Waves unveils its “master plan” to revive the Waves DeFi ecosystem

By Masha Prusso, Waves Labs

[DUBAI,United Arab Emirates] Since April 2, 2022, the Waves DeFi ecosystem has gone through a series of unfortunate events that led to the detachment of its stablecoin, USDN. This caused a severe liquidity crisis for one of its DeFi protocols, the Vires Finance lending platform. Due to the total deposits lent to a group of large borrowers, it has become almost impossible to withdraw the assets provided for regular users.

With a first phase of proposals passed and changes made to the protocol, the USDN is currently close to peg at $0.97, having recovered twice from major depeg events. Today, Waves unveils its “master plan” to revive the Waves DeFi ecosystem. These new measures aim to attract new liquidity to the USDN and improve the architecture of the algorithmic stablecoin to withstand future black swan events. In addition, Sasha Ivanov, the founder of Waves, offers – to personally assume the 400 million dollars of debt held by large borrowers. It can then liquidate part of the balance of the accounts, return the collateral to the protocol, restore liquidity and allow larger user withdrawals.

The proposed master plan includes 4 stages:

Step 1. Boost demand for USDN by buying and locking CRV tokens with 45% of WAVES profits coming from Neutrino, and voting to incentivize the USDN 3 pool. USDN in the Curve pool, this requires paying close attention to CRV and gaining sufficient voting power to distribute rewards and make USDN more attractive to the DeFi market.

2nd step. Sasha Ivanov, the founder of Waves, will assume the $400 million debt and liquidate the collateral for the whale accounts to return cash to Vires via the sale of USDN.

Step 3. In order to avoid further unanchoring from selling large amounts of USDN. The sale will be slow and regularly controlled. Waves anticipates that it will take up to 2 months to restore Vires Finance to full working order. That is, complete freedom to deposit, withdraw, and borrow protocol.

Step 4. Improve the Neutrino architecture by issuing a new recapitalization token to eventually replace NSBT. This new token will be responsible for recapitalizing Neutrino with new Waves tokens when under-collateralized since NSBT fails to do so under current conditions. Recapitalization token holders can earn a reward from 50% WAVES staking rewards in the Neutrino contract.

With the steps listed above, the team aims to strengthen the Waves DeFi while increasing the governance power of the community. Provided all suggested actions are completed, within a period of 1-2 months, Waves believes the ecosystem will be completely revitalized and more resilient to potential crises in the future.

“This new plan to restore functionality and explain the full situation to the community would not have been possible without team members Vires and Neutrino. They have worked tirelessly to find solutions to this crisis, and I firmly believe they have identified the steps to success. This has been a real stress test for the Waves DeFi ecosystem, and it’s amazing to see the support from the Waves community to navigate this crisis successfully. Sasha Ivanov, founder of Waves

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