Neptune Protocol
  • Neptune Protocol Introduction
  • Protocol Design
    • Navigate the App
    • Overview
    • USDN Stablecoin
    • NPT Protocol Token and Staking
    • NPT Tokenomics
    • Vault Types
    • Redeeming against a vault
    • Peg Stability Module
    • Liquidations & Stability Pool
    • Governance and Immutability
    • Recovery Mode
    • Security
    • Smart Contracts
    • Community
    • Glossary
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  • What's the advantage of using Neptune?
  • Why would I deposit my collateral to take out a USDN loan?
  • Tokens
  • Key Features
  • Fees
  • Risks
  1. Protocol Design

Overview

Neptune Protocol offers users:

  • The best lending rates possible: our initial offering is a 0% interest vault

  • Maximum loan-to-value as high as 90.9%

  • Low minimum loan amounts close to $200

  • Loans with a one-time small setup fee and 0% interest so users can repay the loan on their own schedule

What's the advantage of using Neptune?

Users are able to deposit multiple collateral types (ETH, tETH, SOL, ezSOL, jitoSOL, TIA and stTIA ) to create a Neptune vault, which allows them in return to take a loan from Neptune. The loan is issued in the platform’s native stablecoin, USDN.

With a 0% interest loan, once you've deposited ETH, tETH, SOL, ezSOL, jitoSOL, TIA or stTIA to borrow USDN, you are in no way obligated to repay your USDN. As long as you maintain a healthy collateral ratio (collateral divided by debt) for your vault, you can access your collateral any time and pay back the loan on your schedule.

The borrowed USDN can be used for multiple purposes, including exchanging it for other stablecoins or leveraging your deposited collateral by increasing your exposure and buying more with USDN, adding this to your already deposited collateral. You can also deposit the USDN in the stability pool to earn NPT token rewards. Another way to participate in Neptune is to liquidate under-collateralized vaults. This keeps the system healthy, and gives you rewards. For more detail, see Stability Pool and Liquidating a Vault.

Why would I deposit my collateral to take out a USDN loan?

Imagine that you have significant exposure to ETH, tETH, SOL, ezSOL, jitoSOL, TIA or stTIA , more than enough to buy the car you really want. However, you believe in the future upside of these tokens and you don't want to sell yet.

Instead, you create a Neptune vault with 10,000 SOL (worth $150,000 if the SOL price is $15). You take out a loan of 50,000 USDN, which is pegged to USD so you can make your purchase. A year later, SOL has doubled to $30! Your collateral is now worth $300,000 and your debt is still $50,000, so your vault is worth $250,000. You've made a profit of $150,000, meaning you can buy yourself a second car or keep the SOL in the vault until you decide to close it.

Since Neptune only charges a one-time fee with 0% interest, your debt isn't increasing over time, so you aren’t in a rush to decide next steps. Just make sure that you keep an eye on the price of SOL so that your collateral is worth at least 110% as much as your debt. Ideally, the ratio of collateral to debt should be as high as possible; having a low ratio can risk your vault being redeemed or liquidated.

Tokens

Neptune issues two tokens:

  • USDN is a USD-pegged stablecoin. Each $1 equivalent of USDN is backed by at least $1.10 equivalent of collateral.

  • NPT is a protocol token. It’s used to reward users for providing liquidity to the system by capturing a proportional share of the protocol by earning staking rewards when users borrow, redeem or get liquidated within Neptune Protocol.

Key Features

The key parts of the protocol are:

  • A 0% interest loan offering

  • A stability pool, where users can deposit USDN and be rewarded in ETH, tETH, SOL, ezSOL, jitoSOL, TIA or stTIA and NPT tokens

  • A staking pool, where users can stake NPT and earn rewards in both USDN and collateral

  • Incentives to participate in token liquidity pools (to be released in the future)

Fees

Neptune only charges fees when:

  • Initiating a USDN loan. There is a one-time fee of 0.5% of the loan amount.

  • Liquidating a vault. If your vault falls below the minimum required collateral ratio, it may be liquidated. In this process, an equivalent amount of debt in USDN is first burned from the stability pool. The user who initiates the liquidation is rewarded a fee (5% of the vault value), and a portion of the liquidated vault’s collateral is taken as a protocol fee (20% of the vault value). The rest of the collateral from the liquidated vault is then distributed to users in the stability pool.

Risks

The following scenarios may result in loss of funds:

  • Bugs: All tokens (ETH, tETH, SOL, ezSOL, TIA and stTIA ) are managed by the smart contracts written by the Neptune team. A bug or error in the contracts could result in a loss of your assets. Neptune Protocol has been audited by multiple auditors.

  • Token liquidation: If your vault is below the minimum required collateral ratio, your ETH, tETH, SOL, ezSOL, TIA or stTIA may be liquidated and offered as a reward to liquidators.

  • Token exposure: If you deposit USDN in the stability pool, your USDN will gradually be burnt to liquidate risky vaults in return for ETH, tETH, SOL, ezSOL, TIA or stTIA. However, this causes exposure to the ETH, tETH, SOL, ezSOL, TIA or stTIA price, which could result in less funds than initially deposited.

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Last updated 2 months ago