The team at Waves blockchain have rushed to calm anxiety surrounding a warning issued by the South Korean Digital Asset eXchange Association (DAXA) regarding the stability of the protocol’s algorithmic stablecoin USDN and its native digital asset of WAVES.

According to DAXA, the price of the WAVES digital asset could fluctuate due to USDN continuing to lose its $1 peg. Consequently, WAVES has been added to its ‘caution’ list of digital assets and risks being delisted if the situation does not improve.

USDN is Not Intrinsically Linked to WAVES

In a statement on Thursday, the Waves team acknowledged DAXA’s concerns regarding the stability of USDN given the current market conditions. They added that they were closely working with the DAXA team ‘to fully support them in their investigation and alleviate serious and obviously damaging misunderstandings of the relationship between WAVES and USDN.’

The Waves team clarified that USDN is a separate project built on the Waves blockchain, and the WAVES digital asset is only used as collateral. They stated that USDN ‘is not intrinsically linked to the WAVES token’ and the only way the stablecoin could affect its price was by redeeming WAVES from the contract and selling in the open market.

Furthermore, the Waves team pointed out that only 4.2% of the WAVES total supply was held in the Neutrino Smart Contract that governs USDN. The stablecoin also does not play a role in the issuance of WAVES and cannot inflate the WAVES supply. They highlighted that it was ‘impossible to drain the entire reserves due to the daily swap limits set on Neutrino.’

Concerns Regarding WAVES are ‘Unwarranted Misinformation’

The team at Waves concluded by stating that the concerns regarding WAVES were ‘unwarranted misinformation.’ They also pledged to contact representatives at Upbit and Bithumb to resolve the situation quickly.

(By John P. Njui)