The app, which produces stablecoin Vader Protocol US Dollar (USDV), will be shut down, according to a Dec. 29 announcement by its developers.
We break the Vader log: https://t.co/C3AKHo9URj
Existing $VADER and $USDV holders, please visit the webapp to redeem the treasury: https://t.co/SnRlvpXnaQ
For any technical issues related to the claim, please check the Discord channel.
— Vader (@VaderProtocol) December 29, 2022
The Vader protocol was an algorithmic stablecoin network similar to the failed Terra network. It should encourage arbitrage to always keep the USDV equal to $1. When Terra assets were decoupled from the real assets they were meant to represent in May, the Vader team paused the app’s Mint feature. It hoped to prevent users from exposing themselves to any issues that might arise should its stablecoin also depeg.
The Vader team said they spent the next six months figuring out a way to reform the app to make it more secure. “However, after rigorous research and discussion, the team did not find any significant breakthrough in algorithmic stablecoin design that is capital efficient.”
They have paused the burn feature making it impossible for users to deposit their remaining USDV into the app to get their support through the normal redemption process. Instead, the developers created a redemption portal to distribute the app’s remaining treasure. They plan to keep this redemption app available until June.
Related: Realized losses from the FTX collapse were less than Terra and other crises
To distribute funds fairly, the developers broke up the Curve and Uniswap liquidity pools and snapped up existing shares, allowing them to distribute the remaining funds to holders.
Vader Protocol USD appears to have been removed from all major data fees for coin prices, so it’s unclear whether USDV holders will get back crypto worth $1 per coin or a smaller amount.
The US Dollar Terra collapse was one of the biggest crypto crashes of 2022. It caused contagion in the crypto market and contributed to the shutdown of Midas Investments. Its founder, Do Kwon, remains accused of violating capital markets laws in South Korea but has not yet been located by authorities.
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