It appears that if remuneration were to occur, it would be in alternate forms of currency, at the price liquidated on the date, therefore leading to significant amounts of opportunity cost, given the recent rise in the underlying.
With 237 people liquidated, a poll voting with anc was never going to end well. Majority are self-serving.
Even if we were compensated, we’d never be made ‘whole’ per-say. However, I am understanding. It stings a little.more because the collateral taken is net-positive, had it been down, we would be requesting UST/Anc etc.
I feel all parties involved, and in support for the entire ecosystem, should ‘Chip in’ giving the nature of the event. That way, no specific stakeholder is left with the bill. With any action, it is not a good look for anchor. I’m super bullish on the platform, bit this one stung.
Why don’t people who wants to compensate create a pool to be distributed to people that gets liquidated?
It seems to me that a lot of people says that they want to reimburse but do not want to spend a penny on it.
The team could easily release a breakdown in percentage of all who was liquidated, create a timed pool, let people put some money into it and call it a day. To make it better, add an NFT on top as a consolation prize that they can sell on the market.
This will make all parties happy right?
People who got liquidated get something → will not leave the protocol.
People who donated donate sincerely → no impact on ANC reserves and price.
People who doesn’t care about this also will not worry about ANC reserves and price getting impacted.
Looking at the discussion in the thread. I think question 1 should be more specific. Something along the lines of: Should Anchor protocol compensate affected users. (i.e. using resources that Anchor governance has control over)
How would compensation also reflect the lost opportunity cost, given the current rise in luna price (or eth)? would this not be under consideration?
Could the compensation be given in bluna (or beth)? assuming that the price is at the corrected liquidation price (~$66?) - this way it will cover the opportunity cost of current value ($92 at the time of this writing).
I have no skin in this game. I am retired and my investment is very small. I believe in investing in people as much as profits, and would like to see a decentralized solution to this situation.
If there could be a compensation pool, I would invest 100 anc. I would much prefer to have faith in a community rather than a protocol.
Yes, I too sadly would not be happy to be paid back in ANC or UST, the BLuna we lost is now worth an incredible amount more than what it was that day… most of us using the platform are probably long term holders of Luna (although I don’t know that for a fact of course, because to each their own) and wouldn’t have sold. I too feel that unless the actual collateral is provided back to the affected users, then it is a nice gesture although not enough to make the users whole again. The initial loss to users was $9 million, although daily the loss is being increased, so the longer we wait the more the repayment will need to be adjusted based of the current price of BLuna and Beth
I will say this discussion has been very mature and thought provoking and I’m glad to see the community come together!
I agree with @wengzilla …makes sense we pay this out of the profits that resulted on account of these liquidations. This is similar to rolling back as this error never happened and making good the parties that suffered and at the same time, not leaving the profits in the pockets of those that benefited from this. ANC should not suffer the consequence.
I totally agree. It really has to be the actual collateral provided back to the users, assuming the that collateral’s price is the same as at liquidation event.
In other words, the collateral liquidated should be treated as “temporary withheld” to be given back.
Everyone wants the collateral back because it went up, and everyone would be fine with the $ amount had it gone down… I believe it to be fair to pay back users but let’s not push the envelop, it’s true that this was due to a protocol failure (even if indirect) but users need to be aware they are taking risks when using any protocol.
I for one believe the only fair path is to pay back the $ amount lost, the rest should be considered an opportunity cost for the users, this is what happens for most protocols when hacks/failures happen.
I don’t think this is at all true. Of course everyone wants the collateral back, regardless of price movement later. We lost our collateral that we had no intention of removing / selling. The best and fairest result FOR US would of course be to just roll it back as if it never happened.
While I agree with the whole argument that everyone should be aware of the risks when using any protocol… in this case, someone ended up benefitting tremendously, and unfairly, from this ANC price discrepancy. Maybe I’m wrong about this, but in most cases where protocol error or crime causes loss, no one gains (except maybe for malicious users). We have parties here who clearly did gain. Because of that, It seems like there should be a fair way to make it all even again.
I was one of those who were liquidated. I am totally humbled by the sentiment and desire of much of the community to rectify an error. It was a big hit for me. On the day in question I was watching levels closely and added extra bluna for safety. I had a quick shower and when I got out, around 50k had been repaid. The loss is in the Luna it took a year to accumulate.
I’m largely in favour of compensation as that was a better part of my net worth. However, I can appreciate that risk is involved, and that I agree to a point, that ad hoc compensation is problematic. Any final solution should be consistent, universal and just. My thinking is that the difference here, is that the clear fault was with the protocol, rather than an external malicious actor, excessive risk taking from the users, market volatility or governent regulation. The technology is new, and it is being trialed and showcased. Do we want protocol errors to be part of the final evaluation?
So, there is some precedent with other projects that compensated for loss from exploits when they were under no obligation. It is limited, but comes from the reliable venues and clearly sends a message that mistakes can be acknowledged and addressed. In the layer-1 space, the protocol with the most users will prevail, so the stakes couldn’t be higher. I’ve also seen compensation from CEX after external defi failures, again as reassurance to their customers with the disclaimer that it was discretionary not obligatory.
For protocol adoption, confidence is key. And, this is undeniably true for an algorithmic protocol, and stable coin, where trust can only be placed in the integrity of the code and oracles. It is finally, Luna that backs UST.
It seems there is a third option that is surfacing thanks to some big-brain community members. I like the idea of possibly issuing ANC perhaps with a vesting period to avoid sell pressure. I am talking to some devs to see there is time to spin up a contract that can do this soon enough.
I do not think it’s about being self-serving. It’s about people not considering all possible implications for the protocol moving forward; what could look like a good idea today (compensating 237 people), can set a precedent that hurts the protocol in the long run.
We all understand how this happened and how this is 100% on the protocol’s side. However, that does not necessarily imply an obligation for compensation. I can elaborate further.
Let’s say the protocol does not compensate the user for the faulty oracle feed. The protocol will maybe loose more users, reputation, and send the message that if these errors occur, and they do occur, the protocol has no insurance or process to cover for technical errors. We cannot estimate the damage to the protocol, but we can assume it will be large.
Let’s say the protocol takes full ownership of the issue and compensates users in some way or another. And it sets the precedent that the protocol covers for such technical errors. Now let’s say we have another incident, six months from now. Instead of 200 users, we have 3000 users affected. We had set the precedent that the protocol will cover for technical errors. What to do then? proceed in the same way? compensate all users? keep hurting ANC price?
Sure, in a perfect world, there are no technical errors. However, in such projects, short term solutions can lead to long term problems. Personally, as an ANC gov staking user, I would be in favor of compensating the affected users if the solution is sustainable. But I have yet to see such solution.
Talking about this with some other community members and the Anchor dev team. Hoping this or another 4th option will completely solidify. Holidays are going to slow things down until next week though. So sorry for the delay coming.
‘risk takers’ constitutes 50% of the business model. I’m not sure why you would frame it like that. The risk taken on was not the cause of the liquidation I.e a decline to liquidation price. You’re saying it’s at the cost of anc holders, well that liquidation event was at the cost of costumers.
And the cost to each individual is significant, compared to if that was spread across the board. $9MM is a drop in the bucket. I don’t know why people think it will cause a waterfall on price. Not everyone will sell and not on the same block. Regardless of how it gets compensated, too many people are focused on their LP instead of the overall integrity of their investment. Fundentals matter in the long run, and Integrity/trust will win.
Then why did you previously bring up the FDIC insured $100k on deposits?
Completely different argument, and TradFI is not Defi, evidenced by the 20% deposit rate for starters. So let’s not try to think like Tradfi. You’re comparing apples to oranges. Precedent does not constitute law/policy. Each and every event can be handled in a discretionary manor. The long and short of it is that the protocol contracted a 3rd party that let it down and lead to a costly event for a portion of its consumer base. You’re saying that those affected users should wear the significant cost.
I do agree with you, in that I think we can get creative to mitigate everybody’s fear I of further price depression.
I would still rather have my Luna back then Anchor tokens or UST even if Luna went from $66 to $30 instead of to $90, I’m a long term Luna holder and not a quick trader and I’m assuming most affected are long term holders as well.
I understand that not everyone would try and game the restituion, but even long term holders could want the ANC/UST back and just buy LUNA right after, for a profit if it did go down. I stand by my position, payment should be made to the $ amount at the time, regardless of market conditions.
I was not affected by this issue on Anchor but I have been affected in other protocols and that was the resolution (which I found to be fair).