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Conflict Between Waves and Alameda Causes Double-Digit Dips for WAVES

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Conflict Between Waves and Alameda Causes Double-Digit Dips for WAVES

Neutrino dollar, a stablecoin pegged to the US dollar, has lost its peg. On Monday, the stablecoin lost a sign of value as it plummeted to around $0.725. However, it has since recovered slightly, and it was trading at $0.883, according to Chainlink.

On the other hand, WAVES, the native token of the Waves ecosystem, has dipped by around 21%, and it was trading at $33.84 at the time of writing, according to CoinGecko. WAVES was a top performer in March.

The poor performance of USDN and WAVES has been attributed to wrangles happening within the Waves ecosystem. A conflict ensued between WAVES and Sam Bank-Fried owned Alameda Research.

Drama between Waves blockchain and Alameda Research

Over the weekend, the founder of the Waves blockchain, Sasha Ivanov, accused Alameda of manipulating the price of the WAVES token. Ivanov said that Alameda had borrowed funds through Vires Finance to short WAVES.

Ivanov added that Alameda was paying publicists that would speak negatively against the WAVES token to encourage selling and boost its short position. Ivanov also said that he has proof of a wallet address on the Waves blockchain linked to Alameda. The address had borrowed more than $30M worth of WAVES, which were used to short the token.

The CEO of Alameda Research, Sam Bankman-Fried, also the founder of Alameda, has denied these allegations and said it was a conspiracy theory. The co-CEO of Alameda, Sam Trabuco, has also weighed in on the situation.

Trabuco suggested that people analyze the funding rates for WAVES. Funding rates are the money paid to traders in long or short positions. The funding rates were negative, and it is possible that Alameda took a long position because of the high negative rates. Alameda could then hedge on this position by selling WAVES on the spot market. However, as all this unfolds, Alameda is yet to admit that it has manipulated the prices of WAVES.

Waves tables a controversial proposal

A new proposal has been tabled by the Waves blockchain to get back at Alameda for allegedly manipulating WAVES’ prices. The proposal has been supported by Ivanov, but it seems to be dividing the Waves community.

The proposal asks the Waves community to vote for a liquidation rate of 0.1% for those who borrow WAVES and USDN on Vires Finance. Vires Finance is the largest lending protocol on the Waves blockchain. Bypassing this proposal, Alameda funds would be targeted if the investigation conducted by Ivanov is accurate.

If the community passes this proposal by vote, Alameda would be forced to buy 650,000 WAVES valued at around $30 million to maintain its short position. Ivanov says that the proposal will liquidate everyone that is shorting WAVES.

The small liquidation of 0.1% will force those talking short positions to liquidate. Anyone that has taken a loan on Vires Finance will have their positions closed if the price of WAVES makes a slight uptrend. According to Ivanov, the proposal would protect the Waves blockchain from greed.

This proposal has divided the Waves community. Some noted that if the proposal is passed, it will affect all the users of Vires Finance, who will be at risk of liquidations. One member of the community said, “This is a terrible proposal. Just because we don’t like that a party took a big short position doesn’t mean we should change the protocol to target them back.”

Nevertheless, a few users have voted to approve this proposal. Voting for the proposal will start on April 5 and last for five days.

To learn more visit our Investing in Waves guide.

Ali is a freelance writer covering the cryptocurrency markets and the blockchain industry. He has 8 years of experience writing about cryptocurrencies, technology, and trading. His work can be found in various high-profile investment sites including CCN, Capital.com, Bitcoinist, and NewsBTC.