Upbit warns of risks tied to algorithmic stablecoins USDN and USDD

The South Korean exchange Upbit warned of price volatility risks for the cryptocurrencies WAVES and TRON (TRX) due to the loss of the dollar peg by the algorithmic stablecoins Neutrino USD (USDN) and USDD.

‘There are currently concerns that the USDN and USDD pegs are not working very well. As a result, the probability of price fluctuations in WAVES and TRON (TRX), linked to each of the above stablecoins, may increase, so investors should be careful,’ the statement said.

As of writing, USDN trades at around $0.96, USDD at approximately $0.98 (CoinGecko).

In May, against the backdrop of the collapse of UST from Terra, the exchange drew users’ attention to the cryptocurrencies traded on the platform that participate in maintaining the price of certain algorithmic stablecoins. In addition to the assets above, the following were included:

• NEAR — USN;
• KAVA — USDX;
• HIVE — HBD.

Upbit noted that a sudden change in collateral value or a malfunction in the stablecoin’s algorithm could lead to sharp moves in the prices of the assets linked to it.

On June 13, USDD lost its peg to the dollar amid the broader downturn in the cryptocurrency market. Analysts from the analytics firm Nansen noted that hedge fund Oapital, which profited from the UST crash, began transferring large sums into USDD and other “stablecoins.”

‘It doesn’t look very good,’ the analysts commented.

In May, the dollar peg of the algorithmic stablecoin DEI from Deus Finance DAO lost.