Waves Break Silence Over DAXA Investigation, USDN Stablecoin Fails to Repeg

It has been a tough year for algorithmic stablecoins. Historically, these pegged tokens have failed to maintain a grip on $1, especially under extreme selling pressure. But the Terra collapse has been disastrous, and the ripple effects have had a decisive impact on the rest of the market.

Seven months later, another algorithmic stablecoin is having trouble maintaining its dollar peg. In fact, this is the fifth time that Waves-backed Neutrino Dollar (USDN), currently trading at $0.84, de-pegged from the dollar. South Korean exchanges have issued a warning that this has impacted the Waves token, which has come under the scanner for apparent fluctuation in its value.

Waves Address FUD

In the latest post, Waves maintained that USDN is a separate project that uses WAVES as collateral and is not “intrinsically” linked to the native token.

“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.”

It all started when the Digital Asset Exchange Association (DAXA), which consists of the five major crypto exchanges (Upbit, Bithumb, Coinone, Korbit, and Gopax) in South Korea, cautioned users against investing in WAVES citing high volatility caused by USDN de-pegging.

One DAXA platform – Upbit – announced that the platform is looking to suspend the WAVES/KRW and WAVES/BTC pairs and added that it will monitor the token over a period of the next two weeks to determine its next course of action.

Waves revealed cooperating with the investigation to alleviate “serious and obviously damaging misunderstandings” of the relationship between WAVES and USDN. The team behind the open-source platform also said that is extremely confident in reaching a resolution within the two-week investigation period.

DAXA Targets Another Token

The Terra collapse and the subsequent fall of FTX have left South Korean regulators to tread with caution. Aligning with the sentiment, the Seoul Central District Court ruled to justify DAXA’s decision to delist Wemade’s Wemix (WEMIX) tokens from major crypto exchanges in the country.

As per court documents, DAXA accused Wemede, which is backed by tech giant Microsoft, of failing to disclose the number of outstanding tokens. The game developer dismissed the allegations and said that it will continue the legal battle against the crypto exchanges.