I woke up to a call at 1am saying, “Bro, get up we have a problem.” My heart started beating faster. I got up from the couch like a dismantled zombie, running toward the office. As soon as I opened the computer, I saw that there was no liquidity in the yUSD market, where we had deposited millions of dollars. And it wasn’t just us, many other curators were removing liquidity and unwinding leveraged positions, causing the borrowing rate to reach 40%. This meant that all the users and borrowers were getting destroyed, stuck paying insane borrow rates. A huge amount of liquidity was removed in a very short time, which was what triggered our systems. So we started investigating. In two simple steps, we were able to pivot from a losing to a winning position: 1.) We collaborated with @GetYieldFi, to ensure there were no inherent collateral problems, with their protocol (yUSD). 2.) We confirmed that there was no malicious ongoing exploit, using our customized @HypernativeLabs system. But then we decided to do something insane. We deposited even more money, at the height of the crisis. Here’s why: - The borrow rate was 40%, making it a lucrative position for our vault. - We contributed to smooth operations at a time, when everyone else was pulling liquidity. Our duty as a curator, is to ensure lending activity remains as smooth as possible for borrowers, while helping partnering protocols achieve the highest yields possible. In this case, YieldFi trusted us in a moment of crisis. Their team was locked in all day, to ensure that all the redemptions were processed successfully, guaranteeing that the LPs had liquidity available with them, when it was needed the most. That, to me, is the most important part of it all. Because at @ClearstarLabs, we vowed to make DeFi a better place, and after years of hard work, we’re doing exactly that.