Mercurial Finance Plans Overhaul in Effort to Revive Project After FTX Collapse

Mercurial Finance (MER), a DeFi platform built on the Solana blockchain, is undertaking a major overhaul of its brand, community, and token distribution following the impact of the FTX collapse.

The restructuring plan, announced by Mercurial Finance on December 6, is named “Meteora.” This initiative aims to address the widespread crisis caused by FTX, including its partnership with FTX and Alameda Research, which created a highly “toxic” link between the three entities.

Mercurial Finance revealed that the funds raised from the IEO of the MER token on FTX accounted for over 10% of the total capital raised for the project. The liquidity of MER on the market comes primarily from Alameda Research (3%), IEO investors (0.3%), private investors (1.6%), and liquidity mining rewards for pools on the project.

Alameda Research acquired MER at a discounted price of $0.07. Additionally, 1.5% of the MER supply locked in the seed investment round was purchased at $0.02, with a vesting period of only one year. As a result, the entire MER supply has now been circulated into the market.

This situation inadvertently created continuous liquidity for sellers of MER on the open market, primarily exacerbated by issues at FTX and Alameda Research. Evidence of this is the drastic drop in MER’s price from $0.015 to $0.008817 in November 2022, with the diluted market cap of the project now only $8.8 million.

Overview of Mercurial Finance’s key metrics as of December 7, 2022. Source: CoinMarketCap

Facing this situation, the Mercurial Finance team stated:

“There still needs to be clarity and a more serious plan regarding the MER token. The uncertainty has been exacerbated by the hack on FTX, resulting in MER tokens worth over $800,000 being held by the hacker’s wallet.”

Given the current MER price, it is evident that the token has become worthless, leading to declining business operations and a likely scenario where the project may have to “shut down.”

According to the “Meteora” plan, Mercurial Finance will create a new token and transition existing MER token holders to this new model. A DAO will also be established to grant the community more authority over key project decisions.

The plan also includes launching a lending vault and automated market maker (AMM) pool as a separate project.

While it remains uncertain whether Mercurial Finance’s plan will bring a “new breath” to the project in the future, the path to achieving effectiveness is challenging, as the Solana ecosystem is currently in a “fragile” state.

Before Mercurial Finance, several platforms on Solana attempted to recover from the FTX shock but with disappointing results. For instance, Serum (SRM) – once a leading DEX on Solana – planned to fork and revive the project after the FTX hack but eventually admitted a lack of momentum and resources to continue operations.