What Is Neutra Finance (NEU)? How it Works & Where To Buy

DeFi is one of the essential segments of the crypto market because it offers various blockchain-based financial services to users, and Neutra Finance (NEU) is among the newest additions to the sector. 

In this coin review, we’ll look at Neutra Finance to learn what this new project brings to DeFi enthusiasts worldwide.

How Neutra Finance (NEU) Works

Unlike savings accounts in traditional, fiat currency banks, DeFi protocols focus on yield-farming, allowing users to earn much higher returns on their idle assets. Also, DeFi platforms don’t require users to provide personal details or sign contracts. Neutra Finance is one such new platform for yield-generating that offers three essential services. 

The first service is traditional crypto staking, where users can stake the platform’s native NEU token and earn a 31% annual percentage yield (APY). Users get staking rewards in the form of escrowed NEU (esNEU), which they can stake in another staking pool on the platform and earn additional rewards. The staking rewards come from the protocol management fees and the protocol’s performance fees. esNEU provides users with boosted rewards.

The staking mechanism is tied to Neutra Finance’s second service, crypto vesting. The vesting service lets users vest esNEU tokens, released after a 12-month vesting period in the form of NEU tokens.

You can’t cash out esNEU tokens. This mechanism ensures that users don’t just dump their staking rewards on the market and cash them out. Furthermore, users are encouraged to stay in the NEU ecosystem and reinvest their NEU tokens in the protocol.

Neutra Finance’s third service is the protocol’s key product, called the Neutra Finance GLP market neutral vault. Essentially, Neutra Finance provides users with a yield-farming solution where users get to earn a steady APY regardless of crypto price fluctuations, with the help of the GLP token.

GLP is the liquidity provider asset of the GMX decentralized perpetual exchange, and Neutra Finance uses it to provide users with stable yields. 

GLP acts as a basket of Dai (DAI), USD Coin (USDC), Ethereum (ETH), and Bitcoin (BTC). Users can deposit DAI on Neutra Finance in exchange for GLP tokens, which are then deposited in the Neutra Finance vault in the form of nGLP.

The protocol then uses these tokens for opening long and short trading positions on BTC and ETH futures on GMX. The returns from these trading positions are used to provide APYs to users.

What Is Neutra Finance (NEU) Used For?

Neutra Finance battles BTC and ETH volatility by rebalancing the protocol’s short and long positions following the change of the GLP token’s internal composition.

GLP tokens have a fluctuating composition of USDC, DAI, BTC, and ETH. By balancing the sizes of their trading positions on GMX, Neutra Finance aims to create a stable APY level. Essentially, the platform uses an algorithm to conduct trades automatically with the nGLP tokens. 

The primary benefit of using Neutra Finance is making your crypto work for you while you aren’t trading them. The 30% yields on Neutra Finance are incredibly high and thus very attractive for users.

However, it’s important to keep in mind that high yields need to come from somewhere, and it’s questionable whether the Neutra Finance mechanism with opening long and short GLP positions on GMX can sustain the high yields over an extended period of time.

Where to Buy Neutra Finance (NEU)?

There are two decentralized exchange platforms where users can purchase NEU tokens. On UniSwap, you can buy NEU with USDC and Wrapped Ethereum (WETH), while Camelot supports a USDC/NEU trading pair.

As for centralized exchanges (CEX), there aren’t any platforms that support NEU tokens. 

How Long Has Neutra Finance (NEU) Been Around? 

Neutra Finance is super-young. The Neutra Finance team started developing the project during the fourth quarter of 2022 and launched the platform in late January 2023. 

What’s Controversial About Neutra Finance (NEU)?

The main controversy surrounding DeFi projects like Neutra Finance is the question of sustainability regarding high returns. The APYs on Neutra Finance are around 30%, which is exceptionally high.

Most reputable DeFi projects provide yields between a few percent and 10 to 15%, which are realistic returns in crypto. However, higher yields are often unsustainable for a longer period without a huge treasury and a well-developed operational mechanism.

Neutra Finance’s yield-generation mechanism relies on automated trading on the GMX perpetual exchange. If these trades go sideways, Neutra Finance’s yields may crash, and users could get left without any rewards.

That’s why users should be cautious, especially since Neutra Finance is very new, and there’s no telling how long the protocol will be able to sustain its yield mechanics.

How Many Neutra Finance Coins Are There?

The NEU hard cap is six million coins, while there are 540,000 NEU currently in circulation. The rest of the supply is gradually released on the market through NEU and esNEU staking.

Can NEU Be Mined?

There’s no NEU mining possibility, but users can participate in releasing new NEU tokens on the market by staking NEU and esNEU.

Market Cap and Price History of Neutra Finance (NEU)

Neutra Finance has a very modest market cap of a little over one million USD, while the project’s fully diluted market capitalization is 11 million USD.

The NEU price started at around 0.9 USD per token on January 24, 2023, and went on a steady path upwards, all the way to its all-time high of 3 USD on January 28. 

However, the price of NEU had a significant correction and fell to the 1.8 to 2 USD price range, which is still considerably higher than its initial launch price. 

Biggest Competitors of Neutra Finance (NEU)

It’s safe to say that Neutra Finance has hundreds of moderate competitors in the form of micro-cap DeFi projects, but when it comes to the project’s major competitors, UniSwap (UNI) and Lido Finance (LDO) are the key players. 

These platforms offer an incomparably broader range of DeFi services and have much more stable operational mechanics that rely on firmly established liquidity pools with hundreds of millions of USD worth of assets.

In its current state, Neutra Finance can’t even remotely attempt to compete with these projects, mainly because of its quite uncertain yield-generation process that relies on opening long and short perpetual futures trades.

What Does the Neutra Finance (NEU) Project Road Map Look Like?

In the first quarter of 2023, the Neutra Finance team plans to roll out additional yield-farming vaults connected to SushiSwap and UniSwap, as well as an upgraded platform interface.

During the year’s second quarter, the team promises to introduce additional vaults and new blockchains to the platform, which will result in compatibility with additional cryptocurrencies.

Pros and Cons of Neutra Finance (NEU)

Pros

• High yields.
• The team promises to introduce various additional yield-farming vaults.

Cons

• The yields might not be sustainable for a more extended period unless the Neutra finance treasury manages to grow considerably.
• The protocol’s yield-generator mechanism doesn’t seem very stable. 

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