.wavesprotocol founder sasha35625 dismissed criticism of the protocol’s decision to add the new SURF token to a basket of tokens that backs its USDN stablecoin; bitcoin held fast above $20K, while ether also rose. shauryamalwa and JPRubin23 report
Waves founder Sasha Ivanov dismissed criticism of the protocol’s recent decision to add the new SURF token as part of the basket of tokens that backs its USDN stablecoin, which some detractors say has “created a model similar to UST,” referring to Terra's algorithmic stablecoin.
Algorithmic stablecoins are backed by a basket of tokens and rely on smart contracts and arbitrage mechanisms to hold their peg to a chosen currency, usually U.S. dollars. In USDN’s case, users must lock in WAVES in Neutrino's smart contracts to mint USDN, while USDN redemptions have the opposite effect of destroying the stablecoin to unlock WAVES supply.
“Even though all purchases made with this token add to USDN backing, the move created a model similar to UST by relying on a secondary token to support the stablecoin's peg by providing liquidity,” Iakov Levin, CEO of crypto yield platform Midas, explained in a message to CoinDesk.