Beanstalk to Raise $77M in an OTC Loan to Recover From $182M Exploit

The Beanstalk stablecoin is aiming to raise $77 million in an over-the-counter (OTC) loan from private investors to partially recover from a $182 million exploit last month. 

On May 7, the Beanstalk decentralized autonomous organization (DAO) approved a governance vote that gives the core team the ability to borrow funds and use them to replenish the project. This will lead to the issuance of a new stablecoin and pay back investors affected by the April 17 exploit.  

As per the proposal, the team plans to issue a new token to OTC lenders, “that earns a pro rata share of one-third of all new Bean mints until the debt is repaid.”

The project’s founder Manny Publish said in a Monday ask-me-anything that the debt capital will go to whoever was affected by the $182 million exploit. After freezing and burning all of their own hacked stablecoins, the bean calculated that it needed precisely $77 million to reimburse the losses from the exploit. 

As it stands, there are confirmed commitments for 15% of the total $77 million. 

This scheduled fundraiser comes as Terra’s algorithmic stablecoin TerraUSD (UST) has drawn mass attention in the market in the last few days. UST lost its peg to the dollar Monday, dropping to as low as $0.61 percent before recovering to $0.90 at the time of writing, according to Bitpush Terminal data. UST is backed by a $3.5 billion Bitcoin reserve, with plans for that number to reach $10 billion. 

On the other hand, Beanstalk used loans from investors to back its value, known as “pods.” The pods function has time-vested bonds, giving investors interest through Beanstalk’s native token Stalk. 

Author: Tyler Irvin

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