The Waves blockchain community has backed a governance proposal to address the liquidity problems currently facing Waves-based DeFi lending protocol Vires Finance, the project announced on Tuesday.
The vote, which ended on July 29, saw over three-quarters of all votes cast in support of the proposal.
Vires Finance has been dealing with a liquidity crunch since the start of April. The problem began when Neutrino (USDN), a stablecoin on Waves, temporarily lost its peg to the US dollar. This situation triggered a bank run on Vires Finance, the major lender in the Waves ecosystem. The bank run dried up liquidity on the platform preventing other users from being able to withdraw their funds.
Based on comments in the forum discussion, Vires Finance lenders with more than $250,000 in either tether (USDT) or USD coin (USDC) in their accounts were unhappy with a previous plan that would have called for them to be repaid in USDN instead of their USDT or USDC deposits.
With the vote passed, the new “DeFi Revival Plan” for Vires Finance will now go into effect. As part of the plan, these whale users now have two options. The first choice is to liquidate their position to USDN entirely with an added one-year vesting period and a 5% liquidation bonus. Otherwise, they can remain on Vires Finance but will earn no yield on all USDT or USDC funds above the $250,000 threshold.
“Ultimately, the proposal is anticipated to result in more funds being freed up, gradually increasing Vires.Finance’s liquidity and allowing more users to withdraw their assets. Additionally, holders of gVires, the platform’s governance token, will be offered two months' worth of APY via the revenue system,” the announcement stated.
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