Pluto Protocol was designed to safely work as a universal investment during the bear market. More than $1M worth of stablecoins have been added to the Pluto treasury since launch, issuing 700,000 PLUTO tokens.

As a treasury-based reserve currency, Pluto aims to support the Waves ecosystem development and  expand the DeFi investment possibilities for users.

This proposal recommends an algorithm update to allow PLUTO minting with WAVES tokens without significant risks to the treasury. This update will create more utility for WAVES tokens and help increase the Neutrino Backed Ratio (BR).

The Algorithm

Users will be able to issue PLUTO tokens using WAVES tokens using the existing minting process, the 3-4 digit onboarding APY, and lock-up period.

WAVES tokens will be accumulated in the treasury and swapped to USDN once per day (following the gNSBT limits). The ‘Staked NSBT’ (sNSBT) project gNSBT fund will be used as a swap power to maintain WAVES to USDN swaps. sNSBT has 32,000 NSBT staked which allows a daily swap amount of 700,000 USDN. A small fee of 0.5% will go to sNSBT holders as a part of this collaboration.

With this, Pluto will be able to support $700,000 daily deposit of WAVES tokens without increasing sell pressure on WAVES. Also it will boost BR of Neutrino protocol by locking the additional WAVES tokens to it.

With a maximum usage of current sNSBT swap limits, Pluto will be able to recover Neutrino BR by 5% in 2 months. By issuing PLUTO with WAVES tokens the community can make a huge impact to the Waves ecosystem.

Known Risks

The main risk to the system is WAVES volatility. If a user issues PLUTO with WAVES while it’s at its peak, it’s possible that when WAVES is swapped to USDN some hours later, the price may have decreased, and the treasury will receive less USDN. This risk may cause the treasury value to unexpectedly decrease. To mitigate this risk, the amount of WAVES added to the treasury can be manually set to lower limit during periods of extraordinary volatility. Also, Tsunami Exchange can be used to hedge WAVES price risks by taking leverage position.

Another risk is slippage based on the buyback flow. While onboarding with WAVES, if Pluto’s Growth Factor is below 200%, some of the onboarded WAVES will be used to buyback PLUTO token with a route: WAVES->USDN (swop.fi) then USDN->PLUTO (puzzle). During this exchange, the onboarding participant can experience losses caused by slippage. That’s why it’s recommended to use onboarding with smaller amounts of liquidity.

What’s next? Masterplan

If this proposal receives positive feedback from the Pluto and Waves communities, the update will be implemented ASAP. The team believes this proposal can be helpful in the very short-term to bring a positive trend back to PLUTO token and create additional utility for WAVES.

After release of this proposal, the Pluto team will provide a larger update, which should make Pluto easier for everyone, increase promotional efforts, and add extra utility to the PLUTO token. Stay tuned!

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