After its algorithmic stablecoin backing failed to maintain its peg with the US dollar, the token representing Waves ( WAVES ) is now in decline.
Waves traded for $1.75 on December 1st from $2.38. That’s almost 27% less than the opening price.
Since the Digital Asset Exchange Alliance (DAXA) raised concerns about the token, Ethereum (ETH) has seen massive losses. The South Korean association for crypto exchanges claims that WAVES is used as collateral for the stablecoin Neutrino USD (USN), which has lost its $1 peg to $0.565.
Following DAXA’s warning, Upbit (South Korea) and Bithumb (South Korea) delisted Waves from the platform.
Waves states that there is confusion about the USDN connection. WAVES indicates that the pegged stablecoin is not directly linked to WAVES. It clarifies that USDN, which is an independent project built on its Blockchain and that uses its token for collateral, is not part of the WAVES network.
USDN can only be used to directly influence WAVES’ price in one way. That is, by selling WAVES or redeeming WAVES from contracts. However:
- The Neutrino Smart contract holds only 4.2% of the WAVES total supply, which equates to just 9.8% daily trading volume across all the exchanges.
- USDN does not play a role in the issuance and inflation of WAVES.
- Because of the daily swap limits on Neutrino, backing rate protections and daily swap limits, it is impossible to drain all the reserves.
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