Sasha Ivanov, the founder of Waves blockchain ecosystem, has pledged to slowly liquidate debt without causing the Neutrino (USDN) stablecoin to depeg. He has over $530 million in debt. Ivanov has taken the liquidity crunch head-on by subsuming six overextended USDN loans into his own wallet. He has been slowly liquidating his wallet’s supply of USDN.
Ivanov is confident that the debt will be made whole. However, lenders wanting to withdraw assets will face withdrawal limits and stiff competition for any available liquidity. This has critics questioning whether the debt can feasibly be repaid. The company had taken on bad debt in Vires Finance – Waves’ money market protocol. This became another example of decentralized trading platforms centralizing during crises. Ivanov highlighted this “sometimes-decentralized-sometimes-not-sentiment” in a tweet. He had stated that Waves is decentralized but, he takes full responsibility for what happens on the platform. He pointed out the liquidity crunch on Vires Finance and said several accounts that overextended the protocol lending capacity are now close to default.
It should be noted that Vires has restricted withdrawals to $1,000 USD Coin (USDC) or Tether (USDT) per user per day. But users have been struggling to withdraw assets. USDN ecosystem has brushed off speculations that that coin was near collapse. It has depegged multiple times during the crash in crypto prices. However, Vires’ debt centralization and withdrawal limits allowed the stablecoin to restore its $1 peg and avoid a UST-like collapse.
Ivanov’s debt accumulates more than half a million dollars in daily interest. He must pay this on top of the principal.