ListaDAO Initiates USDX Forced Liquidation To Stabilize Protocol And Mitigate Risk
In Brief
Following a decisive vote on LIP022, ListaDAO, in collaboration with Re7Labs, has initiated a liquidation process to stabilize the protocol, reduce risk, and protect the community.
Decentralized finance (DeFi) protocol ListaDAO announced that, following an overwhelming YES vote on LIP022, the protocol has initiated a liquidation process aimed at reducing uncertainty and safeguarding its operations. The decision reflects a coordinated effort to protect the community and maintain stability within the protocol.
The process is being carried out in collaboration with Re7Labs, a company specializing in DeFi and risk-focused research and development. Re7Labs has taken proactive measures in the interest of users, and their expertise and transparency have been highlighted as instrumental in ensuring a smooth and clear resolution for the protocol.
The liquidation is currently near completion, with final settlement data under verification. A portion of the liquidation penalty fees is being held in the protocol’s account, and these funds are intended for repurchasing collateral once all calculations are finalized. Any positions that remain unsettled after this stage will be transferred to a public liquidation pool, enabling participation from the wider community. Additionally, the USDX/USD1 market interest rate has been adjusted to 3%, as accruing further interest is unnecessary during the liquidation period.
In recent days, the USDX/USD1 market experienced persistently high borrow rates alongside minimal repayment activity from borrowers, raising community concerns about potential risk exposure. To mitigate these risks and stabilize the protocol, Re7Labs formally requested ListaDAO’s support for a forcible liquidation. This intervention is intended to minimize losses, preserve market integrity, and maintain overall ecosystem stability.
USDX Plunges Below $0.60 Following Balancer Exploit
Synthetic stablecoin issued by Stable Labs, USDX experienced a depeg on Thursday. The token, which previously had a maximum circulating supply of $683 million, is now trading below $0.60, prompting concerns about potential ripple effects across protocols in which it is utilized.
USDX relies on delta-neutral hedging strategies on exchanges to maintain its peg, but the precise cause of the depeg remains uncertain. Analysts suggest it may be linked to the $128 million exploit of Balancer on November 3rd. The exploit could have triggered forced liquidations of Stable Labs’ hedged BTC and ETH positions, leading to a surge in redemptions and contributing to the stablecoin’s failure to maintain its intended value.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
