After passing VIP-029 , the VIRES team wants to clarify the plan’s next steps for all users. We discussed in the last piece that more proposals would come and that each one is flexible based on community feedback. We hope that we can better gather and aggregate feedback by giving more lead time for each following proposal.
Here then is the entire plan of action to make all users whole as quickly as possible;
- VIP-028 — Reduce interest and give all users USDN vesting option (Approved)
- VIP-029 — Unlock LP tokens (Approved)
- VIP-030 — Add SURF token to vesting mechanics
- VIP-031 — Introduce dynamic adaptive vesting limits
- VIP-032 — Add New USDT/USDC markets
- Begin marketing of successful crisis resolution and establishment of new markets protected from the liquidity crunch.
All these measures are to repay users as quickly as possible. The priorities remain to make everyone affected by the liquidity crunch whole, close off the bad debt-affected USDT/USDC markets from new investors, and start new markets unaffected and protected from the situation happening again.
VIP-028 — we lowered the interest enabling more repayments to feed into the platform’s liquidity rather than simply paying the interest. Giving all users the option to take a USDN repayment plan gives everyone certainty in the timeline they will receive their funds and a 5% bonus on top.
VIP-029 — would allow all locked LP token holders to unlock before their period is up. Given these tokens were locked at a time when a different strategy was being pursued, and lockers were supporting the platform in good faith, it is only fair they can unlock. With USDT and USDC markets all moved to legacy LP, token holders should also get the chance to enter into vesting just like everyone else.
VIP-030 — would add the SURF token to the vesting mechanics. This will contribute massively to the stability of USDN and therefore improve the guarantee of everyone’s repayment plan. The Backing Ratio is currently ~10%, meaning SURF is at a 90% discount. This gives users a significant opportunity to gain returns from the situation. The timeline for users opting for SURF could be less, as daily limits for converting to SURF would be higher than withdrawing the USDN.
VIP-031 — would introduce dynamic limits to vesting. We understand that the protocol deciding on the vesting limits is far from the decentralized model we all wish to be. However, it is necessary at this time, given the market conditions. We are working on a proposal to create dynamic limits to daily vesting based on the USDN peg. If the peg is strong and stable in an acceptable range, daily limits increase; if the peg is out of the acceptable range, daily limits decrease. This is a good solution as it gives users a way to understand the current health of their repayments; it also incentivizes good behavior while penalizing bad in a decentralized manner.
VIP-032 — would create new USDT and USDC markets unaffected by the liquidity crunch or the bad debt. Adaptive withdrawal, borrow limits, and non-borrowable collateral means new markets will be protected from a further liquidity crisis. This means we can return to marketing the platform as a better version of a lending protocol and help set new standards for lending across DeFi, as the only battle-tested lending protocol in the space.
DeFi is an experiment in financial markets. Problems need solving, but more often than not, those problems don’t make themselves known until afflicted by crisis. While difficult for us all, the situation here on Vires Finance is helping to improve the protocol and establish a better and safer model for other lending platforms to follow. Vires Finance is the only protocol to undergo such a severe crisis, and to get through it would demonstrate how powerful the decentralized model is. We hope the community can see that the long-term prospects of a battle-tested lending protocol are enormous, and your support is needed to get us there.
You can help improve this plan by joining the discussion and sharing your ideas here!