape.

Financial Ecosystem

In the development of the Neutron ecosystem, a pivotal initiative is its launched funding program, which provides financial support of 20 million NTRN tokens to innovative decentralized applications (dApps), constituting 2% of its total supply. This strategy aims to stimulate innovation and growth in the Neutron network.

On the Neutron platform, several well-known dApps with substantial user bases and network effects are already under construction. These include:

● Lido: The developers of Lido have introduced an innovative framework intended to introduce its liquidity staking protocol into the Cosmos ecosystem through Neutron. This move signifies a significant step for Lido in expanding its cross-chain capabilities.

● Mars Protocol: This is a cross-chain currency market, and its collaboration with Neutron indicates their joint efforts in advancing decentralized finance.

Furthermore, Neutron has also entered into partnerships with various projects within the Cosmos economic region, including Catalyst, Pulsar Finance, Amulet Finance, Duality, Astroport, and Shogun. These partnerships not only enhance Neutron’s position within the Cosmos ecosystem but also establish a solid foundation for its influence and scalability in the broader blockchain arena.

Tokenomics

Market Cap and Ranking: Neutron currently has a market cap of approximately $385 million, ranking 150th in the global cryptocurrency market.

Fully Diluted Valuation (FDV): Assuming all tokens are in circulation, its fully diluted valuation reaches $1.3 billion.

Total Value Locked (TVL): According to DeFiLlama’s data, Neutron’s total value locked (TVL) in the decentralized finance (DeFi) sector is $50 million.

Circulating Supply and Maximum Supply: The current circulating supply of NTRN tokens is 278.68 million, accounting for 27.87% of the maximum supply (1 billion).

Regarding token unlocking, as of June 2024, major stakeholders, including the team, investors, and advisors, do not have significant token unlocking plans. Each month, 1.67 million tokens (0.17% of the maximum supply) will be unlocked, primarily for enhancing market liquidity. This periodic unlocking mechanism may be considered a “bullish unlocking” as it contributes to increased market liquidity, attracting large investors and institutions to buy tokens on a larger scale.

The primary uses of the Neutron token (NTRN) include:

● Fuel for dApps: NTRN is utilized to activate and operate decentralized applications on the network.

● Governance Participation: Holders can stake NTRN tokens in the voting treasury to participate in network governance and decision-making processes.

● Foundational DeFi Asset:

Paired with other tokens in liquidity pools and yield vaults to enhance liquidity.

Used as collateral in the currency market.

Employed as a payment currency in decentralized autonomous organizations (DAOs) on the network.

Currency Inflation and Token Flow Management:

Neutron Network manages token flow from various channels, including transaction fees, MEV-Tendermint bids, and dApp revenue, through its distribution module. The network allocates 25% of token income to Cosmos Hub as a reward for providing security. The remaining NTRN tokens are burned, creating a deflationary asset model. Fees collected in currencies other than NTRN are allocated to the DAO’s reserve to support network growth and operations.

Token Distribution Strategy:

Treasury: 27.00% of the total supply, serving as liquidity assets controlled by governance mechanisms. 10% of the supply has been decided by governance vote to be transferred to the foundation.

Reserve: 24.00% of the total supply, unlocked based on on-chain activity. The more activity, the faster the token unlocks, and vice versa.

Team: 23.00% of the total supply.

Investors: 11.00% of the total supply.

Airdrop: 7.00% of the total supply.

Liquidity Bootstrapping: 5.00% of the total supply.

Binance Launchpool: 2.00% of the total supply.

Advisors: 1.00% of the total supply.

Token Unlocking Plan:

source::https://cryptorank.io/price/neutron-ntrn/vesting

Fundraising Status:

● In the seed round financing on June 21, 2023, Neutron raised $10 million with a token issuance price of $0.09 per token, currently realizing a 15.39x return on investment.

● A total of 110 million tokens were sold in this round, accounting for 11.00% of the total supply.

● This round of financing was led by several well-known investment institutions, including Binance Labs, Delphi Digital (Delphi Labs), CoinFund, LongHash Ventures, Semantic Ventures, and Nomad Capital.

● This comprehensive token economy structure not only provides Neutron with a solid financial foundation but also establishes its unique position in the cryptocurrency market through its close connection with Cosmos Hub.

Bullish factors:

• In the decentralized finance (DeFi) ecosystem of Cosmos, Neutron plays a foundational role. Compared to its main competitors (ATOM, TIA, SEI, and INJ), Neutron offers a range of interesting features but is relatively undervalued, indicating that it may be underestimated by the market.
• Neutron is set to provide settlement services for Celestia rollups and serves as the primary bridge for $TIA liquidity, which holds significant significance in the modular DeFi space.
• In the next six months, there are no significant token unlock events planned for any stakeholders, providing stability to the market.
• NTRN is listed on multiple major centralized exchanges, such as Binance, enhancing its liquidity and market exposure.
• NTRN has attractive token economics, with no currency inflation within the system, and it is a deflationary asset, with 75% of fees being burned.

Bearish factors:

• With the rise of new modular blockchain protocols, Neutron may face competition from these emerging protocols, potentially diverting attention away from Neutron.
• Although Neutron initially followed the price trend of TIA, community interest in it has waned, leading to a decrease in its market influence.
• Neutron’s on-chain ecosystem activity is relatively low, with a total locked value (TVL) of $50 million, primarily concentrated in Astroport, indicating its limited participation in the DeFi space.

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