Vader, the application that is responsible for the issuance and distribution of the Vader Protocol US Dollar (USDV) has made a major announcement.
The application operator has announced that they have no choice but to shut down the operation for the Vader Protocol US Dollar.
Vader to Shut down USDV
The developers of the Vader application made an announcement about the USDV on December 29. They have announced that they have decided to shut down the project for the issuance of USDV.
The Vader protocol had been launched to work as a stablecoin that used the algorithmic capability for the dollar peg. It had been created using the same algorithmic technology as the Terra network.
The way the Vader protocol maintained the dollar peg was to encourage the system to carry out constant buying and selling of the USDV.
This ensured that the value of the USDV was always equal to the value of the dollar and it remained at $1.
However, the de-pegging witnessed with the TerraUSD (UST), ended up causing great troubles for the algorithm-based stablecoins.
Although the UST was also an algorithm-based stablecoin, the Terra network teams claimed that it was backed by the assets in real time.
However, as things went south with the UST, the Vader teams decided that it was time to deal with the matter on their side. They wanted to ensure that they were ready to face the pressure from the communities.
With the UST dying, it was only a matter of time before other algorithm-based stablecoins were also questioned.
This is when the Vader teams decided that they would pause their application’s minting function. They wanted to ensure that the users utilizing their tokens do not end up facing the same problem.
They wanted to stop them from doing that so that any further losses caused by their network could be avoided. They were afraid that the USDV might end up getting de-pegged as well.
Vader Team Tried Fixing the Problem
It was right after the TerraUSD crash that the teams at Vader decided that they will keep their protocol in the paused state until they find a fix.
They spent the next six months trying to come up with a solution to the problem and fix it for good. Unfortunately, they have not been able to devise an effective solution.
Their goal was to make their stablecoin safer and more stable so the users do not find it risky at all when trading with the USDV.
According to the teams at Vader, they carried out multiple research and went through many discussions trying to come up with a solution.
Unfortunately, their efforts were not able to find any breakthrough that could lead to fixing the USDV problem for good.
They failed to come up with a design for the stablecoin algorithm that could make it efficient in terms of capital.
The burn Function has Been Paused
The Vader teams have confirmed that as they were not able to come up with a reliable solution, they have taken the necessary actions from their end about the USDV.
The first thing they have done is proceed with revoking the functionality of the burning of the USDV. With the ability being revoked, the users will no longer be able to deposit any more USDV.
They will not be able to deposit any more tokens, which means that they will not able to collect the right value for the tokens in their possession at all.
Instead, the teams at Vader have come up with a portal that has been dedicated to redemption purposes.
The particular platform is linked with the treasury of the protocol. The users can attempt to retrieve the actual value of their funds from the particular portal.
The treasury has all the funds that the platform had in its reserve so it is available for the users to redeem their funds.
However, it is the application’s remaining treasury and not all of the users will be able to retrieve their entire funds.
The platform is going to remain available until June 2023, offering the redemption portal. It will be shut down after the mentioned date has arrived.