Waves Founder Holds $500M Debt to Avoid USDN Depeg

  • Sasha Ivanov seeks exit cash as her debt bears interest
  • USDN lenders will face withdrawal limits until debt is liquidated

With the crypto crash, many decentralized lending platforms are one major sell-off away from facing insolvency.

Sasha Ivanov, the founder of the Waves blockchain ecosystem and its stablecoin Neutrino (USDN), dealt with the liquidity crisis in a unique way: by subsuming six overextended USDN loans into his own wallet. Ivanov pledged to slowly liquidate the debt without causing the coin to crumble. The Waves founder currently has more than $530 million in debt.

Ivanov has spent the past month slowly winding down the supply of USDN from his portfolio. Waves has shown confidence that the debt will be repaid, but lenders looking to withdraw assets face withdrawal limits and fierce competition for any available liquidity. Critics question whether the debt can be repaid.

Ivanov took on bad debt from Vires Finance, Waves’ money market protocol. The Episode is another example of decentralized trading platforms becoming centralized during crises. Ivanov captured that sometimes decentralized, sometimes not feeling in his tweet announcing the move.

This move was voted on by Vires token holders on May 31. Vires limited withdrawals to 1,000 USD Coin (USDC) or Tether (USDT) per user per day, but users struggled to withdraw their assets. The company sporadically adds liquidity to Vires which is withdrawn within minutes.

The USDN defied speculation that the coin was on the verge of a crash after pulling back several times during the crypto price slump. Debt centralization and Vires withdrawal limits allowed the USDN to re-establish its $1 peg and avoid a death spiral similar to that of the UST.

Ivanov’s debt amounts to more than half a million dollars in daily interest, a balance he must pay in addition to the principal. Still, the company believes Ivanov will find a way out.

“There is 100% confidence that this will be resolved,” said Coleman Maher, Waves Ecosystem Manager. “It may take a while to resolve, but eventually it will be resolved.”

Several sources within the company said Ivanov’s debt will be paid off within a month or two. Critics are not convinced.

“I don’t know where I’ve seen takeovers work,” Margin Syndicate CEO Steven Paterson told Blockworks. “There are bad debts but that’s in passing. It’s not the debt that’s the problem, it’s the model.

Paterson thinks Vires’ cash crunch could last indefinitely.

“They have no mechanism to return cash to the system,” Paterson said.

Waves is actively looking for outside lenders to inject cash into Vires and help Ivanov repay debt, a source at the company told Blockworks.

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  • Jack Kubinec


    Editorial intern

    Jack Kubinec is an intern on the editorial team at Blockworks. He is a rising senior at Cornell University where he writes for the Daily Sun and is editor of Cornell Claritas. Contact Jack at [email protected]

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