Waves' USDN Stablecoin Loses Peg, Drops 15% Amid Manipulation Scare
USDN's market capitalization had nearly doubled to $850 million in March.
Neutrino dollar, or USDN, an algorithmic stablecoin of the Waves ecosystem, lost its U.S. dollar peg as WAVES, the token backing the dollar-pegged cryptocurrency, saw a double-digit price slide.
- USDN, which is supposed to maintain a 1:1 ratio with the greenback, fell by more than 15% to $0.83 early Monday morning, according to crypto data provider Messari.
- "The USDN peg started to wobble on March 31 and ... crashed almost 20% as of today, wiping $200 million in the process," pseudonymous market expert and Anchor user Duo Nine (Twitter handle @DU09BTC) told CoinDesk. "Considering the total circulating supply of USDN tokens is 1 billion (with 1 USDN valued at around 0.80 USD), this is a major blow to USDN holders."
- WAVES, an inflationary cryptocurrency offered as a reward for mining blocks on the decentralized, open-source blockchain Waves, slipped 15% to $42.
- Users need to lock in WAVES in Neutrino's smart contracts to mint USDN, while USDN redemptions have the opposite effect of destroying the stablecoin to unlock WAVES supply.
- Last week, several Twitter handles accused the Waves team of manipulating the price of its native token through its decentralized finance (DeFi) lending platform Vires.finance. WAVES surged over 200% in March, becoming one of the best performing coins with at least a $1 billion market cap.
- Waves CEO Sasha Ivanov dismissed the allegations, accusing Alameda Research of manipulating waves prices and running a hostile media campaign to trigger a panic selling. Alameda was founded by cryptocurrency exchange FTX CEO Sam Bankman-Fried.
- On Sunday, Ivanov submitted a new governance proposal, supposedly to keep speculative activities at bay. "In order to prevent price manipulation and protect the ecosystem I propose to temporary reduce the liquidation threshold for Waves and USDN borrowing to 0.1%. Also, I propose to limit the maximum borrow APR (annual percentage rate) to be 40%," the proposal reads.
- Crypto Twitter is up in arms against the proposal, calling it an attempt to subvert the system in favor of insiders, and a "rug pull" on everyone who used the platform in good faith.
- Meanwhile, Vires.finance is losing liquidity amid the controversy. According to data source Defi Llama, the total value locked in the DeFi platform has dropped to $945 million from a record $1.26 billion in three days.
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