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Waves announces 4-step Master Plan to 'save' its DeFi ecosystem


invezz.com 27 May 2022 19:00, UTC
Reading time: ~2 m

Waves, a proof-of-stake blockchain platform for decentralized applications, has announced measures it says will help address the recent upheaval that rocked its DeFi ecosystem.

Specifically, the “Master Plan”, as the four-step measures are called, is aimed at ensuring the ecosystem’s algorithmic stablecoin Neutrino USD (USDN) restores dollar parity, whose loss led to a massive liquidity crisis on the DeFi protocol Vires Finance.

With the market in crisis, total deposits in the DeFi lender were advanced to large borrowers, even as regular users found it virtually impossible to access their assets. The need to find a solution to this and other aspects of the crisis has led the team to the measures announced on Friday.

Both problems are still existing today. $USDN is – almost – back to peg at $0.97 and Vires withdrawals are limited by the amount of liquidity that is repaid every day by borrowers.

We understand how hard this has been on the community, which is why this plan is so important.

— Waves 🌊 (1 ➝ 2) (@wavesprotocol) May 27, 2022

A 4-step “Master Plan”

Waves’ revival plan includes a buyback of CRV tokens using 45% of the profits from WAVES and locking these up. Sasha Ivanov has also decided to shoulder the $400 million debt, which means liquidation of whales’ collateral. Selling the USDN will then help return liquidity to the Vires protocol.

The third step involves efforts to ensure the selling of USDN does not lead to fresh de-pegging, with a controlled sale estimated to see Vires Finance re-establish smooth operations after two months. Waves also plans improve the Neutrino architecture by recapitalizing the algorithmic token via new tokens that will ultimately replace NSBT.

Waves Ivanov,  Waves founder said in a comment:

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.” 

Not another Terra

While Waves’ plan is to ensure fully repeg for USDN, the Terraform Labs team is set to re-launch the LUNA blockchain without the algorithmic stablecoin TerraUSD (UST). 

The stablecoin’s de-peg from the dollar ended in a 100% crash, including for the LUNA coin. The Terra team, unable to “save” UST or LUNA, opted to fork the blockchain and start fresh.

Terra 2.0 is expected to go live on Saturday, 28 May 2022.

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