- WAVES and USDN tokens have continued their decline following an ‘investment warning’ from Korean exchanges last week
- USDN hasn’t been pegged to the dollar for over four months, and has collapsed in the last two weeks
- Upbit may delist WAVES if its investigation reveals close links to USDN
Tokens associated with the Waves ecosystem have continued to decline in value following a recent warning by Korean exchanges over the project’s algorithmic stablecoin, Neutrino USD (USDN). USDN itself has depegged spectacularly, currently sitting at $0.77 when it should be $1, while the WAVES token has also fallen 28% on the news. The situation has also been worsened by popular Korean exchange Upbit announcing an investigation into WAVES and a potential delisting to follow, and it seems like Waves’ attempt to calm the waters has not helped.
DAXA Issued WAVES/USDN Warning
Korea has become one of the tightest controlled jurisdictions as far as exchange activities go, so the move by the Digital Asset eXchange Association (DAXA), which consists of the five major crypto exchanges in Korea, to issue a public warning over the USDN stablecoin is no small step. When set against the context of another Korean algorithmic stablecoin however, it’s clear why the exchanges might be a little twitchy about USDN.
DAXA last week flagged the WAVES token with an ‘investment warning’, with the caution coming due to its relationship with the USDN token:
WAVES is a digital asset used as collateral for USDN, a stablecoin aiming to peg its value to 1 USD with (an) algorithm. Currently, the value of USDN is not properly linked to 1 dollar. Upbit has been monitoring the price trend of the USDN and deemed that there’s risk of unexpected investor’s loss due to WAVES value volatility.
As a result, Upbit announced that it would “conduct a detailed review of the digital asset to determine whether the market support will be continued.”
Waves Tries to Clarify Situation
Waves reacted the same day, trying to clarify the relationship between WAVES and USDN:
USDN is a separate project built on Waves blockchain that uses WAVES as collateral; it is not intrinsically linked to WAVES token. There is only one way in which USDN can directly affect WAVES price – through redeeming WAVES from the contract and selling WAVES on the market.
Waves continued that it was “confident the concerns regarding WAVES tokens are unwarranted misinformation” and that it remained “fully committed to upholding complete transparency” throughout this process.
However, Upbit’s concern wasn’t unfounded – USDN hasn’t had dollar parity since early August, with the value slipping to $0.84 in the days before DAXA’s announcement. Naturally, the news sent the coin tumbling further, taking WAVES with it. While WAVES sits at $1.37, what will be of more concern is that USDN has continued to capitulate – it currently sits at $0.77 and shows little sign of reversing its slump:
This price action is unlikely to convince Upbit and other Korean exchanges that USDN is a well-balanced algorithmic stablecoin and not an iceberg that has found its way into the Indian Ocean. Only time will tell how long it can remain a functioning entity, but we wouldn’t bet on it suddenly recapturing its dollar peg after four months away from it.