USDN looks like the next domino to fall

This is in no way financial advice or a recommendation - just my thoughts on a risky domino in the crypto system.

USDN is an algorithmic stablecoin whose peg is "protected" by the ability to convert it to/from WAVES at a fixed $1/USDN value - it's the same deal as UST and LUNA. You can read about the specifics here.

I think we all know that this setup is flawed after the debacle of the last couple of weeks, but it's hard to say exactly when things will break in general. With the USDN/WAVES system, though, we have a bit more of a clear bright line: the goal of the system is to "back" each USDN with at least $1 worth of WAVES by incentivizing traders to add more WAVES if its value falls. Since April 1st, the value of WAVES has fallen around 90%, and this mechanism is breaking. Each USDN is currently only backed by around $0.36 worth of WAVES. You can see the live ratio of how much WAVES is backing each USDN here. It's already down to 36% from 38% when I checked a couple of hours ago.

To my mind, there's no way that most of these algo stablecoins end well (with a few exceptions, e.g., DAI seems fairly safe). But USDN and WAVES seem immanently ready to collapse. This may be holders' last real chance to get out before the run on its bank reaches its natural conclusion.