Waves Community Passes “Reset” Proposal for Vires.Finance

The Waves-based lending platform Vires.Finance is taking extraordinary measures to make users whole after its stablecoin depegged this April amid turbulent market conditions.

Waves Community Backs “Reset” Plan

A DeFi lending protocol is undergoing a “reset” following a community vote.

The community behind Vires.Finance has overwhelmingly voted in favor of a new proposal to “reset” the lending protocol, according to a Tuesday press release. The Waves-based DeFi platform has faced major issues in recent months after the Waves-based stablecoin Neutrino (USDN) lost its peg to the dollar. Vires suffered a “bank run” following the depegging event, leaving users unable to withdraw their funds.

While USDN has almost recovered its dollar parity since April (it is currently trading at $0.99), the fallout from the ensuing liquidity crisis is ongoing. The new proposal seeks to make users whole through a variety of methods. First, Waves asserts that its founder, Sasha Ivanov, has assumed roughly $500 million in bad debt to his own wallet and plans to pay out users affected by the crisis. That measure is a component of the now-passed “DeFi Revival Plan,” which will allow Vires users to choose between being repaid or keeping their funds in the protocol.

Once the proposal takes effect, Vires users with stablecoin accounts (USDT and USDC) exceeding a combined $250,000 will have the option to exchange their positions for USDN with a 365-day vesting period and a 5% liquidation bonus; or they may choose to keep their positions as-is (at 0% APY) while Ivanov liquidates USDN positions to repay the debt. The press release noted that the liquidations will be processed “depending on market conditions.” Holders of gVires, the governance token for the platform, will have the option to redeem “two months’ worth of APY via the revenue system.” The team says this vote is “a final step to stabilize the project and repay all affected users.”

Waves’ stablecoin is not the only one to suffer from a depegging crisis this year. Most notable was the swift collapse of Terra’s algorithmic stablecoin UST, while both TRON’s USDD and Tether’s USDT have also traded below a dollar for days-long periods in recent months. UST, which relied on Terra’s volatile token LUNA to stabilize its peg, has never recovered since its collapse. It currently trades at $0.03.

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies.