Main Street has provided an update on its liquidity and recovery plans, saying protocol coverage, excluding the insurance fund, is now nearing 100% based on current valuations. After reviewing options to provide liquidity to holders, including limited early position unwinds paired with open-market token purchases and burns, the team said legal advice led it to avoid any transaction that would temporarily reduce coverage at this stage. As a result, it cannot proceed with early unwinds or large-scale buybacks for now. According to the maturity schedule, the first meaningful liquidity from the remaining "box" positions is expected to arrive in a little over 30 days. At that point, if updated coverage calculations and market conditions allow, Main Street plans to place limit orders on the open market to buy tokens and permanently burn them. The team is also designing a Morpho redemption mechanism that would restrict transfers of msY in affected Morpho contracts and add a dedicated redemption process to avoid first-come, first-served outcomes and unfairness tied to high accrued interest under prolonged full utilization. The design still requires final legal, technical and security review, along with an independent audit. Foresight News had previously reported that Main Street USD (MSUSD), an algorithmic stablecoin pegged to the U.S. dollar, depegged in June and at one point fell more than 80% to as low as $0.064.
Main Street has updated the market on its liquidity and recovery progress, saying its protocol coverage, excluding the insurance fund, is now close to 100% at current valuations.
The team said it had reviewed several ways to provide liquidity to holders, including limited early position unwinds combined with open-market token purchases and burns. After consulting legal counsel, however, it concluded that transactions that would temporarily reduce coverage are not appropriate at this stage. That means it cannot carry out early unwinds or large-scale buybacks for now.
Under the maturity schedule, the first meaningful liquidity from the remaining "box" positions is expected in a little over 30 days. Main Street said that once coverage calculations are updated, and if market conditions permit, it plans to place limit orders on the open market to buy tokens and permanently burn them.
Separately, the project is designing a Morpho redemption mechanism. The proposal would restrict transfers of msY within the affected Morpho contracts and introduce a dedicated redemption process. The stated goal is to avoid first-come, first-served outcomes and unfairness caused by high accrued interest under prolonged full utilization.
Main Street added that the design still needs final legal, technical and security review, as well as an independent audit.
Foresight News had previously reported that Main Street USD (MSUSD), an algorithmic stablecoin pegged to the U.S. dollar, depegged in June and at one point plunged more than 80%, falling to as low as $0.064.
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