After suffering through a liquidity crisis, the Waves (WAVES) community came together to back a governance proposal that aims to bring the decentralized finance (DeFi) lending protocol Vires.Finance back to life. The vote’s goals are to bring stability to the project and provide compensation to people who have been negatively impacted.
Neutrino (USDN), a stablecoin that operates on the Waves platform and was once pegged to the dollar but has since unpegged itself, occurred in April. Because of this, many users withdrew their assets from the platform, resulting in a liquidity crisis that rendered it impossible for users to remove their cash from the site.
During the event, Waves founder Sasha Ivanov intervened and took control of the situation, gathering $500 million in debt in his wallet to pay it off.
The Vires team has proposed a solution to the problem in the form of a solution that provides consumers with a balance on the platform that is greater than $250,000 with two different options to choose from.
The first choice is to convert their holdings into USDN at a rate of $1.00 per position, with a vesting time of one year and a liquidation incentive of 5%. The second choice is to maintain holdings in USD Coin (USDC) and Tether (USDT) with an annual percentage yield (APY) of 0%. Ivanov will reimburse these holdings, but there are no promises on the timing of the repayments.
The Vires team anticipates that if the plan is implemented, there will be improved liquidity, which will make it possible for customers to withdraw their funds from the platform. Ivanov commended the Waves community for their support of the plan. He also emphasized that the community always has the final say on what happens on their platform.
Fear spread throughout the cryptocurrency market after the devaluation of Terra’s stablecoin, known as Terra Classic USD (USTC), which caused some other stablecoins to exhibit signs of decoupling from their dollar pegs. One of these is DEI, which is the stablecoin that Deus Finance uses. DEI dropped from its dollar peg to $0.60 in May. At the time of this writing, the trading price of the stablecoin is $0.17.
In June, not only did the price of DEI exhibit indications of weakness, but the price of stablecoin protocol USDD did as well, depegging to $0.97. However, to protect its peg, the Tron DAO Reserved contributed 700 million USDC to the defense fund. At this moment, the value of the stablecoin is holding steady at its peg, which ranges from $0.99 to $1.
More Stories: Vauld Gets a Moratorium from Singapore Court upto 9 November