Algorithmic Stablecoin Neutrino USD Has Been Depegged For a Month
It's not often that we see major news firms report on the month-to-month movements of stablecoins, unless a major event like a crash to zero happens. However, this is a problem, since many stablecoins simply don't remain stable. Neutrino USD, ranked #60 in the industry, is a stablecoin minted on the Waves blockchain. Unlike Tether and USDC, Neutrino USD is an algorithmic stablecoin with an extremely checkered past.
In recent news, Neutrino USD has been depegged since August 23rd. This is not the first time it is happened, though, with it occurring frequently from late March to June. Waves has a Ukrainian-based team, so the price of the waves token exploded earlier in the spring after Russia invaded. Naturally, a few months later, it plummeted with the rest of the market.
The Waves Blockchain is currently undergoing an update from version 1 to 2, so it's unclear whether the depegging is a result of the update or otherwise. Either way, a software upgrade should never be a reason for the failure of a product. Since a stablecoin is marketed to remain at a stable value, Neutrino protocol is ultimately failing at its purpose.
Top Stablecoins have been seeing major issues
We have covered how a good portion of stablecoins are highly unreliable, resulting in many new regulations. It is an ironic issue, since many nation states want to develop stablecoins of their own, which are CBDCs. Further regulations from lawmakers are on the horizon, thanks to the uncertainty surrounding stablecoins.
Algorithmic stablecoins have seen issues like 99% coin plummets, code bugs resulting in billions of dollars in value stolen, among other issues. They have been become known as the most insecure type of stablecoin ever since the Terra Luna crisis in the spring. For his crimes as the creator of Terra, Do Kwon is facing potential jail time after an arrest warrant was approved in South Korea for him.
Unless the charts at Coingecko and CoinMarketcap are lying, Neutrino Protocol has a rather sizable problem. This trend of randomly depegging every few months is a dangerous sign for other algorithmic stablecoins.
Whether Neutrino USD survives the future largely depends on if they can discover the errors leading to the depegs. Or, they could label it as a governance token and remove the stablecoin label.