10 March 2023 17:00, UTC
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Decentralized stablecoin investments service mStable has been rattled by falling product revenue and the loss of key contributors – including a co-founder. But backers of the exchange and yield generator are hoping to keep it alive via a merger with another team.
At least four DeFi projects are expected to submit acquisition proposals for mStable by the end of Friday, said the pseudonymous 0xloth, the protocol’s strategy lead. At press time, on-chain asset management service dHEDGE had submitted the first bid on mStable’s forum.
“We’ve been working for 4 weeks actively trying to pursue a M&A route,” 0xloth said.
A buyer would acquire mStable’s crypto assets, team and tech, including its smart contract-based vaults for generating yield on depositors’ stablecoins. Holders of mStable’s governance token MTA will ultimately get to vote on which proposal to accept.
MStable is a protocol for swapping and lending stablecoins on the Ethereum and Polygon blockchains. Its yield generation service held over $11 million in crypto at press time, making it the 18th-largest decentralized finance (DeFi) outpost for Collateralized Debt Positions, per DeFiLlama.
The bidding process is the culmination of a month-long frenzy by key contributors to save mStable from an uncertain future. In early February, co-founder James Simpson announced on the project forums that he was quitting mStable after nearly four years on the job.
“The project will find it very difficult to raise with the current token given its value,” he said, referring to the MTA token, which at $0.02 is down 93% in a year. He continued: “The protocol isn’t earning enough from its products to self-sustain; and the DAO’s runway is continuing to decrease each month and will be depleted at current burn within 12 or so months.”
In his post Simpson proposed three options:
Shutter mStable outright
Slim operations and hunker down until the next bull run
Pursue an acquisition from another DeFi project
“This could give MTA holders either a potential premium on the face value of Treasury Assets and a potential upside in case of a native token swap,” Simpson said in the post. He did not respond to a request for comment.
The only bid in at press time – dHEDEGE’s – does not appear to contain a token swap or other form of compensation for token holders. Instead, it proposes “to set a floor price” on MTA to the benefit of its owners.
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