Hi friends!
The R1 team would like to provide a brief update on how the recovery process is going and to outline what to expect as we shift from round 1 of funding to round 2. On October 20th the R1 multisig was funded in the amount of $50,000 USDS for the purpose of supporting the recovery process. Users participate via our Recovery Exchange, which allows them to redeem depegged 1USDC in return for $0.07 USDS per token, or, for users who voted to support R1, we offer $0.10 USDS per token. This mechanism was introduced to drive the price of 1USDC on chain upwards by incentivizing users to redeem at a slightly higher value than the current on chain parity. Burn mechanisms make use of the original bridge contract, which removes the tokens from circulation entirely, further supporting token price by reducing the supply. Since inception, the price of 1USDC has increased from $0.0664 to $0.102 (at the time of writing). This was achieved with only $100k total of the 3 partners funding, having redeemed for a combined amount of $1.3M! We are excited to move forward with the remainder of the recovery funds in round 1.
At this time the R1 treasury has 30k USDS remaining, which will ensure that users are able to redeem in round 1 as the market fluctuates. However, we are closely monitoring both participation and market action in order to remain dynamic during the recovery process. We are considering the use of standard deviation to price redemptions competitively as well as to ensure that the parity continues to climb throughout the duration. We plan to continue to work on 1USDC redemptions as a primary target, as those assets were affected the most and the chain would benefit from the increased supply of USDS as a native stable coin. We are not simply focused on redemptions, but also supporting the greater narrative of ecosystem growth. That means kickstarting defi, which is the primary driving force to onboarding and TVL in Web3.