Waves (WAVES) Faces Warnings from Korean Exchanges Due to USDN Depeg
On the afternoon of December 8, the price of Waves (WAVES) plummeted sharply after Upbit, a major Korean exchange, issued a warning due to the USDN stablecoin losing its peg to $1.
Update on December 9:
On the morning of December 9, Waves issued an official statement addressing the concerns raised by Korean crypto exchanges regarding the USDN depeg issue.
While acknowledging the concerns from Upbit and other platforms, Waves refuted claims that WAVES token prices could be impacted by the USDN depeg. According to Waves, WAVES and USDN are independent cryptocurrencies, with the only connection being that USDN uses WAVES as collateral. The only way for the token to be manipulated is if users exchange USDN back to WAVES and sell WAVES on the market.
Currently, only 4.2% of the circulating supply of WAVES is held in the USDN smart contract, which is equivalent to 9.8% of the daily trading volume on major global exchanges. Additionally, USDN cannot affect WAVES issuance mechanisms or abruptly alter the USDN supply due to built-in safeguards against such events.
Therefore, Waves has dismissed concerns from Korean crypto exchanges and stated they are in contact with the DAXA (Korean Digital Asset Exchange Association) to clarify any misunderstandings.
The WAVES price has yet to recover from the sharp drop on the evening of December 8.
WAVES/USDT 1H Chart on Binance as of 01:55 PM on December 9, 2022
Original Article:
On the afternoon of December 8, Upbit reported that Waves (WAVES) received a warning from the Korean Digital Asset Exchange Association (DAXA).
The warning was issued due to the USDN stablecoin, which uses WAVES as collateral, repeatedly depegging from $1. Korean exchanges are concerned that if this situation persists, it could pose significant risks to investors.
WAVES was flagged as an "investment warning" by the Korea Federation of Exchanges. The reason is that the USDN stablecoin has been fluctuating rapidly. Upbit will decide whether to terminate the WAVES transaction within two weeks. https://t.co/wiB5gSfm7f
— Wu Blockchain (@WuBlockchain) December 8, 2022
USDN is an algorithmic stablecoin backed by WAVES and operates similarly to LUNA-UST. The repeated depegging of USDN throughout 2022 has raised serious concerns, especially since South Korea has seen substantial losses from the LUNA-UST collapse.
USDN Price Volatility from Early 2022 to Now, Screenshot from CoinMarketCap on the Evening of December 8, 2022
Upbit stated that it will continue to monitor the situation over the next two weeks and assess whether to keep listing the WAVES/KRW and WAVES/BTC pairs. The exchange will announce delisting WAVES if the USDN depeg issue remains unresolved.
USDN previously experienced a severe depeg in April 2022 amid rumors of Alameda Research manipulating WAVES prices, followed by additional depegging incidents post-LUNA-UST collapse and ongoing related disruptions throughout the year.
The WAVES price has been heavily impacted by Upbit's announcement, falling nearly 12% compared to 24 hours ago.
WAVES/USDT 1H Chart on Binance as of 09:30 PM on December 8, 2022
In addition to the collapsed LUNA-UST model, the latter half of 2022 has seen the NEAR Protocol's USN stablecoin halt accepting NEAR as collateral, eventually leading to its "shutdown" by the development team in October.
Despite this, several other DeFi projects continue to launch new stablecoin initiatives, including crvUSD by Curve, GHO by Aave, and CUSD by Coin98.
