Main Street Nears Full Liquidity Coverage as Recovery Plan Remains Under Review

Main Street said its liquidity and recovery progress has improved, with protocol coverage excluding the insurance fund now close to 100% based on current valuations. The team said it had reviewed options for providing holder liquidity, including limited early closings combined with open-market token purchases and burns. According to Foresight News, the team said legal advice led it to conclude that transactions temporarily reducing coverage were not appropriate, so it cannot execute early closings or large-scale buybacks at this stage. Based on the maturity schedule, the first substantial liquidity for the remaining "box" positions is expected in more than 30 days. If coverage calculations are updated and market conditions allow, the team plans to place limit orders in the open market to buy tokens and permanently burn them. The official team is also designing a Morpho redemption mechanism that would restrict transfers of msY in affected Morpho contracts and introduce a dedicated redemption process to avoid first-come, first-served outcomes and unfair accumulated interest from prolonged full utilization. The design still requires final legal, technical, and security review, along with an independent audit. Main Street USD, a dollar-pegged algorithmic stablecoin, depegged in June and at one point fell more than 80% to $0.064.