USD neutrino loses its peg as WAVES plunges, but developer says it will be ‘totally fine very soon’
Neutrino USD (USDN), the flagship stablecoin of the Waves network, lost its peg to the US dollar following allegations that the project’s founders artificially pumped WAVES, the project’s native token.
Waves, which was trading around $31 on March 28, nearly doubled in value within days to break above $60 on March 31. However, the coin started plunging earlier this month, with some users claiming that the team artificially influenced prices. .
As of 07:57 UTC, Waves is trading at $35.04, down more than 22% in the past 24 hours. It is also down 22% on the week.
This crash also affected the network’s stablecoin USDN, which fell to $0.72 from its peg at $1 at some point in the past 24 hours. The stablecoin has since pared some losses and is currently trading around the $0.813 mark, down 11%, according to data from CoinGecko.
Meanwhile, Inal Kardanov, software engineer and developer advocate at Waves Platform, says “USDN will be fine very soon.”
In a recent Twitter thread, Kardanov said the USDN would not collapse because it is “heavily over-collateralized” and due to the fact that its “depeg is mainly caused by FUD [fear, uncertainty, doubt]not fundamental factors.”
Detailing how the USDN could reclaim its peg, Kardanov suggested that the team should create arbitrage opportunities by lowering barriers – specifically the amount of Neutrino System Base Token (NSBT), the Neutrino Protocol token, needed to lock the arbitration.
“So with fewer NSBTs locked, you can trade more and there are a lot more arbitrage opportunities,” he said, adding that it would also provide new opportunities for NSBT holders.
Users can obtain NSBT, which helps Neutrino maintain reserve stability through recapitalization, by investing WAVES on the neutrino.at site or by trading on Waves. Unlike other tokens in the Waves ecosystem, NSBT has rebounded in the last 24 hours, gaining around 28%.
Nonetheless, things started to go south for Waves after pseudonymous crypto investor 0xHamZ took to Twitter to call WAVES the “biggest ponzi in crypto”, claiming the team created price spikes. by borrowing USDC to buy its own token.
The user also claimed that the USDN can only be stable if there is “continued growth in the market capitalization of WAVES”.
Accusations and “conspiracy theory”
However, Waves Platform founder Sasha Ivanov made a different accusation, saying that Alameda Searcha crypto trading company founded by a major crypto exchange FTX CEO Sam Bankman-Fried, “manipulates wave prices and mounts FUD campaigns to trigger panic selling.”
He also took to 0xHamZ’s Twitter feed, saying he was part of a campaign designed to discredit the platform, calling the poster an “anonymous vigilante” whose feed is “powered by a mob of trolls remunerated”.
“This campaign triggered a cash outflow from vires.finance, so I had to really look into what was going on,” Ivanov said, adding that he discovered that Alameda’s account had started borrowing Waves towards the March 20, which they then sent to the crypto exchange. Binance “obviously to sell and lower the price.”
Bankman Fried called Ivanov’s thread an “obv bullshit conspiracy theory” on Twitter, while Alameda CEO Sam Trabucco argued that WAVES’ funding rate, the cost to sell the asset, has been negative , which means that short traders have been dominant and the majority of traders are bearish .
Opinions divided on the new proposal
Notably, in a governance proposal, Ivanov suggested capping returns and lowering the liquidation threshold to “prevent price manipulation and protect the ecosystem.”
There were mixed reactions to the proposal within the community. While some noted that this would benefit ecosystem token prices as short sellers would have to redeem tokens within seven days, others pointed out that it would also harm every user who uses the “platform legitimately.” and also borrows one of the assets on condition of.”
“That’s a terrible proposition,” said one user. “Just because we don’t like a party taking a big short position doesn’t mean we should change the protocol to target them. They’re using the platform as intended. Just let it play out and enjoy rewards.”
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