Regarding the similarities with the Grunfeld: 1.c4 Nf6 2.Nc3 g6 3.d4 d5 4.cxd5 Nxd5 5.e4 Nxc3
Here is what IM Danny Rensch has to say on this position: "Black would rather trade knights than have to retreat to a passive position. Also by giving White a weak pawn on c3 Black insures that they will have counterplay." From Chess Mentor. Lesson on the Grunfeld. My feeling in this position is that black will never let the c pawn catch up with the other neighbouring pawns, thus remaining a backward pawn.
You know the difference between the position in the Grünfield and this one? In the grünfield position white already pushed e4. This of course, makes a huge difference.
I agree with IM pfren. The problem with Nxc3 is it opens the b-file. So maybe Nb6 is the best move, thank you!
chessmasters2004, I know, I know, it's quite obvious. somehow, I forgot to mention it. Anway, you're right, it makes all the difference.
The problem with Nxc3 is that after an eventual Rb1 white is threatening b7, and Black is (supposedly) forced to misplace the b8 knight to d7. However, it seems that Black may afford falling into the "trap"- Chinese GM Li Chao seems happy to play the Black hand.
Black's compensation seems reasonable after both 11.Nf3 and 11.f3. I have not analysed the position to any depth, but the chinese players apparently have.In any case, 5...Nxc3 is ages better than 5...e6? which just shows poor positional understanding- white simply develops with Nf3,0-0,d4 etc and Black has a real problem with the development of his queenside (and the Bc8 in particular), let alone some softness on the kingside dark squares.
There is also 5...Nb6 (currently the most popular at high level), which is normal, safe chess.
5...c6 is of course playable, but you shouldn't expect white to be dumb enough to reply with the lemon 6.Nxd5 - would you?
With due respect to Mr. IM i would like to add that without letting white play e2-e4 if black plays Nxc3?! , then white gets a much better version of Grunfeld and therefore at very top level Nb6 is more played.
With due respect to your chess authority, you have no clue. Regards.