Could we just create a pool for these instances?
People who are positive about helping the cause can donate to the pool, and people who doesn’t care can just sit on the sidelines.
The pool will have a time limit and when it is done, it will be divided proportionally by percentage to the people getting liquidated.
This would not hurt ANC price, nor the yield reserves.
What do you think?
I second this, for the reason you laid down, and also because it creates an even more dangerous precedent for the protocol:
We’d all love to just take the bLUNA back and hand it to the affected users, sadly that’s not how blockchain works, and that bLUNA is not in the purview of Anchor’s governance anymore.
For Anchor to somehow buy bLUNA to distribute to the affected wallets, as much as it would be the ideal outcomes in terms of reparation (no effect to the user’s PNL), is just dangerous, because it creates significant market risk for the protocol. It also introduces a ton of complexity and room for fault to the reparation process (is Anchor going to buy the dip to make users whole? Who will be tasked with pulling the trigger? An individual? An algorithm? Based on what? What (combination of) indicator(s)? I could go on but you get the gist). It’s bad enough this time, despite the small set of affected wallet but with the recent market action, but it’s an existential risk for the protocol, should we even consider following such precedent in the future.
Compensating the dollar value at least makes it so that there is no real loss incurred from the bug, and that alone is already setting a precedent.
I agree with @Magneto23 on that a “precedent” is a just that, and not a policy, but markets are forward looking and thus ground their expectations heavily on precedents. That is why myself and @unlikeg have repeatedly called for us to treat this as a matter of policy, even though Anchor retains discretionary power on the issue as long as the precedent we’re setting is not engraved into a policy.
Lastly, @bitn8, minting ANC for the occasion is an interesting idea. Could you please elaborate on why that’d be preferable to simply using funds from the community pool though?
Looking forward to reading from you all soon. This has been a painful issue to deal with, but I’m grateful to see that it has driven significant engagement and that, despite our natural disagreements, the conversation has so far been quite civil and grounded. Kudos to all of you, fellow Anchorians.
I appreciate the back and forth but there’s a degree of dishonesty that I feel is unnecessary.
Why did I bring up the 100k insurance on deposits? I brought it up as a question, as you know. Because this idea can be found in Tradfi we shouldn’t even considerate it? Do you know the amount of concepts that Defi borrows from Tradfi? Should we not have insurance, because that’s Tradfi? Do you think it is in the spirit of Defi to tell another user how not to think?
You said “You’re saying that those affected users should wear the significant cost.” No. I’ve said much more than this, and most of it in the form of questions or scenarios to consider.
Happy to hear. I also read about some good ideas on Twitter. I remain positive. Thanks for the update.
Agree with you that most deFi flow are borrowed from tradFi.
But if you want to say things based on tradFi, we do have insurance - and if those people being liquidated had insurance, wouldn’t they be covered? It is a ‘smart contract risk’ anyways.
Per Nexus Mutual:
“This cover is not a contract of insurance. Cover is provided on a discretionary basis with Nexus Mutual members having the final say on which claims are paid.”
Are you insured?
My point is that you were referencing insured deposits, which insure bank deposits, not for trading leverage. If you were to trade leverage through a broker and they margin called you, unfairly, due to faulty data, the liability would in 100% of cases extend to the platform or the data provider, not the customer. If the business did not assume liability, customers would emigrate to another platform that had their best interests prioritized. My point is that you’re discussing insurance of deposits when we are talking about leverage trading. Apples to oranges.
You have made some extremely rational and well thought points and i agree with you on most.
I was more stating that with multi-sig wallets and a smart contract code, we could issue community ANC funds over a locked schedule meaning unlock x percent every month to mute selling pressure.
Oh I see, then that’s great news! Seems like the way to go at this point.
The major downside to this proposal is that it ties restitution to the price of ANC. This puts those wrongly liquidated in even greater risk. If ANC price drops by half over the vest, then those that lost money on the glitch will only recover half of their funds. To make it more fair, I would propose that the team mints on a monthly basis according to the price (e.g., if $9M was lost, and you’re paying back 33% per month, then the first month, you mint $3M worth of ANC – regardless of price).
I think there’s a misunderstanding. Afaik, the proposed plan is to:
1- Take ANC from the community pool
2- Gradually sell it on the open market until 9M UST have been collected
3- Distribute the UST to the affected users.
The variable here is not the repayment amount but the amount of ANC necessary to obtain it.
To be clear, this proposal pulled from some of the community ideas to issue Anchor directly. The community fund was meant to issue Anchor for community-related issues and not UST. Therefore the vesting period was meant to help maintain market stability in the ANC token.
Paying for the false liquidations in ANC is a way of using the token for utility purposes. Borrowers get ANC tokens over time as rewards, this is a similar model with a 5% boost.
My guess is that those who have been liquidated would strongly prefer Spaydh’s approach. It seems strange to bundle in risk related to Anchor… A good balance would be for the Anchor team to control the pace of the sale so as to not cause panic in the markets.
i think the highest priority is that this not drag out as it has been because of the Holidays.
equally though is that we should not lose a penny of value because we did not cause the problem and this is not the kind of thing that we should have to integrate into our calculations of risk.
so… speed and fairness is all.
I would argue that on the contrary, it is exactly the sort of thing you should take into account in your calculation of risk. Smart contract risk and oracle failures are known sources of risk when dealing with Anchor, or the whole of Terra for that matters, as the UST-LUNA market module relies on it and the whole ecosystem with it.
@bitn8 Thanks for the clarification, seems like I indeed misunderstood the plan! I’m not against the idea of a gradually released compensation in ANC but won’t the 5% bonus barely compensates for market volatility?
Following ICE’s exploit, affected users who held their ICE for two months got a 20% bonus. What do you think of that system?
ok fair enuff. i guess it comes down to basic minimal level of trust that a supposedly reputable operation connected with Kwon Do and Terra and integrated essentially into its workings would not be petty and cut corners using an inferior oracle as opposed to the industry standard. Didnt see that one coming.
The other thing to consider is we’re not compensating average Anchor borrowers here.
These were a small bunch (240) of extreme gamblers who set their liquidation price at $58 (at an average liquidation loss of $37,500) when the market had already flash crashed to $50 less than one week earlier.
The proposal is more than acceptable and is 100% more compensation than what I preferred. It’s time to move on.
I don’t think you understand some style of anchor borrowers who set their ltv in the high range to set up highly active or automated trading positions to keep their ltv under a certain threshold to maximiE their strategy. Most of them don’t blindly leave their ltvs high and hope for the best. Don’t accuse of “gambling” for the high ltv borrowers - extremely subjective and doesn’t mean anything in this discussion.
Well the way I see it is hopefully Anchor stays stable. I think this is probably the best compromise that meets all stakeholders in the middle and the market risk would be okay with a 5% boost. Curious others thoughts