Neutrl: Innovative Stablecoin Protocol Exploring New Yield Models

Recently, a synthetic dollar stablecoin project called Neutrl completed a $5 million seed funding round. The project was co-led by a private market for digital assets and a venture capital firm, with participation from several well-known institutions and individual investors.

Neutrl's product model is similar to that of similar projects, providing a synthetic stablecoin NUSD that is pegged 1:1 to the US dollar and a yield-generating asset sNUSD. However, Neutrl adopts a more aggressive strategy for its sources of revenue: OTC token discount arbitrage.

This arbitrage model takes advantage of the fact that institutional investors can usually acquire project tokens at lower valuations. These tokens often come with strict unlocking conditions, such as lock-up periods ranging from six months to a year and linear release cycles of two to four years. To realize gains early or to avoid potential risks, some investors choose to sell unlocked tokens at a discount through OTC.

The Neutrl plan will use the assets deposited by users to purchase these discounted locked tokens, while shorting an equivalent amount of tokens in the contract market to hedge against risks. Theoretically, this strategy can lock in the profits from the discount without being affected by the price fluctuations of the tokens.

However, this seemingly perfect strategy also carries potential risks. First, the continuous negative funding rate may erode arbitrage profits. Second, if the token price rises significantly, it may lead to the risk of liquidation for short positions. These factors may all affect the final realization of profits.

It is worth noting that Neutrl is essentially a high-risk strategic arbitrage fund that absorbs user deposits in the form of stablecoins. Although this model provides users with the opportunity to access complex investment strategies, it also requires a more cautious assessment and disclosure of the associated risks.

Overall, Neutrl represents a new direction in cryptocurrency financial innovation, opening up more yield options for users. However, investors should fully understand the potential risks and complexities when participating in such projects.