The Solana-based UXD protocol is being deprecated. UXD is voting to sunset the DAO protocol. The process can take up to two years.
Solana-based stablecoin provider with UXD protocol $7.5 million is winding down its operations in consumer deposits and returning unused capital to investors, the project said Announced On Monday.
The UXD team blamed a lack of liquidity and the inability of its stablecoin model to achieve product-market fit for sunsetting the project, which started in 2021.
“The model leads the stablecoin to be stable, but [it] “It's not exciting enough for DeFi users and doesn't offer enough benefit over centralized stablecoins,” the team said. Said In a Monday DAO forum post.
“We feel that sunsetting the project and returning capital to investors is the best use of capital and team resources.”
The protocol's shutdown and capital reimbursement process is pending the DAO vote, which is already underway and will continue for a week.
If the vote passes, the group said the full shutdown process could take up to two years because of non-performing assets in its insurance funds.
Investor Deposits in UXD Protocol
The long winddown window gives investors enough time to convert those nonperforming assets to USDC and withdraw from the protocol.
The team proposed to maintain two smart contract engineers for the duration of the winddown process to ensure that investors can redeem their funds.
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Monday's announcement recommended an annual salary of $200,000 for the two engineers.
As part of the shutdown process, UXD will burn $7.5 million worth of its UXP token.
Stablecoin competitors are fighting back
UXD is one of several projects, along with Parrot USD and Hubble Protocol, that have sought to challenge the dominance of centralized stablecoin issuers such as Circle and Tether by offering crypto-based alternatives.
The Parrot Protocol team exited in fury last year and walked away with $47.5 million, leaving aggrieved investors with only $27 million in a reserve pool to share among themselves.
That means most investors exit the project with only a fraction of what they put into the protocol.
Hubble Protocol's USDH stablecoin is worth only $2.7 million, a tiny fraction of the $3.8 billion Solana stablecoin market.
Although UXD was never directly hacked, it was one of the projects affected by Avraham Eisenberg's $110 million heist on Solana Lending Protocol Mango Markets in October 2022.
The protocol lost $19.9 million after the heist, but was able to recover the funds shortly after.
Osato Awan-Nomayo Our Nigeria based DeFi representative. He covers DeFi and technology. To share tips or information about articles, please contact him here [email protected].
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