An update from Aperture and a rescue plan for UST stuck in Mirror’s protocol

EDIT: As of 5/17/22 there is sufficient liquidity in Mirror lock contract to withdraw

As of May 15th, 2022 there is still $66M TVL on Aperture. This locked capital from our early adopters, investors, and own employees weighs heavily on our hearts. Needless to say we’ve had many sleepless nights. We feel the pain and frustration of users who tried to withdraw but were unable to do so. We have been looking for ways to unlock the funds for users since the Mirror lock contract issue occurred.

After an initial investigation we have found a workaround and have begun implementing it. We don’t know how much UST will be worth by the time we roll this out. And we know it’s even possible all of these efforts will go to waste. But we do know this is the right move for our users — regardless.

Since May 9th, we have seen an injection of $7M into the Mirror lock contract from the TFL/Mirror team which was quickly depleted. While we are still waiting for Mirror to address this, we have been exploring alternative solutions.

A little background on the delta neutral strategy — in order to close a short-farm position, there needs to be sufficient liquidity in this lock contract:

https://finder.terra.money/mainnet/address/terra169urmlm8wcltyjsrn7gedheh7dker69ujmerv2

Even though this lock contract is constantly out of liquidity, we have devised a workaround for users to add the liquidity they would need to close the position. Through repeated testing, we realized a direct transfer into this contract won’t work, funds can only be deposited by creating a new “short-farm” position.

The amount of UST needed is associated with the value of the total position and/or the increment of the last reinvest and can be anywhere from 0.1% to 33%.

With this figured out, we started to work on a solution:

• Aperture will calculate the UST needed to free up a given user’s short position
• The user will then initiate a position rescue by injecting the needed UST into the lock contract
• Aperture will then in a single atomic transaction, inject this needed UST into the Mirror lock contract by creating a new short-farm and then withdrawing the entire original investment

The newly injected UST will be stuck in Mirror. But it’s possible future updates from the Mirror team could unlock this residual capital for users as well.

We are quickly working to implement this solution. A “Rescue” button will be added to your delta-neutral position in the next 48 hours. Again, we don’t know what UST will be worth by then, but we do know that this is what we must do for our users.

The UST depeg is a calamity to all of us — our own team and investors suffered substantial seven-figure losses. We are all waiting eagerly to see what’s going to happen next with the Terra ecosystem.

Hang in there and thank you for bearing with us through this tragedy. We are all in this together!