May 27, 2022, Dubai: Since April 2nd, 2022, the Waves DeFi ecosystem has been through a string of unfortunate events leading to the de-peg of its stablecoin, USDN. This caused a severe liquidity crisis for one of its DeFi protocols, the Vires Finance lending platform. Due to total deposits being lent out to a group of large borrowers, it became near impossible to withdraw the supplied assets for regular users.
With the first phase of proposals passed and changes to the protocol made, the USDN is presently close to the peg at $0.97, having recovered twice from large depeg events. Today, Waves is revealing its “Master Plan” to revive the Waves DeFi Ecosystem. These new measures seek to attract new liquidity to USDN and improve the architecture of the algorithmic stablecoin to resist future black swan events. In addition, Sasha Ivanov, Waves Founder, is proposing – to personally take on the ~$400m worth of debt held by the large borrowers. He can then liquidate part of the accounts balance, return the collateral to the protocol, restore liquidity, and enable larger user withdrawals.
The proposed master plan consists of 4 steps:
Step 1. Boosting the demand for USDN by buying and locking CRV tokens with 45% of the WAVES staking profits from Neutrino, and voting to incentivize the USDN 3-pool. Since the de-peg was caused initially by the large selling of USDN in the Curve pool, this calls for paying close attention to CRV and acquiring sufficient voting power to distribute rewards and make USDN more attractive to the DeFi market.
Step 2. Sasha Ivanov, Waves Founder will take on the $400m debt and liquidate the whale accounts’ collateral to return liquidity to Vires via selling USDN.
Step 3. In order to avoid further depegging from selling large amounts of USDN. The selling will be slow and steadily controlled. Waves are predicting it will take up to 2 months to return Vires Finance to full working order. Meaning total freedom to deposit, withdraw, and borrow from the protocol.
Step 4. Improving Neutrino architecture by issuing a new recapitalization token to replace NSBT eventually. This new token will be tasked with recapitalizing Neutrino with new Waves tokens when under-collateralized since NSBT fails to do so in current conditions. The recapitalization token holders can earn a reward from 50% WAVES staking rewards in the Neutrino contract.
With the steps listed above, the team aims to reinforce the Waves DeFi while increasing the community’s governance power. Provided that all the suggested actions get fulfilled, In a period of 1 to 2 months, Waves believes the ecosystem will be completely revitalized and more resilient to potential crises in the future.
“This new plan to restore functionality and explain the full situation to the community would not have been possible without the Vires and Neutrino team members. They have worked tirelessly on finding solutions for this crisis, and I firmly believe they have identified the steps to succeed. This has been a real stress test for the Waves DeFi ecosystem, and it is incredible to see the support from the Waves community in navigating this crisis successfully.” Sasha Ivanov, Waves Founder
For more detailed info, see the full article here: https://wav.ink/3MX3PCv
Launched in 2016, Wave is a global open-source platform for decentralized applications. Based on proof-of-stake consensus, Waves aspires to make the most of blockchain with a minimal carbon footprint.
Waves technology stack can benefit any use case that demands security and decentralization — open finance, personal identification, gaming, sensitive data, and many others.
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