Waves Statement on DAXA investigation into WAVES token.
Upbit and Bithumb have today notified users of risks they see as associated with Waves due to USDN depegging. Therefore, Waves is issuing a message to the Waves community to clarify the situation.
We recognize the common due diligence requirements from Upbit and Bithumb, especially in light of current market conditions. We are working closely with their teams to fully support them in their investigation and alleviate serious and obviously damaging misunderstandings of the relationship between WAVES and USDN. We are extremely confident in reaching a resolution within the two-week investigation period.
According to their statement, Upbit and Bithumb believe that WAVES price could become volatile due to USDN depeg. However, USDN is a separate project built on Waves blockchain that uses WAVES as collateral; it is not intrinsically linked to WAVES token. There is only one way in which USDN can directly affect WAVES price - through redeeming WAVES from the contract and selling WAVES on the market. However:
- Only 4.2% of the WAVES total supply is held in the Neutrino Smart contract, equating to only 9.8% of the daily trading volume across all exchanges.
- USDN plays no role in the issuance of WAVES and cannot inflate WAVES supply.
- It is impossible to drain the entire reserves due to the daily swap limits set on Neutrino and backing rate protections
Therefore the effect of entirely redeeming all WAVES in the smart contract would be negligible and there is zero new issuance of WAVES.
For these reasons, Waves is confident the concerns regarding WAVES tokens are unwarranted misinformation. Waves representatives are in contact with both Upbit and Bithumb teams and will continue to cooperate with them to correct this misunderstanding. We hope to bring this investigation to a close in the coming days and we remain fully committed to upholding complete transparency with you, our community, throughout this process.