Decentralized finance (DeFi) trading project Mercurial plans to relaunch as “Meteora,” issue a new token to nearly all MER holders and expand its trading lineup in an aggressive attempt to distance itself from Sam Bankman-Fried’s fallen empire.
The stablecoin exchange’s planned rebrand has major ramifications for owners of MER, a token that has fallen 46% since FTX’s collapse. It is being abandoned in favor of the new Meteora token whose maximum supply is 100 million, 1/10th the mint of MER. Most MER owners will receive the new token in amounts proportional to their current holdings, according to plans reviewed by CoinDesk.
But insiders will take a big hit. Mercurial’s seed investors, private investors and team members – major backers who controlled 45% of all MER tokens under Mercurial’s original plan – are slated to get a 50% haircut on their unvested tokens, said Ben Chow, the co-founder of sister protocol Jupiter Finance. He says the shakeup will boost token owners’ influence over the reconstituted project.
Meteora is the latest Solana-based crypto protocol to reimagine itself in the fiery ashes of the FTX and Alameda Research. Sam Bankman-Fried’s highly-interconnected crypto exchange and hedge fund were kingmakers in the Solana DeFi ecosystem as top venture investors and market-makers. Their demise has gutted nearly every Solana-based trading protocol, including Mercurial, which issued its token in a sale hosted by FTX.
When, hours after FTX Group declared bankruptcy in November, a hacker sacked the exchange’s ruins, they also snagged a major haul of MER tokens then worth $800,000. That heist gave Mercurial’s team a pretext to revamp the entire protocol, Chow said. (The hacker’s address is being blacklisted from the airdrop, as are all associated with FTX.)
“Originally it was just going to be a product under Mercurial with the MER token but because of what happened with FTX that became a catalyst for us saying, “Hey we really need a new token, not just a new product.”
Indeed, Meteora has been in the works since at least September as Mercurial’s novel yield-generating DeFi product, called a dynamic automated market maker. Chow said Meteora’s AMM vaults get extra yield on depositors’ assets by loaning excess capital to lending protocols. This generates lending yield on top of the trading fees from the AMM.
Of course, it also increases the risk that something could go wrong and assets are lost or stolen. Chow acknowledged the heightened chance of getting rekt but said high risk tolerances are par for the course in DeFi. Besides, he said, the protocol rebalances loans automatically. “We will withdraw faster than you could.”
Other DeFi protocols will be able to build on top of Meteora to “stack the yield” and get future upside, he said.
The snapshot that determines new token holdings will happen in late December or early January, according to the plans. In January it will launch a yield-generating product called dynamic vaults, issue the new token, wipe the Mercurial social media and begin moving control to the community.
Meteora will move “substantial leverage” over protocol operations to token-holders in a newly launched “decentralized autonomous organization,” per the new plans. This is the first time the protocol will have a DAO.
One of their first decisions will be what to do with the MER owed to the hacker’s address, Chow said. They also get major influence over how Meteora manages circulating supply.
“This plan allows us to clear all uncertainties surrounding our tokenomics and pave the way for a clean and transparent token setup for the ecosystem and project moving forward,” the plan read.
First, Chow and other Jupiter and Mercurial/Meteora team members plan to walk the community and investors through the plans with town halls.
“It stands a really good chance of being a decentralized yield layer for solana so I imagine they will be equally supportive,” he said.