On November 6, 2025, Lista DAO initiated an emergency governance vote, designated as LIP-022, to enable forced liquidation of the USDX market involving vaults managed by MEV Capital and Re7 Labs. The vote, conducted via the Snapshot platform, will run until November 9 at 12:12 PM UTC. As of the announcement, only 18 veLISTA token holders had voted, all in favor of the liquidation measure.
The crisis stems from abnormally high borrowing rates reaching 800% in vaults where collateral assets $sUSDX and $USDX showed zero repayment activity. Lista DAO stated that the forced liquidation aims to minimize potential losses and maintain healthy market conditions in the on-chain peer-to-peer lending ecosystem. The proposal was triggered by a request from Re7 Labs' vault curator, who provided a plan through Lista DAO's Discord channel earlier that day.
Timeline of events: At 9:23 AM UTC, Lista DAO publicly announced it was monitoring the soaring rates in MEV Capital's USDT Vault and Re7 Labs' USD1 Vault, calling for immediate transparency from both institutional managers. By 10:55 AM UTC, Re7 Labs submitted a proposed liquidation plan, which Lista DAO acknowledged before launching the vote at 11:15 AM UTC. Concurrently, PancakeSwap advised users to review positions in affected liquidity pools, while MEV Capital implemented mitigation measures, including setting allocation caps to zero and updating Interest Rate Models.
Background: The collateral assets $USDX and $sUSDX are synthetic stablecoins, with USDX trading at a discount of $0.68 and sUSDX at a premium of $1.06 (down from $1.13). This situation echoes the recent $93 million Stream Finance loss, where xUSD collateral led to protocol failures, highlighting broader DeFi risks. Lista DAO emphasized the need to protect users from bad loans and instability in lending vaults, which have drawn scrutiny for high-risk practices.
