Algorithmic stablecoin Neutrino, associated with Waves blockchain, loses peg as token slumps
An algorithmic stablecoin known as Neutrino that is associated with the Waves blockchain lost its peg to the dollar after the price of the underlying token tumbled.
Waves, the token backing Neutrino USD, or USDN, dropped by more than 26% in the past 24 hours. USDN was trading at about $0.796, according to CoinGecko.
Stablecoins are typically used to facilitate trading on exchanges by minimizing the volatile price swings seen by most cryptocurrencies. Most hold assets such as dollars in reserve to maintain the one-to-one relationship, while others such as Neutrino seek to keep at equilibrium by issuing and burning tokens. If the value of the underlying token drops sharply, the peg can drop below the target level.
The failure comes in the wake of the fall last year of Iron Finance, a decentralized finance project that sought to build a stablecoin without being backed by fiat currencies. Neutrino had a market value of about $828 million, making it the 101th largest cryptocurrency, according to data from CoinMarketCap. Waves is valued at about $3.9 billion.
Waves gained attention earlier this year amid speculation that some Russians could be rushing into the Russia-rooted blockchain because of geopolitical tension. The token had been one of the best performing cryptocurrencies this year among the top 50 cryptocurrencies by market capitalization, according to data from Messari.
Similar to other algorithm stablecoins like Terra’s UST or Iron Finance’s IRON, USDN’s peg is maintained by Waves’ own Waves token. For every USDN being issued, Waves tokens would be locked in smart contracts, or codes running on blockchain. When Waves’ price fell sharply, USDN’s peg broke.
A representative of Waves project didn’t immediately respond to a
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