The Waves-backed stablecoin Neutrino USD (USDN), which is supposed to remain closely pegged to the US Dollar, fell from its peg for the fourth time this year. Sasha Ivanov, founder of the company behind the algorithmic-based stablecoin, already went on record stating that Neutrino USD needed to upgrade its algorithm to better protect and maintain its USD peg.
The Brief History Of Neutrino USD Depegging
The first time Neutrino USD (USDN) depegged from its correlation with the dollar this year was back in April. On April 2 USDN depegged and fell to as low as $.65 before recovering back to $.88 eventually. The stablecoin dropped for more than 2 days in the beginning of April. The next time USDN depegged from its tie with the US dollar was just two days after the UST and Luna ecosystem crash. On May 11, USDN again began to fall, eventually going down to $.88 before recovering again after more than a couple of days.
The network focused on ‘fixing the algorithm’ to better maintain the peg, even adding additional tokens to the underlying financial protocols, largely dependent upon the WAVES network token, the ecosystem which USDN is predominantly backed by. Before long, for several days at the beginning of June, Neutrino USD fell once again to as low as $.93. The difficulties of the USDN depegging continued early Friday morning, on August 26, as the stablecoin is still currently trading around $.96, a slight recovery from its low of $.90 reflected just a few hours ago.
Issues With Stablecoins Throughout 2022
Neutrino USD is not the only stablecoin to experience serious depegging issues in 2022. The entire industry has been in a state of heightened uncertainty after one of the largest stablecoin-related crashes in the history of the industry occured in the Terra Luna decentralized finance ecosystem at the beginning of May. UST, also an algorithmic-backed stablecoin, crashed along with the Luna Classic network cryptocurrency, after a massive sell off was conducted. The UST sell off created a ripple and was believed to be connected to a calculated attempt to profit from a short sell of Bitcoin, since the Terra Foundation would have to sell BTC reserves in order to protect the UST peg to the US Dollar after the sell off was done.
The Terra Luna news of its ecosystem crash brought about many questions which were already being raised by several experts and professionals within the crypto and blockchain industries. These questions have been largely centered around issues of liquidity fluctuations being able to create large, sudden volatile inconsistencies in the stability of stablecoins which are backed algorithmically as opposed to with fiat or other physical paper or asset backings. Even fiat and asset-backed stablecoins have been brought into question this year. Tron network’s TRX and Bitcoin-backed stablecoins USDD also depegged earlier this year in June, adding to uneasy feelings about the reliability of stablecoins to remain pegged to the fiat currencies they are said to keep.
Navigating Forward In Cryptocurrency and Stablecoins
Stablecoins are not the only thing that have been uncertain throughout the cryptocurrency industry. So far 2022 has been a difficult landscape to navigate for all global markets, as the stock market suffers, the US housing market now experiences a recessed state, among other universal market challenges being faced by citizens across the globe.
In crypto and blockchain news specifically, Bitcoin and Ethereum have experienced lows that haven’t been seen in over 2 years. There is however, good news as well, like the expansion of more merchants, retailers and large corporations who are integrating cryptocurrencies into their operations as regulations are expected to become clearer. Not long ago the Ethereum Foundation released news of its expected date for the next phase of its long-anticipated merge to become a Proof-of-Stake (PoS) blockchain network. Ethereum and other blockchain networks experienced elevated price levels and trading activity for several weeks behind that announcement.
As challenges are still being fielded to get the USDN stablecoin fully recovered with its peg with the US Dollar, the crypto industry is expected to continue unfolding and progressing forward as the underlying financial protocols look to power the next phase of our increasingly digitally-aligned society within the underlying blockchain infrastructure.