Hello,
This communication aims to clarify speculations about the USDC vault with MEV as curator and the various USD0++ markets.
First of all, like absolutely everyone else, MEV (and other curators like Steakhouse or Gauntlet) was not aware of the release of the new floor price. (they receive yesterday all tree a message at the same time.) Had they known, the situation could have been handled differently, with a much smoother transition. Contributors decided not to risk a leak that could have led to a death spiral for the protocol. MEV, therefore, had no involvement in this decision and cannot be held responsible, as the consequences are currently more negative than positive for them. The choice to keep this secret can be criticized, but it was made considering the risks to the protocol in the event of a leak. Moreover, all documentation clearly specifies that USD0++ is an asset backed by USD0 locked for 4 years.
Regarding markets and their security:
All markets with a hardcoded or 1:1 price equivalence with USDC will be replaced with new markets indexed to the floor price, featuring a higher LLTV. This adjustment reflects the fact that the 0.87 floor price has no volatility and is inherently designed to increase in the future, following the yield curve. This will allow low risk markets for borrowers and lenders.
The Usual team has been in contact with all partners and the various curators since last night, and the necessary market transitions should be completed within two days. Additionally, the DAO, as mentioned in the initial article about the floor price change, will be able to unwind any position with bad debt to avoid harming lending protocols and their potential curators.
We remind everyone that this decision was made solely to ensure the protocol’s proper functioning. While it is a harsh measure, contributors would have preferred it to be handled differently, but it was necessary. This change does not alter the intrinsic value of USD0++ and adds much more value to USUAL. Contributors are confident of a return to normalcy very soon, once the market cool down.
Once again, this may be the most challenging decision in the history of the Usual protocol, but it is also the most beneficial for its longevity and growth. It’s long term beneficial for both USUAL and USD0++ and the balance of the protocol.
More details about markets will be given soon.