This article understands the start-up rules of Neutron, the first consumer chain of the Cosmos ecosystem

Neutron, as the first consumer chain in the Cosmos ecosystem, will be able to take advantage of the security of the Cosmos Hub. In the near future, Neutron will conduct airdrops, liquidity auctions, and lock-up airdrops.

Written by: Jiang Haibo

Cosmos Hub completed the Lambda upgrade on March 15 this year and officially launched Replicated Security (replication security), also known as Interchain Security (inter-chain security), which is a shared security model designed by Cosmos Hub.

Application chains using replication security are also called consumer chains. They will no longer need to maintain the security of the blockchain themselves, but will be produced by the validators of the Cosmos Hub, and these validators will also receive additional Native token rewards increase the value capture capability of ATOM.

Neutron is the first consumer chain to start with replication security. It was approved by the Cosmos Hub community proposal No. 72 last year and obtained 50,000 ATOMs from the Cosmos Hub community pool to develop Neutron as a DeFi Hub in Cosmos , Well-known projects including Lido will also be directly deployed on Neutron. Today, Neutron's mainnet is launched and airdrops have begun. Neutron is a permissionless smart contract platform built on Tendermint and using the Cosmos SDK. With about $2 billion worth of ATOMs pledged in the Cosmos Hub, Neutron will also be one of the most secure cross-chain smart contract platforms through replication security, while also enabling DeFi applications to run on dozens of blockchain networks expand. For a detailed introduction to Neutron, please refer to the article on PANews, and the startup rules of Neutron will be introduced below. Before the launch event on May 24th, Neutron has gone through a two-week warm-up period to ensure the stability and security of the Neutron blockchain.

Airdrop rules: 7% airdrop, snapshot time is November 19, 2022

When: Three months beginning May 24

According to Neutron's token economics, its native token is NTRN, with a total of 1 billion, which can be used as Gas fees in Neutron and has governance authority. Neutron has been continuously supported by Cosmos Hub, so it also allocated 7% of the total tokens for ATOM stakers. The initial allocation is as follows.

• Founders allocate 23% of tokens, locked for 1 year, then unlocked linearly over 3 years. *Early backers allocate 21% of tokens, locked for 1 year, then unlocked linearly over 3 years.
• The community allocates 12% of tokens for airdrops and launch events.
• Neutron DAO allocates 54% of the tokens, which can only be transferred and used after a governance vote.

Airdrop tokens come from a 12% portion of community distribution, of which 7% is used for airdrops. Specifically, 4% will be allocated to accounts that staked more than 1 ATOM at block #12900000 (November 19, 2022); 3% will be allocated to accounts that participated in Prop 72 voting. Eligible users can claim within the first three months of Neutron's launch, which is May 24, and expired unclaimed tokens will be transferred to the Cosmos Hub pool. The received tokens will be unlocked within three months after the end of the Neutron launch event (about 9 days after launch), and the airdrop part accounts for 58.3% of the initial circulation.

The airdrop address first excludes addresses with a pledged amount of less than 1 ATOM, which account for 38% of Cosmos Hub pledged addresses according to statistics. The number of airdrops is mainly distributed according to the weighted number of pledges, which eliminates the possibility of Sybil attacks, but it is also not good for retail investors. If the pledge amount of a single account is greater than 1 million ATOM, it will be calculated as 1 million ATOM. Users who hold more than 1 million ATOMs through multiple addresses need to report actively, otherwise the airdrop will be canceled when they are found out.

Users who used Stride for liquidity staking at the above block heights can also claim the airdrop, but any US users, users from sanctioned countries, centralized exchanges, and custodians are excluded.

Liquidity Auction: 4% of tokens for auction

Time: May 24th to May 31st

The liquidity auction will help Neutron complete the price discovery process, and participants will be able to determine the price of NTRN tokens and begin to influence the Neutron governance system.

Neutron distributes 4% of the tokens distributed by the community equally among two virtual liquidity pools, ATOM and axlUSDC (USDC cross-chained from Axelar to Neutron). Neutron Treasury provides NTRN tokens, users participate in ATOM and axlUSDC, and finally press Everyone's capital participation ratio is uniformly allocated to LP tokens, which means that Neutron Treasury will automatically obtain 50% of LP tokens, and both ATOM and axlUSDC participation will be settled at the same price.

The liquidity auction is divided into two phases. The first stage is a 5-day free period where you can freely increase and decrease your participation funds. The second stage is the end period of 2 days. During these two days, the auction funds cannot be increased, and only one withdrawal transaction can be initiated. On the first day, 50% of the funds are allowed to be withdrawn, and on the second day, the funds allowed to be withdrawn will gradually increase from 50% down to 0.

At the conclusion of the auction, all participating funds are deposited into Astroport's liquidity pool in the form of LP tokens.

Even if you do not participate in the subsequent lock-up airdrops, the LP tokens obtained from the auction, like the airdrop tokens, need to be unlocked linearly within three months after the launch of the event. This part of LP tokens can also receive other mining rewards from Neutron or Astroport.

Lock-up airdrop: lock-up for 4.5 to 12 months, and additionally allocate 1% of the total amount of tokens

Time: May 31st to June 5th

Users who participate in the liquidity auction can participate in the next lock-up airdrop, which is a reward mechanism for liquidity auction participants. They can choose to lock their LP tokens for 4.5 to 12 months to obtain a lock-up airdrop award. The reward tokens for this stage also come from the community distribution, accounting for 1% of the total tokens.

The lock-up airdrop is a liquid mining plan. Users who want to participate in the lock-up airdrop create lock-ups with the NTRN-ATOM or NTRN-USDC LP tokens they hold. The same user can divide the LP tokens into multiple shares to create multiple Lock positions at different times.

The lock airdrop is also divided into two stages. The first is a 3-day free period where participants can create lockups for LP tokens obtained from their liquidity auctions and cancel them at any time. Then there is the end period of 2 days. In this stage, lock positions cannot be created, but they can be canceled. Up to 50% of lock positions can be canceled, and the maximum cancellation ratio will decrease over time.

Neutron's lock-up airdrop mechanism incentivizes longer lock-ups, in which the time multiplier is super-linear, and the longer the lock-up time, the greater the reward share. For example, the reward rate for 4.5 months is 0.5, the reward rate for 7.5 months is 1, and the reward rate for 12 months is 8.

Different from other activities, the rewards obtained from the locked airdrop can be withdrawn at any time.

Through Replicated Security, the application chain in the Cosmos ecosystem will no longer maintain the security of the blockchain, and the Cosmos Hub can also improve the value capture capability of ATOM. Now that the first application chain, Neutron, has started and airdrops have begun, projects including Lido will be directly deployed on Neutron, and the Cosmos ecology may receive more attention.