Today, the Digital Asset Exchange Association issued a warning notice about an altcoin. Also, cryptocurrency exchange Upbit has delisted the corresponding altcoin. WAVES price fell after these developments, while the USDN stablecoin lost its dollar peg.
The market is no stranger to the de-peg thing in stablecoins!
Algorithmic stablecoins are notorious in the market with the UST going to zero. This collapse ended with the explosion of the Terra ecosystem’s LUNA token. The Terra crash was the most important factor in the market crash before the FTX event. Algorithmic stablecoins are cryptocurrencies that are not fully secured. So it has different mechanisms to maintain fixation. This naturally makes them vulnerable to market conditions.
cryptocoin.comThe UST boom created a domino effect, causing Magic Internet Money (MIM), another stablecoin, to lose its peg. Despite the fragility of algorithmic stablecoins, new projects like Djed by Cardano (ADA) are still scheduled to be launched. But that doesn’t mean the concept has evolved since the crises seen earlier in the year. Let’s take a closer look at the latest de-peg event in the cryptocurrency market.
After the warning, delist came and altcoin projects collapsed
The Digital Asset Exchange Association (DAXA), which consists of five major crypto exchanges in Korea, issued an alert for Waves (WAVES) on Dec. The warning followed the de-peg of the stablecoin USDN backed by WAVES. So far, USDN has not been able to re-establish the $1 stable in more than 180 days. This means that the USDN protocol can liquidate WAVES through an automated arbitrage process in an attempt to regain the peg. Meanwhile, USDN saw gold 16% of constant value on Dec.
DAXA’s move to issue a warning caused Upbit to delist both WAVES and USDN. The delisting, coupled with the DAXA warning, plays a role in the price drop currently seen in WAVES and USDN. A crypto follower shared the following on the subject:
WAVES and its stablecoin, USDN, are crashing. Upbit is delisting WAVES with a strong ‘investor alert’. I also hear ‘exit scam’ rumors. As long as I can remember this project was a total shit show.
Algorithmic stablecoins are not alone in de-peg. There are persistent concerns about Tether’s USDT support and overall solvency. This continues to raise de-peg fears among investors of all levels. Over the years, USDT has lost its anchor. But it was never of the scale and duration seen with UST and USDN. As the community continues to leverage algorithmic stablecoins, regulators are taking notice. It also prioritizes editing this space.
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