Waves

Waves founder announces new stablecoin as USDN depegs

Days after USDN lost its peg with USD, Waves CEO and founder Sasha Ivanov promised that his new stablecoin will be “undepeggable.”

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.

*Neutrino USD (USDN) one-year price chart. Source: 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.

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.

The total crypto market cap drops under $1.2T, but data show traders are less inclined to sell

An improving Tether discount in Asian markets and positive futures premiums for BTC and ETH suggest a slight recovery is in the making.

The total crypto market capitalization has been trading in a descending channel for the past 29 days and currently displays support at the $1.17 trillion level. In the past seven days, Bitcoin (BTC) presented a modest 2% drop and Ether (ETH) faced a 5% correction.

*Total crypto market cap, USD billion. Source: TradingView*

The June 10 consumer price index (CPI) report showed an 8.6% year-on-year increase and crypto and stock markets immediately felt the impact. Still, it’s not certain whether the figure will convince the United States Federal Reserve to hesitate in future interest rate hikes.

Mid-cap altcoins dropped further, sentiment is still bearish

The generalized bearish sentiment caused by weak macroeconomic data and uncertainties regarding the Federal Reserve’s ability to curb inflation has severely impacted crypto markets.

The Fear and Greed Index hit 11/100 on June 9, and the data-driven sentiment gauge has been below 20 since May 8.

*Crypto Fear & Greed Index. Source: alternative.me*

This persistent “extreme fear” reading indicates that investors are worried, but, at the same time, it supposedly presents a buying opportunity.

Below are the winners and losers from the past seven days. While the two leading cryptocurrencies presented modest losses, a handful of mid-capitalization altcoins declined by 14% or more.

*Weekly winners and losers among the top 80 coins. Source: Nomics*

Helium’s (HNT) community approved the HIP-51 proposal, covering the economic and technical constructions required to support new users, devices and different types of networks, including cellular, VPN and WiFi.

Chainlink (LINK) rallied 22% after the developers released a revamped Chainlink 2.0 roadmap, including native token staking.

Theta Token (THETA) gained 9.7% as the network announced livestream support using API technology which enabled instant and easy connection to apps and websites.

WAVES lost 28% after the $1,000 daily withdrawal limit for stablecoins in Vires Finance was implemented to avoid further pressure on the Neutrino Protocol Stablecoin (USDN).

Data shows traders are less inclined to sell at the current levels

The OKX Tether (USDT) premium is a good gauge of China-based retail crypto trader demand. It measures the difference between China-based peer-to-peer (P2P) trades and the United States dollar.

Excessive buying demand tends to pressure the indicator above fair value at 100%, and during bearish markets, Tether’s market offer is flooded and causes a 4% or higher discount.

*Tether (USDT) peer-to-peer vs. USD/CNY. Source: OKX*

On May 31, the Tether price in Asian peer-to-peer markets entered a 4% discount, signaling intense retail selling pressure. Curiously, the situation improved on June 10 after the indicator moved to a 1.5% discount. Despite remaining negative, the metric shows investors’ willingness to buy the dip as the total crypto capitalization dropped below $1.2 trillion.

To exclude externalities specific to the Tether instrument, traders must also analyze the cryptos futures markets. Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

*Accumulated perpetual futures funding rate on June 10. Source: Coinglass*

Perpetual contracts reflected mixed sentiment after Bitcoin and Ether held a slightly positive (bullish) funding rate, but altcoin rates were negative. For example, BNB’s negative 0.20% weekly rate equals 0.8% per month, which is generally not a concern for derivatives traders.

Any recovery depends on macroeconomic data stabilizing

According to derivatives and trading indicators, investors are less inclined to reduce their positions at current levels, as shown by the modest improvement in the Tether premium.

The positive funding rate for Bitcoin and Ether futures displays traders’ growing appetite for leveraged long positions as the total crypto capitalization broke below $1.2 trillion.

Unless the traditional markets and macroeconomic scenario deteriorates, there is reason to believe crypto investors are expecting a positive price move soon.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Total crypto market cap risks a dip below $1 trillion if these 3 metrics don’t improve

Declining demand for Tether, negative futures premiums for altcoins and the lack of inflow to the crypto sector are all signs that a rocky road is ahead.

The total crypto market capitalization has ranged from $1.19 trillion to $1.36 trillion for the past 23 days, which is a relatively tight 13% range. During the same time, Bitcoin’s (BTC) 3.5% and Ether’s (ETH) 1.6% gains for the week are far from encouraging.

To date, the total crypto market is down 43% in just two months, so investors are unlikely to celebrate even if the descending triangle formation breaks to the upside.

Regulation worries continue to weigh investor sentiment, a prime example being Japan’s swift decision to enforce new laws after the Terra USD (UST) — now known as TerraUSD Classic (USTC) — collapse. On June 3, Japan’s parliament passed a bill to limit stablecoin issuing to licensed banks, registered money transfer agents and trust companies.

A few mid-cap altcoins rallied, but overall sentiment was unaffected

The bearish sentiment was clearly reflected in crypto markets as the Fear and Greed Index, a data-driven sentiment gauge, hit 10/100 on June 3. The indicator has been below 20 since May 8, as the total crypto capitalization lost the $1.7 trillion level to reach the lowest level since January 27.

Below are the winners and losers from the past seven days. While the two leading cryptocurrencies presented modest gains, a handful of mid-capitalization altcoins rallied 13% or higher.

Waves rallied 109% after liquidity was brought back to Vires Finance and the Neutrino Protocol USDN stablecoin re-established its $1.00 peg after a $1,000 daily withdrawal limit was imposed on USDT and USDC.

Cardano (ADA) gained 19% as investors expect the “Vasil” hard fork scheduled for June 29 to improve scalability and smart contract functionality, incentivizing deposits to the long-hyped decentralized finance applications on the network.

Stellar (XLM) hiked 18.6% after the remittance giant MoneyGram partnered with the Stellar Development Foundation, launching a service that allows its users to send and convert stablecoins into fiat currencies.

Solana (SOL) lost 8% due to an unexpected block production halt on June 1, requiring validators to coordinate another mainnet restart after four hours of outage. The persistent issue has negatively impacted the network on seven occasions over the past 12 months.

Data points to further price pressure

The OKX Tether (USDT) premium is a good gauge of China-based retail crypto trader demand. It measures the difference between China-based peer-to-peer (P2P) trades and the United States dollar.

Excessive buying demand tends to pressure the indicator above fair value at 100% and during bearish markets, Tether’s market offer is flooded and causes a 4% or higher discount.

Tether has been trading at a 2% or higher discount in Asian peer-to-peer markets since May 30. However, the indicator showed a modest deterioration as it bottomed at a 4% discount on June 1. This data leaves no doubt that retail traders were caught off-guard as the total crypto capitalization failed to break the $1.3 trillion resistance.

Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

*Accumulated perpetual futures funding rate on June 3. Source: Coinglass*

Perpetual contracts reflected mixed sentiment as Bitcoin and Ethereum held a slightly positive (bullish) funding rate, but altcoin rates were opposite. Solana’s negative 0.20% weekly rate equals 0.8% per month, which is not a huge concern for most derivatives traders.

According to derivatives and trading indicators, the market is at risk of seeing more downside. Evidence of this can be seen in the slightly higher demand for bearish positions on altcoins and the evident lack of buying appetite from Asia-based retail markets.

Bulls need to display strength and hold the $1.19 trillion market capitalization support to avoid an increase in leveraged sellers, bearish bets and the subsequent negative price pressure.