[Proposal] Oracle Refund

This governance proposal is seeking to use the Anchor Community Fund to issue refunds to users affected by the Anchor Oracle Price Feeder. The issue with the Anchor Oracle Price Feeder resulted in an error that set the $bLUNA price at $58.44 on 08:43:37 PM, December 9th (UTC) causing erroneous liquidations for 239 users who had open borrow positions below the max LTV of 60%. In total, ~690,727.49 bLUNA (~$37.249M total discounted value) were liquidated.

This has raised community concerns about the recent influx of deposits and highlights the need to refund the affected users through the Anchor Community Fund.

The total refund amount is currently $9,6 mil (~2.76% of the community fund, based on ANC price on 12/29/2021 14:35 UTC), which is sufficient to bring the affected users’ wallets back to neutral.

If this proposal passes, the market rate equivalent of Anchor tokens, plus a 5% boost, will be withdrawn to a vesting smart contract that linearly unlocks the funds over a 2 month period to avoid market instability. Affected users’ wallets addresses will be whitelisted to the vested smart contract and users will be able to claim the refund through a simple Anchor web UI. After three months, any unclaimed funds will be returned to the community pool.

18 Likes

Cleanest solution I’ve seen. :+1:

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I’ll vote in favor of this proposal.

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(post deleted by author)

Where did you check for the affected user list?

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Would it not be faster and better both those effected and ANC holders to provide debt relief to outstanding loans for those effected for the amount out by?
I imagine it’d have minimal if any ANC price effect, and also put those out in a stronger debt position, let’s face it, they’re likely to open that debt position again.

Just would seem to encourage use of the protocol more, and not actually cost the ANC holders anything now, outside of a slightly weaker balance sheet, which can be made up for in time.
As someone who both is an ANC holder and effected by the oracle issue, this would be my preferred outcome. But if that’s not on the table, then the community pool is a good second best.

I think we should revisit the 2 month lockup period as that time horizon seems overly conservative and adds unnecessary punishment to those who were wrongly liquidated.

Between Terraswap and Astroport, there is roughly $84M volume over the last week. If you scale that to 8 weeks (2 months), that’s nearly $672M of ANC volume. A $9M dump would represent 1.3% of that volume… That’s effectively a no-op. If you shifted the time scale to 1 month, it would have practically the same effect, but those impacted would have significantly more flexibility to rebuy LUNA and take out leverage again.

Separately, would it be possible to see a list of all affected wallets and the calculated impact amount? Would be good for transparency purposes and to get more eyes on sanity checking the $9.4M payout.

4 Likes

The volume-based assumption here is wrong.

It’s like saying: since LUNA has ~$100B of volume scaled over 2 months (~$1.7B volume over 8 weeks), a $1B dump would only have 1% of an effect. This does not make sense.

A better assumption is to calculate the effects using x * y = k, which Terraswap and Astroport both use. You can do the math and the calculated effects are much more extreme imo.

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I will definitely vote yes to this proposal! When will proposal be live?

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Correct. In the x*y = K model, a sale of a few million could push way out on price the curve, which creates volatility which then causes LPs to pull out, while Arbs step in to try and rebalance further pushing the price down. This could send the price down a lot more than a few percent.

As one of the affected users, i can say that this proposal is acceptable. Yes, it does not factor in opportunity cost, or duress caused by the liquidation, however, given the support of the community / protocol and rationale provided regarding appropriation of funds and it’s affect to the investors, i can get my head around it, and support this proposal.

I think, if the vesting schedule could be accommodative, then we have a winner. Perhaps some affected users would prefer a mix of UST and ANC, thus reducing sell pressure. Given the length of the schedule, i wouldn’t anticipate that LPS and investors dump their tokens in anticipation, either.

This seems to be the path forward.

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I’m not arguing that a 1.3% volume drop would translate into a 1.3% price move, and I agree that selling $9M in one go would shift the price dramatically. I was simply saying that it is unlikely that anyone would even notice a $9M dump spread out over the course of 1 month given that it’s a very small portion of normal activity. I would imagine that LP farming + borrowing ANC rewards represent a much larger volume of sell pressure on a daily basis.

How do you simulate the effect with the x * y = k over time?

It would be hard but could estimate different scenarios with some type of differential equations

(post deleted by author)

As soon as the prop passes there will be a web UI function that allows user to enter their address and claim the refund.

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When will this happen? I will be glad to throw some anc towards proposal or create one but I don’t know how to word it so that people will vote on it.

This will be going up once the current poll finishes.

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Given the lopsidedness of the people affected against the community, if the mass anc holders vote against, the affected will be left with no form of compensation? no emotion, just asking out of curiosity?

We are going to make sure this passes!

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That is relief! and appreciated by the other 237, im sure.

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