Citation:
In the latest blockchain technology, Celestia's modular blockchain concept has opened up a new path for blockchain expansion and optimization. A striking case is the application of Manta: by adopting Celestia as its data availability layer instead of the traditional Ethereum platform, Manta has achieved more than 99% savings in fees, which has attracted widespread attention in the industry (see related materials for details).
Looking ahead, we foresee thousands of rollups choosing Celestia as their data availability layer, laying the foundation for a new, scalable rollup ecosystem. $TIA’s current price appreciation is driven by its unique position in the modular narrative, providing the only liquidity exposure in the market with no token unlocking planned for the next year.
As the modular narrative continues to grow, we expect VCs to increasingly seek to invest in Celestia or other high-quality modular projects. In this trend, Celestia has the potential to become the next Cosmos hub. Therefore, the market and investors should pay close attention to key projects in the development stage of the modular ecosystem, such as Dymension and Neutron.
Project Overview
When exploring the background of the Neutron project, we can see its leading position in the IBC (Inter-Blockchain Communication) ecosystem. Neutron is not only an important gateway for the Cosmos network to connect with other systems (especially Ethereum and the modular world), but is also specifically designed to be the preferred platform for deploying cross-chain smart contracts.
Neutron has entered the world of modular blockchains with its Nexus component. Built by developers from Neutron, Hyperlane, and Mitosi, Nexus integrates IBC and Hyperlane's modular security technology. The platform builds a bridge between Cosmos, Ethereum, and modular ecosystems, enabling fast and secure transfers of assets. It supports asset transfers to any rollups (such as Arbitrum, Manta, Eclipse, etc.), providing cross-chain applications with the ability to quickly access liquidity in various fields in the Cosmos and Celestia ecosystems.
Therefore, Neutron provides interoperability between multiple blockchain ecosystems, making it a high-risk, high-reward investment option for $TIA. It not only plays a key role in the Ethereum and Celestia ecosystems, but also has a place in the Cosmos ecosystem.
Neutron supports smart contract applications and rollapps on its network, which can be extended through IBC technology in more than 50 interconnected networks, including Cosmos and EVM chains. This feature makes Neutron take the lead in IBC traffic in Cosmos, even surpassing well-known chains such as Injective, dYdX and Kujira.
It is worth mentioning that Neutron has established a close connection with the Cosmos Hub and the IBC ecosystem. It has formed a strong alliance with the ATOM community by sharing 25% of transaction fees and miner extractable value (MEV) revenue. This strategic move not only strengthens Neutron's position in the Cosmos ecosystem, but also adds momentum to its development in the entire blockchain field.
Financial Ecosystem:
A key initiative in the development of the Neutron ecosystem is the launch of its grant program, which provides funding support for innovative decentralized applications (dApps) with 20 million NTRN tokens, representing 2% of its total supply. This strategy is intended to stimulate innovation and growth on the Neutron network.
On the Neutron platform, several well-known dApps with strong user base and network effects have already started to be built. These include:
Lido: Lido developers have released an innovative framework to bring their liquidity staking protocol to the Cosmos ecosystem via Neutron. This move marks an important step for Lido in expanding its cross-chain capabilities.
Mars Protocol: This is a cross-chain money market, and its cooperation with Neutron demonstrates the joint efforts of the two to promote financial decentralization.
In addition, Neutron has also collaborated with multiple projects in the Cosmos economic zone, including Catalyst, Pulsar Finance, Amulet Finance, Duality, Astroport, and Shogun. These partnerships not only enhance Neutron's position in the Cosmos ecosystem, but also lay a solid foundation for its influence and scalability in the wider blockchain field.
Token Economics:
Market capitalization and ranking: Neutron’s current market capitalization is approximately $385 million, ranking 150th in the global cryptocurrency market.
Fully Diluted Valuation (FDV): Assuming all tokens are in circulation, the fully diluted valuation is $1.3 billion.
Total Value Locked (TVL): According to DeFiLlama, Neutron has a total value locked in the decentralized finance (DeFi) space of $50 million.
Circulating Supply vs. Max Supply: The current number of NTRN tokens in circulation is 278.68 million, which is 27.87% of the maximum supply (1 billion).
Regarding the token unlocking situation, as of June 2024, there are no significant token unlocking plans from key stakeholders (including the team, investors, and advisors). 1.67 million tokens (0.17% of the maximum supply) will be unlocked every month, primarily to enhance market liquidity. This periodic unlocking mechanism may be considered a “bullish unlocking” because it helps increase market liquidity, thereby attracting large investors and institutions to purchase tokens in larger quantities.
The main uses of Neutron token (NTRN) include:
- As a fuel currency for dApps: NTRN is used to activate and run decentralized applications on the network.
Governance participation: Holders can bind NTRN tokens to voting treasury to participate in network governance and decision-making process.
Basic DeFi assets:
Pair with other tokens in liquidity pools and yield vaults to enhance liquidity.
Used as collateral in money markets.
Used as a payment currency in decentralized autonomous organizations (DAOs) on the network.
Inflation and Token Liquidity Management:
The Neutron network manages the flow of tokens from multiple sources through its distribution module, including transaction fees, MEV-Tendermint bids, and dApp revenue sharing.
The network allocates 25% of token revenue to the Cosmos Hub as a reward for providing security.
The remaining NTRN tokens are destroyed, forming a deflationary asset model.
Fees collected in currencies other than NTRN are allocated to the DAO’s reserve to support the growth and operations of the network.
Token distribution strategy:
Treasury: 27.00% of the total supply, liquid assets controlled by the governance mechanism. 10% of the supply has been transferred to the Foundation by a governance vote.
Reserve: 24.00% of the total supply, unlocked based on on-chain activity, the more activity, the faster the tokens are unlocked, and vice versa.
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 Launch Pool: 2.00% of the total supply.
Advisors: 1.00% of total supply.
Token unlocking plan:
Source: https://cryptorank.io/price/neutron-ntrn/vesting
Fundraising:
In the seed round of financing on June 21, 2023, Neutron raised US$10 million with a token issuance price of US$0.09, and has currently achieved a return on investment of 15.39 times.
A total of 110 million tokens were sold in this round, accounting for 11.00% of the total supply.
The round 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 economic 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 the Cosmos Hub.
Bullish factors:
Neutron plays a fundamental role in the Cosmos decentralized finance (DeFi) ecosystem. Compared to its main competitors (ATOM, TIA, SEI, and INJ), Neutron offers a range of interesting features, but its valuation is relatively low, indicating that it may be undervalued by the market.
Neutron will soon provide settlement services for Celestia rollups and serve as the main bridge for $TIA liquidity, which is of great significance in the field of DeFi modularity.
There are no major token unlocking events scheduled for any stakeholders over the next six months, providing assurance for market stability.
NTRN has been listed on several major centralized exchanges such as Binance, which enhances its liquidity and market exposure.
NTRN has attractive token economics features, with no inflation within the system and is a deflationary asset where 75% of transaction fees are destroyed.
Bearish factors:
As a new wave of modular blockchain protocols emerge, Neutron may face competitive pressure from these emerging protocols, which may distract the current attention from Neutron.
While Neutron initially followed TIA’s price action, community interest subsequently waned, causing its influence in the market to decline.
Neutron’s on-chain ecological activity is relatively low, with a total locked value (TVL) of 50M, mainly concentrated in Astroport, showing its restricted participation in the DeFi field.
