Neutrino Dollar breaks peg, falls to $0.82 amid WAVES price 'manipulation' accusations
Neutrino Dollar (USDN), a stablecoin issued through Waves-backed Neutrino protocol, lost its U.S. dollar-peg on April 4 amid speculations that it could become "insolvent" in the future.
USDN dropped to as low as $0.822 on April 4 with its market capitalization also diving to $824.25 million, down 14% from its year-to-date high of $960.25 million.
Interestingly, the stablecoin's plunge occurred despite Neutrino's claims of backing its $1-peg via what's called "over collateral," i.e., when the total value of Waves (WAVES) tokens locked inside its smart contract is higher than the total USDN minted, also called the "backing ratio."
Notably, Neutrino smart contract's backing ratio came out to be 2.62 on April 4, according to official data, underscoring that it had adequate funds to back USDN's dollar-peg by 1:1; that is, despite WAVES' 35%-plus drop in the last five days.
WAVES' price dropped from its record high near $64 on March 31 to as low as $47 on April 4. The coin started declining as its momentum indicator, the relative strength index (RSI), jumped above 70 — an "overbought" area that typically triggers selling sentiment.
Nonetheless, the selloff occurred also as a pseudonymous analyst accused Waves of artificially pumping WAVES by 750% in the last two months by:
1) collateralizing USDN to borrow USD Coin (USDC) on the Vires.Finance lending platform;
2) using the proceeds to purchase WAVES;
3) converting the tokens to USDN, and
4) redeploying them into the Vires.Finance pool to borrow more USDC.
The analyst also said that a decisive WAVES' price crash would make USDN insolvent.
If WAVES prices drop enough ---- WAVES mkt cap could be less than USDN outstandingThis would mean USDN is insolvent and would depegIf USDN depegs
Read more on cointelegraph.com
