Sasha Ivanov, founder and CEO of the Waves blockchain platform, is planning to launch a new stablecoin amid the ongoing crisis of the Waves-backed stablecoin, Neutrino USD (USDN).
Ivanov took to Twitter on Dec. 20 to announce the USDN situation resolution plan alongside a new stablecoin project.
“I will launch a new stablecoin,” Waves founder wrote, adding that there is going to be a “USDN situation resolution plan set in motion before.” He stressed that nothing new will be launched or announced until the USDN plan resolution is set in motion. Ivanov also promised that the stablecoin will be “undepeggable.”
Ivanov told Cointelegraph that the the new stablecoin will be a "hybrid between an algorithmic stablecoin" and will be based on the decentralized autonomous organization model. "It will be implemented using an approach which is native to Waves and cannot be implemented on other chains," he noted.
One of the biggest reasons for the USDN crash is that the current USDN model is not attuned to the current market conditions, Ivanov said, adding that more robust models should be developed. Referring to USDN as to an "incentivesbased stablecoin," he stated:
"Unfortunately incentive based models do not account for black swan events, they work in 99.9% of market conditions but are not able to withstand very heavy market volatility."
Despite USDN's imperfections, Waves does not plan to abandon the stablecoin. "USDN will not be completely phased out, we’re absolutely committed to stabilizing USDN and the new stablecoin should actually help USDN to restore its value," Ivanov stated. The CEO added that overcollateralization and adaptive algorithms should help create "un-depeggable assets."
Neutrino USD is an algorithmic crypto-collateralized stablecoin pegged to the United States dollar and backed by Waves. The USDN stablecoin has been struggling to maintain its 1:1 peg, losing the peg multiple times in 2022.
USDN saw the first major crash in early April 2022, with the stablecoin tumbling to $0.8. The tok has subsequently lost its peg several times since, with the latest crash bringing USDN to as low as $0.53. At the time of writing, one USDN token is worth $0.58, according to CoinGecko.
The news comes amid the Waves (WAVES) cryptocurrency seeing a significant drop in price due to the South Korean crypto exchange authority, the Digital Asset eXchange Alliance (DAXA), issuing a warning on WAVES on Dec. 8. According to data from CoinGecko, WAVES has lost about 30% of its value since the DAXA released the warning.
Related: Japan recommends against algorithmic backing in stablecoins
Waves subsequently pointed to “misinformation” disseminated by some centralized exchanges that have been shorting the Waves token, despite “no fundamental distress being present in the Waves Ecosystem.”
“The Waves team responded to the baseless allegations quickly and since then some exchanges have begun to roll back their restrictions,” Waves noted in a blog post.