Hong Kong-based cryptocurrency lender Babel Finance is reportedly planning to launch a crypto-backed stablecoin to repay creditors after suffering a $766 million loss last year.

According to a Bloomberg report, the company is working with a decentralized finance (DeFi) platform, Hope, which will feature a stablecoin of the same name.

The Hope stablecoin will be backed by bitcoin and ether, ensuring its value is pegged to one dollar. The proposal states that traders will be able to benefit from arbitrage opportunities when the value of the stablecoin dips below or rises above the peg.

The move comes after Babel Finance froze withdrawals last June, citing “unusual liquidity pressures” following a market downturn triggered by the collapse of the $60 billion Terra ecosystem.

Co-founder Wang Li reportedly incurred $524 million in proprietary trading losses, with an additional $224 million being lost after lenders liquidated collateral that underpinned loans issued to Babel.

To prevent creditors from making claims for at least six months, Babel Finance is said to be on the verge of filing a moratorium extension.

In the meantime, Yang Zhou, co-founder and sole director of Babel Finance, has teamed up with several former employees to build out the Hope DeFi platform. The stablecoin will be the centerpiece of the platform, which aims to provide users with access to decentralized financial products and services.

The Hope stablecoin’s design draws comparison with Terra USD (UST), which was backed by cryptocurrency rather than fiat currencies or equivalents like USD Coin (USDC) and tether (USDT).

Terra USD was at the center of the market collapse that led to Babel Finance’s $766 million loss. The Hope team will be hoping that their stablecoin can avoid the same fate and provide a much-needed lifeline to Babel Finance’s creditors.