Waves Founder Accuses Alameda of Manipulation as Stablecoin De-Pegs

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Waves founder and CEO Sasha Ivanov has accused Alame­da Research of mar­ket manip­u­la­tion after the price of the WAVES token slumped more than 45% in four days.

The alle­ga­tions come as Neu­tri­no dol­lar, or USDN, an algo­rith­mic sta­ble­coin native to the Waves ecosys­tem, lost its peg against the U.S. dol­lar, falling by as much as 20% to around $0.80 yesterday.

Writ­ing on Twit­ter, Ivanov alleged that Alame­da manip­u­lat­ed the price of WAVES in order to cov­er a short posi­tion, which it sup­pos­ed­ly opened against the token.

He also accused Sam Bankman-Fried’s trad­ing firm of pro­mot­ing a hos­tile social media cam­paign to trig­ger pan­ic selling.

Ear­li­er, sev­er­al peo­ple accused the Waves man­age­ment of manip­u­lat­ing the price of its token via its DeFi lend­ing pro­to­col Vires Finance. Ivanov dis­missed the alle­ga­tions, blam­ing Alame­da instead.

“They [Alame­da] were the first to push the [WAVES] price on FTX. But after the posi­tion was closed with prof­it the sub­se­quent short trade they opened failed because the price kept going up. Bor­row­ing and FUD had to bring the price down and make the short prof­itable,” claimed Ivanov.

WAVES hit an all-time high last month

WAVES ral­lied more than 250% last month, hit­ting an all-time high of $63 on March 31. But the token, an infla­tion­ary cryp­tocur­ren­cy for the Waves ecosys­tem, has sharply declined ever since, tank­ing 25% to $35 in a day.

Sam Bankman-Fried, founder and CEO of cryp­to exchange FTX, dis­missed the alle­ga­tions by Ivanov as a “bull­shit con­spir­a­cy theory”.

Ivanov has now sub­mit­ted a new gov­er­nance pro­pos­al, osten­si­bly to lim­it what he con­sid­ers to be bad behavior.

The pro­pos­al says: “In order to pre­vent price manip­u­la­tion and pro­tect the ecosys­tem I pro­pose to tem­porar­i­ly reduce the liq­ui­da­tion thresh­old for Waves and USDN bor­row­ing to 0.1%. Also, I pro­pose to lim­it the max­i­mum bor­row APR (annu­al per­cent­age rate) to 40%.”

The pro­pos­al has been met with harsh crit­i­cism. “This is a ter­ri­ble pro­pos­al,” said one user, respond­ing on the Vires Finance forum. “Just because we don’t like that a par­ty took a big short posi­tion doesn’t mean we should change the pro­to­col to tar­get them back. They are using the plat­form as intend­ed. Just let it play out and enjoy the rewards [sic],” added the user.

USDN stablecoin loses peg

Mean­while, Neu­tri­no dol­lar, or USDN, an algo­rith­mic sta­ble­coin of the Waves ecosys­tem, lost its 1:1 peg to the U.S. dol­lar yes­ter­day after the price of the under­ly­ing WAVES token crashed.

The sta­ble­coin dropped almost 20% to $0.80, accord­ing to Coin­mar­ket­cap data. USDN’s total mar­ket cap­i­tal­iza­tion fell more than 15% to $837 mil­lion in the pre­vi­ous 24 hours.

Ana­lysts say the decline may have start­ed on March 31, warn­ing that the sta­ble­coin could become insol­vent should WAVES con­tin­ue to tumble.

USDN is mint­ed when users lock their tokens in the Neu­tri­no smart contracts.

The sta­ble­coin is sup­pos­ed­ly built to sus­tain poten­tial declines in the price of WAVES that may result in a de-peg. But the so-called “back­ing ratio”appears to have failed.

Disclaimer

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