Open financial protocol Neutral is launching a stablecoin called the Neutral Dollar (NUSD), the first of a series of its soon-to-be-released decentralized financial instruments (DeFi).
As detailed in a press release published April 11, Neutral is building a suite of blockchain-based financial products, among which includes NUSD, a new blockchain-native financial instrument pegged to USDC, DAI, TUSD, and PAX, with plans to include other stablecoins as Neutral’s constituent basket evolves, further boosting stability as the market matures.
To maintain its value, NUSD uses a unique economic mechanism that rebalances the basket’s composition according to price fluctuations and allows on-chain swapping between stablecoins within its aggregated constituent basket, thereby effectively addressing the issue of fragmented liquidity in the stablecoin market as well as boosting transparency of its digital assets through real-time audits.
In an effort to subdue potential investor risks, Neutral Dollar has undergone rigorous testing, proving that the on-chain token is far less volatile compared to other alternative stablecoins on the market.
NUSD’s basket composition is designed to evolve as the stablecoin market matures, thereby offering better price stability, diversification, and scale compared to other standalone stablecoins. By serving as a channel for end-users to facilitate liquidity between underlying stablecoins, Neutral Dollar offers a more stable and diversified instrument for institutions.
As part of its business roadmap, the company has also previously completed a Series A funding round led by venture capital firm Sequoia Capital China.
“Contrary to their name, most stablecoins experience significant volatility,” said Neutral Dollar’s architect & Neutral’s Chief Technology Officer Matthew Branton, explaining that:
“Neutral Dollar provides end users with increased stability and, for service providers, acts as a frictionless liquidity channel between different stablecoins. We want to extend the reach of stablecoins as far and wide as possible, presenting a financial instrument that is accessible, reliable, and truly representative of the stablecoin market.”
As Branton surmised, “In order for the digital asset space to reach its full potential, the industry needs reliable financial instruments that take us beyond the limitations of fiat currencies, while also upholding the highest standards in stability and transparency,” adding that:
“Today, we set the ball in motion towards building on the previous generations of asset-backed, crypto-backed, and algorithmic. Our aim is for Neutral Dollar to be the stablecoin of choice for investors of every grade, and the exemplary stablecoin for the wider market.”