Babel Finance, a cryptocurrency lending firm that suffered losses during the cryptocurrency market downturn in 2022, is reportedly exploring new opportunities to restructure its business and pay off its creditors.
A new stablecoin, dubbed the “recovery coin,” will be minted by Hope, a decentralized finance (DeFi) project. Unlike other stablecoins, which use fiat currency as collateral, Hope’s stablecoin will be backed by Bitcoin (BTC) and Ether (ETH), with a 1:1 peg to the U.S. dollar maintained through arbitrage incentives for traders.
Babel Finance’s liquidity problems are not unique, with other major industry lenders also grappling with similar challenges. Hodlnaut, Celsius Network, Genesis Global, and Voyager Digital are among those that have faced serious liquidity problems due to the cryptocurrency market’s downturn in 2022.
In late February, Voyager Digital’s customers voted for a restructuring plan that involved Binance.US, the U.S.-based business of Binance, acquiring Voyager’s assets.