{"id":3141,"date":"2022-04-05T05:37:15","date_gmt":"2022-04-05T05:37:15","guid":{"rendered":"http:\/\/cryptoheretostay.com\/?p=3141"},"modified":"2022-04-05T05:37:15","modified_gmt":"2022-04-05T05:37:15","slug":"waves-stablecoin-crash-sparks-death-spiral-fears","status":"publish","type":"post","link":"https:\/\/cryptoheretostay.com\/?p=3141","title":{"rendered":"Waves Stablecoin Crash Sparks Death Spiral Fears"},"content":{"rendered":"<p> <script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"crypto\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script><br \/>\n<\/p>\n<h3>Key Takeaways<\/h3>\n<p>The flagship stablecoin of the Waves network, Neutrino USD, has depegged after rumors of &#8220;death spiral&#8221; risks began circulating on Twitter.<br \/>\nUSDN is currently trading around the $0.86 price mark.<br \/>\nThe WAVES token has lost over 30% or $1.8 billion in value over the last four days.<\/p>\n<p>Share this article<\/p>\n<p>After almost doubling its market capitalization in a few weeks, Waves\u2019 Neutrino USD stablecoin has lost its peg, signaling a potential \u201cdeath spiral\u201d event for the ecosystem\u2019s native token.<\/p>\n<h2>Neutrino USD Depeg Spells Trouble for Waves<\/h2>\n<p>Neutrino USD, the flagship stablecoin of the Waves ecosystem, is seeing its peg challenged amid short selling pressure on the ecosystem\u2019s native token, WAVES. Neutrino USD (ticker: USDN) is meant to roughly follow the price of the U.S. dollar, but it\u2019s currently worth around $0.86.\u00a0<\/p>\n<p>USDN lost its desired $1 peg last Friday after a scathing post by the pseudonymous crypto investor 0xHamZ began making rounds on Twitter. 0xHamZ called WAVES, the native token of the Waves network, the \u201cbiggest ponzi in crypto,\u201d and claimed that the project\u2019s founders had been artificially pumping the token\u2019s value using leverage.<\/p>\n<p lang=\"en\" dir=\"ltr\">WAVES is the biggest ponzi in crypto<\/p>\n<p>It has recklessly engineered price spikes by borrowing USDC at 35% to buy its own token<\/p>\n<p>Continuous WAVES market cap growth is needed to keep the system stable<\/p>\n<p>WAVES will eventually crash and USDN will break with it<\/p>\n<p>You&#8217;re on notice\ud83e\uddf5<\/p>\n<p>\u2014 0xHamZ (@0xHamz) March 31, 2022<\/p>\n<p>Waves began making headlines in March after seeing its market capitalization surge almost sixfold in just over a month amid otherwise relatively shaky market conditions. Its principal use case is to mint and support USDN, which has likewise seen its market capitalization surge from around $500 million to an all-time high of over $960 million over the same period before losing around $130 million in value today.<\/p>\n<p>USDN\u2019s mechanism works similarly to MakerDAO\u2018s DAI, only it is overcollateralized and can only be minted using the WAVES token. The surging demand for USDN could be attributed to the large staking yields offered for the stablecoin on various DeFi platforms in the project\u2019s ecosystem. However, 0xHamZ said that the high USDN staking yields were heavily dependent on the continuous growth of the collateral token, WAVES, and that the team had been \u201cfolding leverage\u201d to engineer a supply squeeze to pump WAVES\u2019 price artificially.<\/p>\n<p>They also shared on-chain data to substantiate their claim, showing that the Waves team had been depositing USDN on the Waves-native money market protocol Vires Finance to borrow USDC, transferring the USDC to Binance to buy WAVES, and converting WAVES to USDN. The data showed that they repeated this process multiple times.\u00a0<\/p>\n<p><em>USDN\/USDC (Source: CoinGecko)<\/em><\/p>\n<p>Soon after the rumor of Waves using leverage to prop up the value of their token broke out, USDN began sliding below its targeted $1 peg. Although it is overcollateralized by WAVES, USDN is currently trading around the $0.86 price range, showing little signs of recovery. The WAVES token has also erased over 30% or $1.8 billion in value, raising concerns of a potential \u201cdeath spiral\u201d event that could see the value of the WAVES collateral on the Neutrino protocol fall below the market capitalization of the USDN stablecoin. That would mean the system has become insolvent.<\/p>\n<h2>Founder Blames Alameda Research<\/h2>\n<p>In response to the rumors, Waves founder Sasha Ivanov blamed the renowned cryptocurrency trading firm Alameda Research for orchestrating an anti-Waves \u201cFUD\u201d campaign. \u201cGet your popcorn ready: @AlamedaResearch manipulates $waves price and organizes FUD campaigns to trigger panic selling. I hope I caught your attention,\u201d Ivanov said in a Sunday tweet storm.<\/p>\n<p>Ivanov claimed that Alameda had borrowed WAVES on Vires Finance to short the asset and orchestrated the campaign on Twitter to trigger a sell-off and turn its trade profitable. \u201cSo what do we have here: They were the first to push the price on FTX, but after the position was closed with profit the subsequent short trade they opened failed, because the price kept going up,\u201d he wrote. \u201cBorrowing and FUD had to bring the price down and make the short profitable.\u201d<\/p>\n<p>Alameda founder and former CEO Sam Bankman-Fried dismissed Ivanov\u2019s claims as a \u201cbullshit conspiracy theory\u201d without providing further details about the trading firm\u2019s involvement with the incident.<\/p>\n<p>Ivanov also posted a proposal to the Vires Finance DAO to \u201ctemporarily reduce the liquidation threshold for Waves and USDN borrowing to 0.1%\u201d and limit the maximum borrow APR to 40%.<\/p>\n<p lang=\"en\" dir=\"ltr\">https:\/\/t.co\/sZUh19dBNi New DAO proposal on https:\/\/t.co\/X8GtUDr6fT<br \/>Let&#8217;s protect #waves ecosystem from greed!<br \/>GREED IS BAD.<\/p>\n<p>\u2014 Sasha Ivanov \ud83c\udf0a (1 \u279d 2) (@sasha35625) April 3, 2022<\/p>\n<p>The idea behind the proposal is to liquidate Alameda\u2019s supposed short position and protect Waves\u2019 long position by capping the borrowing rates for USDC and USDT. Setting higher borrow rates would mean that the team would have to make higher interest payments on its stablecoin loans, which it uses to support the price of WAVES.<\/p>\n<p>The Waves team allegedly controls around 30% of the circulating supply of VIRES, meaning that it could heavily influence\u2014if not singlehandedly decide\u2014the outcome of the vote. However, if Ivanov\u2019s proposal gets rejected, it could force the Waves team to unwind its leveraged long position on the Vires money market platform to service their debt. Following 0xHamZ\u2019s warning post on Friday, the borrow APRs for the USDC and USDT pools on Vires jumped from around 34% to 80%, effectively more than doubling the interest Waves must pay on its loan, which is reportedly worth north of $400 million at press time.\u00a0<\/p>\n<p><em>Disclosure: At the time of writing, the author of this feature owned ETH and several other cryptocurrencies.<\/em><\/p>\n<p>Share this article<\/p>\n<p>The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.<\/p>\n<p>You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.<\/p>\n<p>See full terms and conditions.<\/p>\n<h3 class=\"title\">NFT Express: Your on-ramp to the world of NFTs<\/h3>\n<p>\nAt Tatum, we\u2019ve already made it super easy to create your own NFTs on multiple blockchains without having to learn Solidity or create your own smart contracts. Anyone can deploy&#8230; <\/p>\n<h3 class=\"title\">Alameda Invests $20M in Polkadot-Based Reef Finance<\/h3>\n<p>\nThe price of Reef Finance\u2019s native token has jumped 30.82%, as Alameda Research has revealed a $20 million investment. Alameda Invests in Reef Alameda Research has announced a $20 million&#8230; <\/p>\n<h3 class=\"title\">Alameda Research Leads $50 Million Investment in Travel App Maps.me<\/h3>\n<p>\nMaps.me is integrating DeFi for its 140 million users. Ahead of the overhaul, the travel app raised $50 million in a funding round led by Alameda Research.\u00a0 Maps.me Makes DeFi&#8230; <\/p>\n<h3 class=\"title\">Give More Clarity on Crypto Regulation, SBF Urges CFTC<\/h3>\n<p>\nFTX CEO Sam Bankman-Fried advocated for the benefits of cryptocurrency markets in a Senate committee hearing on digital assets today.\u00a0 FTX CEO Testifies Before Senate\u00a0 Sam Bankman-Fried wants the Commodity&#8230; <\/p>\n<p><script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"bitcoin\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script><br \/>\n<br \/><a href=\"https:\/\/cryptobriefing.com\/waves-stablecoin-crash-sparks-death-spiral-fears\/?utm_source=main_feed&#038;utm_medium=rss\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways The flagship stablecoin of the Waves network, Neutrino USD, has depegged after rumors of &#8220;death spiral&#8221; risks began circulating on Twitter. USDN is currently trading around the $0.86 price mark. The WAVES token has lost over 30% or $1.8 billion in value over the last four days. Share this article After almost doubling [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":3142,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_wp_rev_ctl_limit":""},"categories":[4],"tags":[],"class_list":["post-3141","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/3141","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3141"}],"version-history":[{"count":1,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/3141\/revisions"}],"predecessor-version":[{"id":3143,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/3141\/revisions\/3143"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/media\/3142"}],"wp:attachment":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3141"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3141"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3141"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}