Waves blockchain founder Sasha Ivanov has called on centralized exchanges to disable the ability for traders to short the protocol’s native token called waves, amid a 40% decline in its price over the last two weeks.
“Waves does not need waves [token] futures markets,” Ivanov tweeted, adding, “They are a breeding ground for FUD and making money off short positions, profitable because of it.” FUD stands for fear, uncertainty, and doubt and it refers to a general feeling of pessimism around a token or the market itself that can lead to downward price action.
The waves token has declined steeply over the last two weeks. Data from CoinGecko shows a 40% drop from $2.37 to $1.54 within that period.
Waves token down 40% in the last two weeks. Image: CoinGecko
A reportedly misleading DAXA warning about the market health of wave is to blame for the recent downward price action, Waves Labs stated on Monday. DAXA is a South Korean digital asset collective. Major South Korean exchanges such as Upbit responded to the warning by halting waves token deposits.
This warning came amid mounting short interest in the waves token, according to the report. As such, the liquidity crunch created by halting deposits fostered the perfect environment for short sellers to make a significant profit, the report argued.
A new Waves stablecoin
The waves token is not the only one in the protocol’s ecosystem that is in a downward trajectory. Neutrino dollar (USDN), the Waves ecosystem algorithmic stablecoin has also lost its peg to the U.S. dollar by a significant amount. USDN is currently trading at $0.51 as of the time of publishing.
USDN lost its peg at the same time as waves began to decline following the DAXA warning. The stablecoin is backed by waves token and is supposed to trade at par with the U.S. dollar. Users mint USDN by staking their waves token in a protocol called Neutrino.
USDN depegs further. Image: CoinGecko
Ivanov has stated that he will launch a new stablecoin. He also stated that the protocol will come up with a way to remedy the USDN situation but did not provide any details.
It’s just time to create a protocol more attuned to the current market conditions,” said Ivanov, while adding, “It will be easier to stabilize USDN first and launch the new protocol after.”
USDN is no stranger to losing its peg. The algorithmic stablecoin lost its parity with the U.S. dollar earlier in the year amid a spat between Waves and the now-bankrupt crypto trading firm Alameda Research. The spat led to a liquidity crisis on Vired Finance, a Waves-based DeFi protocol that had to be resolved later in the year.