Dear Friends and Fellow Ludwigs,
The Earth has quaked and the sounds of eruption have echoed across the Cryptoverse. Smoke lies thick in the air as the ashes of a multi-billion dollar protocol start to settle. The aftershocks still ripple through the landscape and we are all hurting. We have been swept off our feet and we are still winded by the blow.
There is no quick recovery for such situations, there is no quick fix. We have lost comrades along the way and our hearts ache from the severity that this chaos has caused.
But we continue. As promised. Till our bony fingers bleed. We are in this for the long run and we are dedicated to our cause!
The road to Vienna is paved full of adventure, and this has pushed the boundaries of our exploration to the test. The war horns were sounded and the team responded in full capacity. We rallied together to protect, to defend, to minimise damage and to ensure the survival of our community.
We take this moment now to reflect, to catch our breath and to transform this pain into power. We are now more equipped than ever before and better prepared for the future. Through these pitfalls and struggles we grow wiser and we grow stronger. We become battle tested veterans with an embodied sense of lived experience. With that experience comes a sharpened clarity in our vision for this protocol and for this community.
So what happened?
It feels like we have experienced more than a year’s worth of calamity in just the past week alone. With so much going on, let’s take a moment to cover some of the major events and the impacts they have had.
By now it’s no surprise and we are sure that you are aware of the events surrounding the collapse of Terra Luna and UST. The effects of the crash ricocheted through the entire industry and the collapse sent a wave through the network, sparking a cascade of capitulation and distrust.
Impact to Beethoven: All new technology needs to undergo stress tests before they can get the “battle hardened” status. The sudden collapse resulted in UST going significantly below its target rate of $1 and this put the Phantom Stable Pool under pressure. The result is that our end users have not had a smooth experience when interacting with the pool.
Next steps: As per the Discord announcement, anyone who is having difficulty leaving the pool “My Dark Twisted Decentralised Dollar” should follow the steps and we will assist in the process.
DEI is also an algorithmic stablecoin like UST. The DEI stablecoin is collateralised, meaning that users are able to mint 1 DEI by depositing collateral worth $1 and similar to UST, DEI’s peg is stabilised by a mechanism that involves the minting and burning of DEUS.
Following stablecoin fears brought about by the fall of UST and a decision by Deus Finance developers to pause DEI redemptions during the turmoil. The DEI stable coin has suffered significant price volatility, and at the time of writing is sitting off its dollar peg at a value of $0.59. Currently The Deus team is working to restore the DEI peg and have implemented mitigation measures as well as the development of solutions for long term sustainability.
Impact to Beethoven: Similar to what happened with UST, these events put the Phantom Stable Pool under pressure. The result is that our end users have not had a smooth experience when interacting with the pool.
Next steps: As per the Discord announcement, anyone who is having difficulty leaving the pool “From gods, boosted and blessed” should follow the steps and we will assist in the process.
Scream is a lending protocol on the Fantom network and allows for users to borrow and lend tokens directly on the platform for low fees. In the mix of all the mad music, Scream also suffered a recent setback that had implications for many users within the space. Although exact numbers are still to be determined, it appears that at some point over the past couple of days Scream mispriced the value of fUSD to $1 when at the time of the incident its collateralised value was worth less than $0.81. A similar scenario occurred for DEI on the platform as well. This created a scenario where the depositors of fUSD and DEI could borrow against their collateral as if it’s value was $1 when in fact it was lower. This led to the accumulation of bad debt for the protocol. The Scream team is currently working hard on a solution to mitigate the bad debt.
Impact to Beethoven: The boosted component (yvtokens) of our pools use Yearn, who in turn had incorporated Scream into some of its strategies.
What we did: As soon as the news broke, the team started proactively unwrapping the yvTokens. As a result, we were able to ensure that there was no loss of funds to anyone that had exposure to the Scream incident by using our boosted pools.
So in summary, it’s been a week full of music unlike anything we have heard before. Investors, protocols, traders and regulation in general will most likely take this historical moment as a time of change and we are now at the forefront with a choice ahead of us — which direction do we want to take?
Commitment to Community — We are because you are.
We strove, protected and defended because you are all valuable members of this community, important and irreplaceable. The team, the protocol and our vision are still fully intact and now it’s time to extend a hand to the community.
The Lotus Room
We would like to offer our community a space of refuge and we would like to present “The Lotus Room”. A dedicated channel on Discord. This has been an initiative that has sat close to our hearts for some time now and in light of the current market conditions, we feel like it is the right moment to cultivate this space.
“The Lotus flower symbolises rising from a dark place into beauty and rebirth”
The purpose for the Lotus Room is to cultivate a space where we can be open as individuals and be supportive for each in matters beyond finance. A space where we can be vulnerable, emotional and human.
The Lotus Room will be opening up on our Discord today. We will release more details on how you can participate when the channel opens.
Social Science Lab
Our in-house social researcher Josey has put all other studies on hold to get ready for interviews and workshops around the topic of ‘making sense of crisis situations’. The public social research channel will be opened on Discord today. The purpose for this channel is to take a deep dive into topics related to human behaviour, decision-making, and motivation. The insights of these enquiries will help us navigate through challenging situations with greater confidence in the future.
If you feel like it, please join us and let’s work together to make Beethoven a better space for all of its users.
Despite the volatility over the last week we are as strong as we have ever been. We are picking up our bags and we are continuing on this wonderful journey to Vienna. As the rest of the market recovers we continue to play, we continue to compose. As we head towards our launch on Optimism, an air of excitement builds and there is so much to look forward to.
This week’s recap has been slightly different. A special edition for a special time. We will get back to our normal Concerto Programme next week with all your favourite updates.
Thank you for being with us on this journey. Your love and support mean the world to us and we wish you all the very best for the rest of the week.
Love as always
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