The Waves Platform team has unveiled a plan for a ‘priority’ recapitalisation of the algorithmic stablecoin Neutrino USD (USDN).
$USDN Resolution Plan is here!💪
Turn USDN into an index asset for the Waves Ecosystem by accepting $WX, $SWOP, $VIRES, $EGG, and $WEST as collateral.
Read the full proposal here: https://t.co/Um8L8MpM2x
— Waves 🌊 (1 ➝ 2) 🏄♂️ (@wavesprotocol) December 22, 2022
“Over the past few weeks, the USDN price has significantly deviated from parity with the US dollar. This was largely fueled by growing distrust in the stable asset, as well as fear, uncertainty and doubt arising from false messages from centralized exchanges,” the announcement said.
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In early December, the Digital Asset eXchange Alliance issued a warning to investors about risks associated with the Waves platform amid the USDN’s loss of parity with the US dollar.
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The asset has not been able to restore its peg since August. As of writing, it traded around $0.51. According to CoinGecko, the circulating supply is valued at $99 million.
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According to Waves’ statement, developers need to ‘restore trust among arbitrageurs in maintaining USDN’s peg’. To this end, the plan is to increase the asset’s collateral and enhance its price stability.
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The team proposed:
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- include in the collateral of the algorithmic stablecoin tokens from Waves ecosystem products (WX, VIRES, SWOP, EGG and WEST) worth $15 million. These assets will be ‘donated’ by the projects themselves;
- resume swaps with USDN;
- offer SURF and NSBT holders the opportunity to earn additional income from arbitrage of ecosystem tokens;
- restore unconditional withdrawal of assets for users who deposited USDN into the Vires.Finance protocol.
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Voting on the proposal will close on December 26. If successful, developers will implement the corresponding upgrade by January 5. After that, a vote on the smart-contract and user-interface update will take place (January 6-10).
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CEO and founder Sasha Ivanov said the measures will turn USDN into a multi-collateral asset with a ‘soft peg’ to the US dollar. According to him, the algorithmic stablecoin will become an ‘index fund’ for ecosystem tokens.
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— The new model is bootsrapped by team tokens in such a way that USDN value is restored asap.
— USDN 2.0 is phased out as a hard-peg stable coin, to be replaced by a new model in q2 2023. But it will live on in its new role and retain its value.— Sasha.waves (@sasha35625) December 22, 2022
In his Telegram channel, Ivanov said that in Q2 2023 Waves will launch a new stablecoin ‘with a hard peg and an adaptive over-collateralization architecture’. He stressed that the asset will have no connection to USDN.
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The founder of Waves added that he intends to propose a different name for the existing algorithmic stablecoin, and publish a relevant technical document describing it.
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Earlier, Ivanov explained that the launch of the stablecoin was necessary to create ‘a protocol more adapted to current market conditions’.
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