Wintermute Accuses NEAR Foundation and Aurora Labs of Failing to Redeem USN Stablecoin
The post Wintermute Accuses NEAR Foundation and Aurora Labs of Failing to Redeem USN Stablecoin appeared first on Coinpedia Fintech News
Wintermute, a leading market maker, has publicized a conflict with NEAR Foundation and Aurora Labs over the redemption of USN stablecoin, possibly signifying deeper issues within the cryptocurrency accountability mechanisms after the series of industry shake-ups.
Public service announcement or “how we are not really friends with Near @NEARFoundation and Aurora Labs @auroraisnear going forward”
— wishful cynic (@EvgenyGaevoy) November 7, 2023
Wintermute has accused the NEAR Foundation (NF) and Aurora Labs of breaking the promise of their commitments concerning the redemption of USN stablecoins. The controversy arose as the stablecoin, initially algorithmic and resembling Terra’s UST, encountered a significant design flaw leading to a ‘collateral gap.’
The USN Debacle
Initially pitched as a stablecoin pegged to the US dollar, USN’s journey has been fraught with challenges. Its transformation from an algorithmic base, akin to the defunct UST, to a model backed by USDT, was intended to enhance stability. However, it was met with implementation hiccups and a mismatch in collateral.
The Near Foundation had previously established a “USN Protection Programme” after identifying the collateral shortfalls, with Aurora Labs operating the initiative through a grant from NF. However, when the time came to act on their public guarantees, NF’s decision to withhold funds necessary for redemption has now been scrutinized.
Wintermute’s involvement began when facilitating asset liquidation for FTX’s bankruptcy estate, including selling 11.2 million USN. Based on NF’s assurance and direct communications with Aurora Labs, Wintermute proceeded with the transaction, expecting a straightforward redemption process. The reality proved starkly different, with NF backing out and offering a mere fraction (20%) of the original value.
Wintermute’s Stance and Next Steps
After protracted negotiations and delayed redemption efforts, Wintermute is considering legal action against NF and Aurora, encouraging others in similar situations to join forces for recourse.
The incident has highlighted the need for transparency and accountability within the crypto industry, particularly in the wake of numerous high-profile failures and the collective push for more robust governance practices.
The case poses serious questions about the governance of crypto entities and their obligation to uphold promises, especially during industry downturns that have seen the likes of 3AC, Terra, and FTX collapse.
The potential for legal action by Wintermute against NF and Aurora Labs and the accompanying publicity could affect market confidence in the NEAR protocol and its associated projects. This incident is a critical reminder of the risks involved in the digital asset space and the importance of due diligence and transparent regulatory frameworks.
Read More
Wintermute Accuses NEAR Foundation and Aurora Labs of Failing to Redeem USN Stablecoin
The post Wintermute Accuses NEAR Foundation and Aurora Labs of Failing to Redeem USN Stablecoin appeared first on Coinpedia Fintech News
Wintermute, a leading market maker, has publicized a conflict with NEAR Foundation and Aurora Labs over the redemption of USN stablecoin, possibly signifying deeper issues within the cryptocurrency accountability mechanisms after the series of industry shake-ups.
Public service announcement or “how we are not really friends with Near @NEARFoundation and Aurora Labs @auroraisnear going forward”
— wishful cynic (@EvgenyGaevoy) November 7, 2023
Wintermute has accused the NEAR Foundation (NF) and Aurora Labs of breaking the promise of their commitments concerning the redemption of USN stablecoins. The controversy arose as the stablecoin, initially algorithmic and resembling Terra’s UST, encountered a significant design flaw leading to a ‘collateral gap.’
The USN Debacle
Initially pitched as a stablecoin pegged to the US dollar, USN’s journey has been fraught with challenges. Its transformation from an algorithmic base, akin to the defunct UST, to a model backed by USDT, was intended to enhance stability. However, it was met with implementation hiccups and a mismatch in collateral.
The Near Foundation had previously established a “USN Protection Programme” after identifying the collateral shortfalls, with Aurora Labs operating the initiative through a grant from NF. However, when the time came to act on their public guarantees, NF’s decision to withhold funds necessary for redemption has now been scrutinized.
Wintermute’s involvement began when facilitating asset liquidation for FTX’s bankruptcy estate, including selling 11.2 million USN. Based on NF’s assurance and direct communications with Aurora Labs, Wintermute proceeded with the transaction, expecting a straightforward redemption process. The reality proved starkly different, with NF backing out and offering a mere fraction (20%) of the original value.
Wintermute’s Stance and Next Steps
After protracted negotiations and delayed redemption efforts, Wintermute is considering legal action against NF and Aurora, encouraging others in similar situations to join forces for recourse.
The incident has highlighted the need for transparency and accountability within the crypto industry, particularly in the wake of numerous high-profile failures and the collective push for more robust governance practices.
The case poses serious questions about the governance of crypto entities and their obligation to uphold promises, especially during industry downturns that have seen the likes of 3AC, Terra, and FTX collapse.
The potential for legal action by Wintermute against NF and Aurora Labs and the accompanying publicity could affect market confidence in the NEAR protocol and its associated projects. This incident is a critical reminder of the risks involved in the digital asset space and the importance of due diligence and transparent regulatory frameworks.
Read More