Algorithmic Stablecoin Neutrino USD is on the Brink of Failure

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Algorithmic Stablecoin Neutrino USD is on the Brink of Failure | Blockworks blockworks.co/algorithmic-stablecoin-usdn-is-on-the-brink-of-failure/

17 sats \ 11 comments \ @cryptocoin 5 Apr 2022 bitcoin

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0 sats \ 9 replies \ @cryptocoin OP 5 Apr 2022

An emerging stablecoin with a recent market cap approaching $1 billion has diverged dangerously from its US dollar peg — calling its very existence into question.

USDN, the stablecoin of the Waves blockchain ecosystem, is supposed to be worth $1, but as of Monday at 5:15 pm ET, it traded for just 81 cents.

USDN, or Neutrino USD, is considered an algorithmic stablecoin because its supply can expand and contract by burning or minting WAVES, the native token of the proof-of-stake Waves protocol.

The price also impacts the yield users earn on USDN in the Vires Finance dApp, Waves’ money market protocol — similar to Compound or Aave on Ethereum. As WAVES increases in value, so does interest earned by depositors.

A pseudonymous DeFi analyst, going by the username 0xHamz, alleged that Waves was using the USDN minting process, combined with Vires, to artificially inflate both the price of WAVES and the supply of USDN.

Waves Founder and Lead Developer Sasha Ivanov is moving to an advisory role with development responsibility shifting to a new US company, Waves Labs, the company said.

0 sats \ 7 replies \ @cryptocoin OP 5 Apr 2022

A Bloomberg article on the topic:

Most [stablecoins] hold assets such as dollars in reserve to maintain the one-to-one relationship, while others such as Neutrino seek to keep at equilibrium by issuing and burning tokens. If the value of the underlying token drops sharply, the peg can drop below the target level.

Neutrino had a market value of about $828 million, making it the 101th largest cryptocurrency, according to data from CoinMarketCap.

Terra blockchain, which powers the UST algorithm stablecoin, recently launched a Bitcoin reserve to help improve UST’s peg to the dollar.

Algorithmic Stablecoin Neutrino Loses Peg as Token Slumps https://www.bloomberg.com/news/articles/2022-04-04/crypto-algorithmic-stablecoin-neutrino-loses-peg-as-token-slumps https://archive.ph/vnypI <-- An archive, which may be easier to read.

0 sats \ 5 replies \ @cryptocoin OP 5 Apr 2022

An article from The Block:

Just because we don’t like that a party took a big short position doesn’t mean we should change the protocol to target them back,”

Voting on the proposal begins on April 5 and will last five days.

"Someone will make a lot of money off of it. and it's not us, of course.”

Drama erupts around the Waves blockchain project and trading firm Alameda https://www.theblockcrypto.com/post/140475/drama-erupts-around-the-waves-blockchain-project-and-trading-firm-alameda https://archive.ph/XTlUX <-- An archive, may be easier to read.

0 sats \ 3 replies \ @cryptocoin OP 5 Apr 2022

An article on Decrypt:

Like Ethereum, Waves is a layer-1 blockchain that features smart contracts and allows people to launch their own decentralized applications and associated tokens. Akin to Terra, its most popular feature has been its own algorithmic stablecoin—USD Neutrino, which is backed by Waves.

According to Ivanov, the scheme works by borrowing massive amounts via Waves-based lending protocol Vires Finance, then selling it off while spreading "FUD" (fear, uncertainty and doubt), thereby pushing the price down.

Waves Is Taking Crypto Traders on a Wild Ride. Here's What You Need to Know https://decrypt.co/96890/waves-taking-crypto-traders-wild-ride-what-you-need-know https://archive.ph/T9UKa <-- An archive, which can be easier to read.

0 sats \ 1 reply \ @cryptocoin OP 5 Apr 2022

And on CoinDesk:

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.

According to data source Defi Llama, the total value locked in the DeFi platform [vires.finance] has dropped to $945 million from a record $1.26 billion in three days.

Waves' USDN Stablecoin Loses Peg, Drops 15% Amid Manipulation Scare https://www.coindesk.com/markets/2022/04/04/waves-usdn-stablecoin-loses-peg-drops-15-amid-manipulation-scare https://archive.ph/ckmNW <-- An archive, which may be easier to read.