At Neutrl, safety and transparency are core to the protocol. We use industry best practices, and mark our OTC positions the way real risk managers at large institutional funds do: conservatively, consistently, and with a liquidation-focused mindset.

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Today we dive into exactly how we value OTC positions on the Neutrl Transparency Dashboard, why the method is intentionally conservative, and how it protects depositors through market cycles. Our aim is simple: give you the clarity to deposit with confidence and to understand how your capital stays safe.

The Neutrl portfolio is composed of:

• Locked tokens purchased OTC at a discount to spot price that vests over time
• Matched short positions on perpetual futures to hedge price and stay delta neutral
• Stablecoins as liquid capital buffer

Our reserves aim to state the current market value of our portfolio. Locked tokens are by nature, illiquid, so instead of marking the position at current prices, we mark OTC positions at a conservative worst-case liquidation price today, not a hopeful price tomorrow. This is the same way that institutional asset managers account for illiquid positions in Traditional Finance. Our methodology applies a time-weighted “illiquidity” discount to each vesting tranche, with a cap on the value of any tranche. This captures the cost of illiquidity, sale frictions, and execution risk if we had to liquidate quickly.

Why this is industry best practice

Our approach mirrors how institutional investment managers value hard-to-trade or restricted assets. The key principles are simple:

• Focus on liquidation price: value positions at what you could realistically sell them for today.
• Adjust for liquidity and time: apply discounts that reflect transfer restrictions and the time until assets unlock.
• Be transparent about methods and assumptions, and prioritize observable market inputs where possible.

In practice, leading firms use time-based discounts for illiquidity and report hedged net exposure to avoid overstating value. Neutrl follows this discipline and goes further with an explicit cap near vest, and conservatively sourced discount inputs. This ensures that depositor safety wins over optimistic valuation.

The formula we use

This formula is intentionally conservative:

• Most conservative discount input: We bias the mark using the most conservative discount rates shared from STIX’s anonymized OTC dataset. We deliberately understate value.
• Time-weighted haircut: Further unlocks are worth less today. The discount compounds with time-to-vest.
• A cap on every vest: Even when a tranche is very close to unlocking, we cap the value. This is because in a liquidity crunch, we assume that we will have to take a haircut even if the vesting is tomorrow; the cap bakes that reality into our marks.

ZK-Proof Verification with Accountable

We partner with Accountable to provide ZK-proof verification of reserves. Accountable connects directly to our exchange accounts via read-only APIs to attest to balances, margin, and hedge positions, and it independently verifies our OTC deal valuations using the methodology described above. The system generates zero-knowledge proofs that confirm portfolio totals and constraint checks (e.g., assets ≥ liabilities, hedge coverage, OTC discounting and caps applied) without revealing token-level positions or venue identifiers. This gives you cryptographic assurance that the numbers on our Transparency Dashboard are complete and accurate, while preserving the privacy needed to protect the protocol from stop hunting or other predatory behavior.

What this means for depositors

• Safer reserves: Conservative marks help prevent over-distribution and overstatement of collateral.
• Transparent and understandable: You get a truer valuation of what the portfolio is worth today if we had to unwind, and how it would respond to price moves.
• Reputation you can rely on: By adopting and openly documenting institutional valuation discipline, Neutrl raises the bar for safety and transparency in DeFi.

Our commitment to continuous transparency

• Periodic validation: We regularly test the cap and discount assumptions against market evidence, adjusting when warranted and communicating those changes.
• Independent scrutiny: We welcome third-party review of our methodology and source data.

The bottom line

Neutrl’s OTC valuation is simple but elegant: time-weighted discounts, a hard cap for realism, and a hedge-aware presentation. It’s conservative enough to protect deposits, rigorous enough to stand up to institutional scrutiny, and clear enough for anyone to follow on our dashboard.

This balance of safety, clarity, and discipline represents the level of transparency DeFi deserves and reinforces Neutrl’s position as a leader in transparency for synthetic dollars.

Learn more about Neutrl by reading our docs, and follow us on X for more updates.