The Ripples Are Still Being Felt: Midas Investments Closes Shop

With so many exchanges defrauding their investors, rugging, becoming insolvent, or otherwise closing operations, you might not have noticed that Midas Investments shut down for good on December 27th (harsh timing!). Even if you did notice, you might not have cared, which is a sad sign of the times. However, even though Midas is down badly, they are still offering customers different withdrawal options, based on position size, instead of simply shutting down forever after freezing withdrawals like other exchanges have done.

Midas Investments bills itself as a CeDeFi (Centralized Decentralized Finance) platform. Essentially, Midas has custody of your tokens while running multiple DeFi strategies with your funds and requires little customer verification. The Midas shutdown really reflects the state of the current market because they’ve been around since 2017 and have seen bad market conditions before, which is worrisome.

So stick around while we take a look at the reasons that led to the closure, how Midas plans to handle remaining customer funds, and what Midas has planned for the future.

Reasons For Closure

The fact that Midas was able to stick around this long probably means they had good fundamentals in place and actually tried to keep running their DeFi strategies until the end, which is cool. But eventually, the big closures of Celsius, FTX, 3AC, and others finally got to Midas. In addition to the big closures causing mass withdrawals, Midas also experienced a 20% withdrawal of customer funds in March 2022, due to worsening macro conditions. Midas also experienced losses due to the decreasing value of smaller projects called Ichi and Defi Alpha. Essentially, the combination of factors mentioned made it impossible for Midas to make the daily payouts promised to customers.

Remaining Funds

On December 27th, Midas froze withdrawals for 2-3 hours while they ‘re-balanced’ customer funds based on what was left and the size of the customers’ position. They chose to deduct pending rewards from customers which sucks but at least they aren’t just stealing customer funds, which is cool – so it’s a mixed bag.

A couple of notable takeaways:

  • Balances will be adjusted by deducting 55% of the total value + pending rewards.
  • Balances lower than $5k will not be affected
  • Any balance over $5k will not go below $5k (aside from deducting pending rewards)
  • Midas tokens can be withdrawn or swapped for the new projects’ token
  • There are several scenarios given that you can read about here.

New Product

It might be difficult to think about Midas launching a new product after closing its existing one. But they are planning to create a new platform with the hopes of catching the next bull cycle. It’s unclear exactly how the new platform will differ. 

For that matter, it’s difficult to figure out what the future of DeFi in general is…if it has one at all. But it’s probably safe to assume that the next wave of DeFi won’t have Lambo calculators and 300% APR numbers. 

To be fair, Midas never offered these types of returns and seems to know the returns will be less than what was offered during this bull cycle. “The goal of the new project is to create a win-win situation by connecting competing protocols with liquidity and offering a simplified yield to a range of DeFi and CeFi audiences.” In this context, simplified means reduced, which really is a win-win for long-term investors.

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