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- USDV is native stablecoin of Vader.
- When Terra lost its peg, team Vader halted minting to cope.
- After many attempts to save, the team failed.
The horrible year for cryptocurrency is ending; this year showed us many events that caused huge suffering for companies, protocols and users alike. One of the incidents was the Terra ecosystem collapse, in which a flawed algorithmic stablecoin led to its collapse.
Another similar incident has come to light; Vader Protocol US Dollar (USDV) will shut down, according to announcements from developers on December 29, 2022.
What is Vader?
Vader is a decentralized liquidity protocol that anchors a slip-based fee Automated Market Maker (AMM), along with its native stablecoin USDV.
Features
Vader is the native utility token, and its stablecoin is stabilized by burn-to-mint between VADER and USDV. At the same time, its liquidity incentives are bootstrapped to demand USDV and a Protocol-Owned-Liquidity (POL) with Bond Sales.
This greatly helps in backing up the coin and increasing the purchasing power of stablecoin as more reserves are built up inside the treasury of the protocol. In unison, AMM for Liquidity Providers (LPs) and Continuous Liquidity Pools (CLP) maximizes the fees generated for LPs through Slip-Based Fees. Impermanent Loss Protection (ILP) protects long-term LPs over 100 days. At the same time, Synth holders are single-sided LPs and face no Impermanent Loss (IL).
What caused Vader to fail?
Vader protocol was an algorithmic stablecoin network; in theory, it was considered similar to the failed Terra network. The coin was supposed to encourage buying and selling to keep USDV value pegged to $1. When Terra lost its peg in May 2022 with the real-world assets it was supposed to represent; team Vader halted the mint function of the app. Hoping that this step will keep users from exposing themselves to any problem that could arise due to depegging.
Team Vader then spent the next six months trying to salvage the situation and find ways to make it safer. However, “upon rigorous research and discussions, the team found no notable breakthrough in the algorithmic stablecoin design that is capital efficient.”
They later decided to pause the burn function to make it impossible for users to deposit their USDVs onto the app and retrieve their backing via the usual redemption process. Developers, in turn, created a different redemption portal to distribute the apps’ remaining treasury.
How will the users get back their funds?
The team is planning to keep the redemption app running till June 2023. To fairly distribute the funds, developers broke the Uniswap and Curve liquidity pools and snapshotted the existing shares, allowing them to properly distribute holders’ funds.
USDV is being delisted from all the major price data fees, and it’s unclear whether the user will get their funds back at $1 worth or some lesser amount.
USDV’s Performance
It is currently trading at $0.00004293, with a jump of 21.08% in the last 24 hours. Its market cap is a mere $180,749 making it rank at 3064. Its volume dropped by 6.25% and is now at just $236,574.
The current price is 99.97% down from its all-time high of $0.1367 on January 5, 2022. And 33.36% up from its all-time low of $0.000003219, which it hit on December 29, 2022.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
