Waves / Vires (USDN)
CollapsedStablecoin · $USDN · born 2019 · ✝ 2022
An algo-stablecoin propped up by its own reflexive loop.
Neutrino USDN was Waves' algorithmic stablecoin, backed by the WAVES token, that lost its dollar peg in 2022. The linked Vires.Finance lending market then froze withdrawals amid accusations of a self-inflated WAVES/USDN borrowing loop.
- Peak
- USDN depeg; ~$500M frozen
- Cause
- Collapsed
- Year of death
- 2022
☠️ Cause of death
USDN's reflexive backing by WAVES unwound when confidence broke, and Vires froze withdrawals as the leveraged loop between the two assets collapsed.
📓 Lessons left behind
- —A stablecoin backed by its own governance token is reflexive.
- —Self-referential leverage loops unwind violently.
- —Frozen withdrawals reveal the collateral was never really there.
🌱 The idea that survived
Exogenous collateral
Reinforced that durable stablecoins need independent, exogenous collateral rather than self-referential token backing.
#stablecoin#algorithmic#depeg#reflexive