'Russian Ethereum' Waves Crashes 23% Amid 'Ponzi Scheme' Allegations

The native token of the Waves WAVES/USD blockchain project fell by more than 23% on Tuesday.

What Happened: According to data from Benzinga Pro, WAVES fell to an intra-day low of $32.84. After rallying more than 200% in March, the token has seen a massive decline over the last week.

Data shows that WAVES — often dubbed the "Russian Ethereum ETH/USD" — has lost 43% of its value since hitting an all-time high of $61.30 on March 31.

The Layer 1 blockchain’s stablecoin USD Neutrino USDN/USD has also lost its peg to the U.S. dollar, falling to a low of $0.72 on Tuesday.

Last week, pseudonymous analyst “0xHamz” posted a thread on Twitter Inc TWTR alleging that the Waves blockchain was “the biggest ponzi scheme in crypto.”

WAVES is the biggest ponzi in crypto

It has recklessly engineered price spikes by borrowing USDC at 35% to buy its own token

Continuous WAVES market cap growth is needed to keep the system stable

WAVES will eventually crash and USDN will break with it

You're on notice

— 0xHamZ (@0xHamz) March 31, 2022

The analyst presented a data-backed argument that suggested that the project’s stablecoin would only be sustainable so long as WAVES’s market cap saw continuous growth.

If WAVES prices drop enough ---- WAVES mkt cap could be less than USDN outstanding

This would mean USDN is insolvent and would depeg

If USDN depegs is material --- the USDC short on Vires could liquidate $607mm of the $875mm outstanding USDN

This would be Armageddon

— 0xHamZ (@0xHamz) March 31, 2022

Meanwhile, the Waves blockchain founder Sasha Ivanov said the thread was nothing more than a campaign “fuelled by a crowd of paid trolls” to bring WAVES down.

This campaign triggered liquidity withdrawal from https://t.co/qvDu9FIYj2, so I had to really look into what was going on. I started with Vires lending platform, because before that someone had reached out to us asking to borrow 1 mln $waves (obviously to short)

— Sasha Ivanov 🌊 (1 ➝ 2) (@sasha35625) April 3, 2022

Ivanov then went on to suggest that FTX CEO Sam Bankman-Fried’s Alameda Research was behind a scheme to borrow large amounts of money through Waves’ lending protocol Vires Finance and short WAVES.

Ivanov also suggested that Alameda was behind the coordinated FUD attack on WAVES to instigate panic selling and further benefit their short position.

Bankman-Fried called the accusations a “ bulls**t conspiracy theory.”