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Vader will Shut Down Stablecoin USDV, Cannot Find a ‘Breakthrough’

According to the protocol, the remaining treasury will be distributed to users via a redemption app until June.

According to a Dec. 29 announcement from its developers, the app that generates the stablecoin Vader Protocol US Dollar (USDV) will be shut down.

The Vader protocol was a failed algorithmic stablecoin network, similar to the Terra network. It was intended to encourage arbitrageurs to keep USDV constant at $1. When Terra assets depegged from the real-world assets they were supposed to represent in May, the Vader team paused the app’s mint function. It hoped to keep users from being exposed to any problems that might arise if its stablecoin also depegged.

The Vader team stated that it spent the next six months attempting to reform the app in order to make it more secure. However, “the team discovered no notable breakthrough in the algorithmic stablecoin design that is capital efficient after rigorous research and discussions.”

They have paused the burn function, making it impossible for users to deposit their remaining USDV into the app in order to retrieve their backing via the normal redemption process. Instead, the developers have set up a redemption portal to distribute the remaining treasury of the app. They intend to keep the redemption app available until the end of June.

To ensure that the funds are distributed fairly, the developers have divided the Curve and Uniswap liquidity pools and snapshotted existing shares, allowing them to distribute the remaining funds to holders.

The Vader Protocol USD appears to have been delisted from all major coin price data fees, so it is unclear whether USDV holders will receive $1 in crypto per coin or a smaller amount.

The US Dollar Terra crash was one of the most significant crypto crashes of 2022. It caused a chain reaction in the cryptocurrency market, contributing to the closure of Midas Investments. Its founder, Do Kwon, is still accused of violating capital market laws in South Korea but has yet to be apprehended.

 

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