Waves' USDN Stablecoin Loses Peg, Drops 15% Amid Manipulation Scare

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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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.

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