It was a sad day for a lot of iconists that day of the market crash. People who had saved ICX for a long time and supported the project through thick and thin tragically lost their funds unexpectedly. People who had control of their positions were left wiped out by unexpected reverse rebalancing mechanisms and people who could have repaid their loan before liquidation did not do so as they were unaware of the high penalty fees. If they were aware of the penalty fees, they could have saved a lot of money by repaying their loan before liquidation and still be left with a big share instead of NOTHING. Big opportunity cost lost. Penalty fees are a MAJOR risk that should be informed about very clearly so that all users know about all the risks before taking up a loan. Hardly anyone had even heard about penalty fees before the liquidation event. This is unjustifiable. In the traditional world, financial organizations that don’t inform about all risks associated with the services (like a disclaimer with small text) tend to have a really bad time in court if they are sued. However, I believe we as a DAO can solve these issues like a community, a big family, without anyone being sued.
If Balanced is to succeed long term like a decentralized bank, the users have to be protected and must be informed clearly about all risks before using the services (I am not referring to ordinary liquidation risks but massive reverse rebalancing and uninformed high penalty fees). It wasn’t greed that wiped out many of the liquidated, it was system failure. Some of the tech experts claim it was not a system failure but something that can happen. I define it as a system failure if Balanced claims to be a bank and not a casino.
My opinion is that the only right thing to do is for all users liquidated the day of the market crash to be fully refunded due to extraordinary conditions. This is very well possible as the ICX price is still very low now. The Icon Foundation can even help with a portion of its $200M incentive program fund as we are of the same community that should work together. If not, the loss will go from affecting the liquidated people to indirectly negatively affecting the ICX price as people will look at Icon’s main DeFi as unserious and untrustworthy. Hence, this is an issue that should concern all iconists, not only the ones liquidated that day. Big problems must be solved in a fair way in order to succeed long term. If it is a good and fair solution to this problem, Icon will come back stronger than ever with an epic, vibrant community taking the crypto market by storm!