Neutrino USD (USDN), an algorithmic stablecoin within the Waves blockchain ecosystem, slipped below its U.S. dollar peg after the largest algorithmic stablecoin, TerraUSD (UST), fell as low as 23 cents early Wednesday.
- USDN, which is expected to hold its price at $1, fell 12% to 88 cents on Wednesday, according to data provider Messari. The native token of the Waves platform, WAVES, fell 26% to $9 in the last 24 hours.
- USDN is the stablecoin of the Waves protocol and is similar in design to the Terra blockchain's algorithmic stablecoin, UST. Users must include the WAVES token in Neutrino's smart contracts to mint USDN, while USDN redemptions destroy the stablecoin to release WAVES supply, balancing supply and demand and keeping the stablecoin in equilibrium.
- After the implosion of UST - which had a market cap of $18 billion before it lost its peg and the Terra ecosystem fractured, causing turmoil in the broader cryptocurrency markets - smaller algorithmic stablecoins faced increased pressure and their prices began to wobble.
- "You're clearly seeing UST contagion spreading," Messari analyst Dustin Teander told CoinDesk. "The curve pool for USDN-3pool is now unbalanced because 92% is USDN. We have seen the same type of ratios with UST's curve pools. This is usually a good sign that the peg is under pressure and new deposits are needed to restore balance."
- Crypto research firm Delphi Digital wrote in its daily report Monday that while UST has received the most attention related to de-pegging, smaller algorithmic stablecoins such as FRAX, FEI and USDN also face the same threat. "It remains to be seen whether each project will be robust enough to maintain its peg in these volatile times," the report said.
- This is the second time in 40 days that the USDN rate has deviated significantly from the dollar peg. On April 4, USDN fell by double-digit percentage points after users accused the platform of manipulating the price of the WAVES token through its decentralized financing platform (DeFi) Vires.finance. Waves CEO Sasha Ivanov denied the allegations and blamed short sellers - traders betting to profit from a falling price - for USDN's woes.
- At press time, USDN was changing hands at 90 cents, but it was trading at 79 cents on crypto exchange KuCoin, data from charting platform TradingView show.