- In response to the ongoing Multichain crisis, Stargate DAO voted to wind down its liquidity pools on Fantom, effectively stopping $USDC transfers to and from Fantom.
- Acknowledging the crucial role of Liquidity Providers (LPs), Stargate facilitated a smooth transition for them by whitelisting existing LPs, allowing them to redeem their LP to any other supported chain.
Amidst a backdrop of growing uncertainties, Stargate, the LayerZero cross-chain bridge protocol, recently made a significant move following a DAO vote. On May 31, 2023, Stargate announced that it would be winding down liquidity pools on Fantom, effectively stopping $USDC transfers to and from Fantom on its protocol.
This measure came on the heels of persistent technical issues affecting the Multichain protocol and the resultant concerns over the stability of anyUSDC. This move, determined by a DAO vote, saw overwhelming support from its community, with an impressive 93.98% of the voting power in favor.
Navigating through the Multichain Storm
Stargate’s decision comes as a response to recent concerns over the stability of the anyUSDC stablecoin, primarily issued by the troubled Multichain protocol. Following Multichain’s opaque description of ongoing issues as a result of “force majeure,” uncertainty loomed over the cross-chain bridges associated with it, leading to significant proposals like the one from Stargate.
Stargate’s proposed action plan sought to address these uncertainties head-on, beginning with a decrease in exposure to the anyUSDC stablecoin on Fantom. Notably, Stargate set STG emissions on the Fantom pools to zero and disconnected these pools from all other collections within the Stargate network. These measures were implemented to prevent contamination and maintain Stargate’s operations’ integrity. Approximately 11.4 million dollars worth of liquidity provider (LP) funds were involved in the Fantom pool, underscoring the need for such careful precautions.
Recognizing the critical role of LPs in its ecosystem, Stargate ensured that their transition amidst this strategic shift would be as seamless as possible. Stargate will whitelist existing LPs, enabling them to redeem their LP tokens on any other supported chain. This ensures the continued participation of LPs within the network, contributing to its overall robustness.
Furthermore, any Protocol Owned Liquidity (POL) was removed from the Fantom pool and deposited into the Ethereum $USDC pool, providing an additional layer of protection for the ecosystem.
Looking Forward
The Stargate community has shown remarkable resilience in its response to the Multichain crisis. By taking proactive and strategic steps, Stargate has demonstrated its commitment to safeguarding its users and providing them with alternative bridging options, even in times of uncertainty.
As Stargate winds down its Fantom operations, the protocol acknowledges the need to explore alternative bridging options for Fantom users. This open-ended approach signifies Stargate’s unwavering dedication to its users, ensuring they can continue to access the benefits of its ecosystem while reducing exposure to the Multichain crisis.
This recent development is a powerful reminder of the importance of risk mitigation in the complex world of DeFi. Stargate’s swift and strategic response to the crisis offers a blueprint for other protocols for navigating similar challenges in the future. It sends a clear message: in a rapidly evolving DeFi landscape, resilience and adaptability remain crucial to maintaining trust and stability.
