The application that produces the stablecoin Vader Protocol US Dollar (USDV) will be closed, according to a December 29 announcement from the developer.
We are setting the Vader Protocol: https://t.co/C3AKHo9URj
that is there $VADER and $USDV owners, open the webapp to redeem treasury: https://t.co/SnRlvpXnaQ
For all technical issues related to the claim, please check the channel
on Discord. – Vader (@VaderProtocol) December 29, 2022
The Vader Protocol is an algorithmic stablecoin network similar to the failed Terra network. This is supposed to encourage arbitrage so that USDV is always equal to $1. When Terra’s assets depeged in May from the real world assets they were supposed to represent, Vader’s team paused the app’s mint function. It hopes to prevent users from exposing themselves to any problems that may arise if the stablecoin is depeg.
Vader’s team said it spent the next six months trying to find ways to modify the app to make it more secure. However, “through rigorous research and discussion, the team did not find any significant breakthroughs in capital-efficient algorithmic stablecoin design.”
They have paused the burning function, so users can’t deposit the remaining USDV into the app to get backing through the normal redemption process. However, the developer has created a redemption portal to distribute the remaining app treasury. They plan to keep the ransom app available until June, 2023.
related: Realized losses from the collapse of FTX were small from Terra, another crisis
In order to distribute the funds fairly, the developers have eliminated the Curve and Uniswap liquidity pools and taken the existing shares, in order to distribute the remaining funds to the holders.
Vader Protocol USD appears to have been wiped out on all major coin price data charges, so it’s unclear whether USDV holders will get $1 crypto per coin or a smaller amount.
The US dollar Terra crash was one of the biggest crypto crashes of 2022. This caused contagion to spread through the crypto market, and was a contributor to the closing of Midas Investments. The founder, Do Kwon, remains accused of violating capital market laws in South Korea but has not been found by the authorities.