3 - 6 minute read
The Waves team has been facing mounting allegations that they are operating as a Ponzi scheme, with Twitter user 0xHamZ presenting strong evidence in the form of blockchain data that appears to show the team borrowing stablecoins against USDN on the Vires Finance decentralized finance (DeFi) lending protocol, using the borrowed stablecoins to buy WAVES on exchanges, staking the WAVES on the DeFi market to mint USDN, and then using the USDN to borrow more stablecoins in a continuous cycle.
Despite this evidence, Waves founder Sasha Ivanov has denied the allegations, stating that they are “totally baseless and false” and that the Waves team is “fully transparent and compliant.” Ivanov has also pointed to Alameda Research, a trading firm founded by FTX CEO Sam Bankman-Fried, as being responsible for attempting to profit from WAVES shorts by organizing a hostile media campaign against the project.
Want to learn the truth about the Waves ecosystem and its projects?🌊— Waves 🌊 (1 ➝ 2) 🏄♂️ (@wavesprotocol) December 27, 2022
Check out our latest blog post where we debunk 6 common myths and provide clarity for the community👇https://t.co/MAgdhx6CmQ
However, many remain skeptical of Ivanov’s claims and the team’s ability to effectively address the concerns raised by the community. “I don’t trust a word that comes out of Ivanov’s mouth,” stated one Twitter user. “Turns out […] they were only like the 8th biggest [Ponzi scheme]”, said another user.
In an attempt to restore confidence in their platform, the Waves team has released a USDN Resolution plan which includes measures such as adding support for Waves Ecosystem tokens to be deposited as backing in the Neutrino contract and react
Remember when @0xHamz called Waves the biggest ponzi in crypto because they stole $500M+? Turns out he was wrong and they were only like the 8th biggest— Avraham Eisenberg (@avi_eisen) December 16, 2022
Behind Luna, FTX, 3AC, Genesis, Celsius, Voyager, and BlockFi
One of the most notable aspects of the USDN Resolution plan is the addition of support for Waves Ecosystem tokens to be deposited as backing in the Neutrino contract. This would allow users to deposit WX, VIRES, SWOP, EGG, and WEST as collateral for USDN, effectively making USDN an index fund for the Waves ecosystem. According to the Waves team, this measure is designed to diversify and increase the collateralization of USDN, as well as allow USDN to benefit from the price appreciation of Waves Ecosystem tokens. However, it is worth noting that this approach could potentially introduce additional risks for investors, as the value of USDN would be closely tied to the performance of the Waves ecosystem tokens.
The USDN Resolution plan represents an attempt by the Waves team to address the concerns raised by the community and restore confidence in their platform. While it remains to be seen how effective these measures will be in fully stabilizing the USDN peg, they represent a step towards addressing the underlying issues facing the project. However, it is important for investors to carefully consider the risks and potential rewards before making a decision, given the ongoing concerns about the transparency and accountability of the Waves team.