The token of the decentralized application (DApp) creation platform Waves (WAVES) is plummeting after the algorithmic stablecoin backing it failed to maintain its peg to the US dollar.
From opening at $2.38 on December 1st, Waves is now trading for $1.75, a nearly 27% decrease.
The low-cap Ethereum (ETH) rival is seeing massive losses after the Digital Asset Exchange Alliance (DAXA) flagged the token with an investment warning. South Korea’s association of crypto exchanges reasons that WAVES is used as collateral for the stablecoin Neutrino USD (USDN), which has lost its $1 peg and is now worth $0.565.
Following DAXA’s warning, two of South Korea’s leading crypto exchanges, Upbit and Bithumb, delisted Waves from their platform.
Waves says there is a misunderstanding as to its ties with USDN. In a statement, the platform says that the depegged stablecoin is not intrinsically linked to WAVES. It explains that USDN is just a separate project built on its blockchain that uses its token as collateral.
“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. However:
- Only 4.2% of the WAVES total supply is held in the Neutrino Smart contract, equating to only 9.8% of the daily trading volume across all exchanges.
- USDN plays no role in the issuance of WAVES and cannot inflate WAVES supply.
- It is impossible to drain the entire reserves due to the daily swap limits set on Neutrino and backing rate protections.”
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Source: https://dailyhodl.com/2022/12/16/ethereum-rival-plummets-in-price-after-stablecoin-built-on-its-chain-loses-peg-to-us-dollar/