Following the demise of UST and LUNA, the plan aims to terminate DeFi credit protocol Mars. It occurs at a time when Mars' entire locked value fell by 99%, from $270 million to $2.6 million. According to Delphi Labs, the Mars Protocol ran into a number of issues as a result of the intention to divide Terra. Following a 99% drop in TVL to $2.6M, Delphi Labs wants to discontinue the DeFi Protocol Mars.
Following the stunning collapse of the UST stablecoin and its sibling token LUNA last week, a proposal has been made to shut down the DeFi credit protocol Mars.
The rapid collapse of the Terra ecosystem, which has repercussions for the whole crypto sector, coincided with a 99% drop in Mars' total value locked (TVL), which dropped from $270 million to $2.6 million. The proposal by Delphi Labs, the research company for cryptocurrencies that assisted in the founding of Mars, will "automatically cancel open positions" on the network and "refund customers by returning deposits to their wallet addresses."
This "would essentially shut down the protocol and clear all assets it now owns," the plan claims. Delphi claimed that the uncertainty surrounding the Terra ecosystem as a result of the "extraordinary drop of UST and the price of LUNA" was what led to its decision. It added that "issues regarding crediting smart contracts with assets on 'Terra 2' and other chains remain unsolved," and that "Terra is likely to become economically unstable or permanently discontinued."
In a previous tweet, Mars Protocol stated that the lack of a trustworthy stablecoin made its compliance with any Terra hard fork dubious.
Delphi Labs claims that Terra's "hardfork" is problematic for Mars. The idea to divide Terra, according to Delphi Labs' proposal, caused a number of issues for the Mars Protocol. For instance, it noted that the rival blockchain governance plans "may result in a scenario where Mars would need to be maintained on two chains [such as] both Terra Classic and Terra 2.0."
The company stated that in the event of an airdrop resulting from the debut of new Terra chains, it was "preferable that end users, not the Mars smart contracts," hold cash. The "questionable economic security" of the new breakaway chains on Terra also worries Delphi Labs.
Delphi Labs "financed the Red Bank with sufficient LUNA, UST and ANC [tokens] to liquidate all open positions without users first having to pay off existing loans" in order to facilitate the shutdown.
The MARS token's future is still unknown. Over the last 24 hours, the token has decreased 1.1% to $0.001, according to CoinGecko. Over 99% of MARS's record high price of $0.25 in April have been lost.
