Liquidation event (refund)

Dear community!

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!


I 100% agree with you on this. I as mentioned on another feed on here this effects all of Icon and not just balanced. Everyone in that 24 to 48 hour period should be fully refunded, but I do think to be fair they should be put back in the loan as well with the new LTV and Liquidation limits. So that they can pick what is best for them. As I think most would pay down their loan and still use balanced.

I feel if this is not done a lot of users will walk away and a lot of users who weren’t liquidated have mentioned once they pay their loan off they will walk away. Doing this for the community could help keep a lot of users and possibly increase users and they see this is a stand up community that takes care of one another.

This is a time where Iconist come together and not be divided putting each other down.

Let’s show the world the power of our community and do what is right for the end users and get them their money back and make the necessary changes to the DEX.


As you mention, the early adopters will stay loyal to this platform should this issue be resolved with a chance to manage the loan position again under normal circumstances. After all, most of us have been in Icon since very early on and want to continue this journey and support the community. It would be a shame if it all ended with this tragedy. I would never have had any problem with a normal liquidation of course but what went on that liquidation day was unprecedented and must get compensated somehow. Otherwise, I see a very slow comeback in Balanced gaining trust again. And we all know that in the crypto sector, moving slow is the worst, we will be forgotten and never take it to the next level before other platforms capture our market share. Therefore, I emphasize like you that a fair refund is not only for the best of the liquidated victims but in fact for the whole community as trust is very important in crypto. People will hesitate to take loans on Balanced unless they feel safe again. That is why a rapid solution is crucial for the fate of Balanced.


I haven’t got time to check into this case yet but I see a similar type of Refund case taking place on Anchor Protocol right now. We should have a voting as well.



Very well said, and I agree with 100% of this. The future of the trust in Balanced depends on this decision.


Balanced dao is live for almost a year now. This means there are more people liquidated, not only the ones who got affected by recent crash. How do you propose the dao to handle these wallets? It would be disgusting and unfair to only compensate the ones affected by the most recent crash.

Moreover, balanced in the end is a platform where you take risk and get rewarded for it. The one who takes more risk is rewarded with higher yield so is obviously also exposed to higher potential loss. In short, your suggestion would he against all basic rules of free market. If you can come up with a solution where you take in to account the following, i might vote in favor:

  1. How to deal with adresses who got liquidated in earlier crashes?
  2. How to compensate the ones who took less risk vs who took more risk?
  3. How to compensate the ones who sold other assets to cover their loan?


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I don’t think the DAO will vote for full refunds. But you can try for sure.

Also the Anchor refund happened because there was an error in the protocol. At Balaced everything works as technically intended.

I think the least that should be done is to refund the fee taken from the liquidated, as this was not clear at all. I don’t think many have been liquidated before this crash (could be wrong), so they could also have returned the fee. It’s unheard of that all the collateral is taken (way more than what is necessary to pay off the loan) without any warning. Many would have managed their loan differently in the end had they known this. Would for example be much smarter to pay off the loan just before liquidation and still have much money left instead of nothing but they didn’t know that everything would be gone. It’s no question that this fee at least should be returned imo.


Plus such a high penalty fee is insane in my opinion. I will vote for some kind of compensation that is fair to everyone.


I think people who keep saying about managing the risk of their own, need to understand the full story of this event.

I have 110,000 bnUSD loan with all collateral locked before the event happened.
When the market is going down last week, I sold my other assests (LP, Token, Fiat) to bnUSD. I have repay and dropped my loan from 110,000 bnUSD to 50,000 bnUSD, and my Liq price is at ~0.35.

What happen is the rebalancing hit us hard after a 1M ICX collateral account got Liq, and started a chain reaction to all other borrowers with rebalancing.

My final Loan is back to 96,800 bnUSD, rebalancing added 45,000 bnUSD loans to my position within 24~30hrs, you can see you get added 1500bnUSD per 20-30mins, I manage to find more fiat from my other assets to repay it, while rebalancing keeps pushing my Liq position up, unluckily not everyone has enough time to react.

Risk is Risk, I agree everyone should manage their own risk level, but BalancedDAO is not an investment option DeFi platform. We position BalancedDao as a Bank, which will allow you to take out bnUSD as a loan, without bothering to sell your ICX in market ups/downs.

BalancedDao interest and profit shouldn’t be coming from Liq users, instead, it builds for profit from more trade and pairswith #BTP coming. Also making bnUSD widely used in the crypto market.

When we try to find the perfect math balance for the protocol, things like this will happen. What if we have experienced another black swan event beforehand and changed the Peg of bnUSD to 8% or 10% before things happen, maybe there will be less damage to the user.

What I am trying to say here, BalancedDAO is here to service users’ interests and protect them from black swan events like what the website said. If borrowers are really trying to hard to support the platform but they get punished based on their support, i think it’s not looking good to the long-term image here.

  1. Can we refund users with their 21% liq amount from the DAO emergency fund?
  2. Is it possible to add a loan to user account and give them back 45%~68% of their collateral sICX?



I agree!

When rebalancing struck so aggressively and the loans started increasing and liquidation price moving up it was hard to monitor.

I knew when I had to get my laptop and move things … unfortunately due to the price rising I couldn’t stop it although funds were there ready!


Fully agree, ICON has the best community. For years and years already we keep supporting. Please don’t let us down now.


Wow, this is horrendous. I didn’t get liquidated but I feel for all the victims that are blamed for being greedy that actually had a good risk management but got stuck by the system error. I agree with Iconist, it can’t be referred to as no other than system failure. If not, this whole platform is broken and a gambling platform. Honestly. People will never take large scale loans on Balanced again if this is not resolved, I can tell you that. We must get a fair solution to this asap and move on.


The most recent round of liquidations is unprecedented. Dozens of positions were liquidated, which haven’t happened before. Even during the May 2021 crash, there were very few liquidations. I don’t have answers for #2 and #3. For #1, I don’t believe it is necessary to refund previous liquidations because they were not directly or indirectly caused by constant rebalancing over a period of days.


I think we should bring this massive liquidation event under more attention and would like to hear a statement from the ICON foundation and Min Kim.


And I at least haven’t seen any leadership reply on here on what is being done. Maybe I have missed it but I don’t see any and this stuff needs attention ASAP and Al should be a priority.

I get refunding everyone 100% is tough but there is more then enough funds in the emergency reserve to cover this and this is an emergency situation.

Not doing this would look really bad on icon as a whole and lot of users will walk away from balanced. The dex can’t survive if the user base keeps dwindling down. Multiple large BALN holders have mentioned that in telegram.

This is really a no brainer in my eyes. Can we please see some process from leadership on this?


Yes, I agree. This was a big scandal and sweeping the problems under the carpet is a bad idea. If Icon Foundation does not come out with a statement, one can wonder if they really care about the community and investors at all. Like stated continuously, this was NOT an ordinary liquidation, it’s closer to fraud in my honest opinion. Like people mention, even after repaying nearly half of the loan, bringing the liq price much lower, they still got liquidated as a result of complete failure in the system. These issues should be solved here within the DAO. If not, this is such a grave mistake that we could take the story to crypto media sites like Cointelegraph. Maybe then we get the attention from Icon Foundation and Min.


Hey guys,

First of all i want to express my support for everyone that has been affected by last week’s liquidation event. Personally i think it is terrible to see someone’s life savings go up in smoke, whatever the risk they chose to take.

That being said, this can never be blamed on someone else than the investors themselves. Balanced functioned as it is supposed to function. The truth is in the contracts & documentation. We all just chose to invest in something we didn’t (fully) understand. Sometimes that turns out ok, and sometimes we end up burned. The entire crypto space is filled with warnings to do you own research, and not rely on other people’s words.

That what happened is terrible, does not mean Balanced owes us a refund. The primary goal of Balanced is, and should be to provide value for its token holders (Mission of Balanced Governance - #9 by Uglyrage).

That balanced functioned as it was supposed to function, also doesn’t mean i agree with how it functions as can be referenced here: (Enhanced Borrower Experience - #16 by Uglyrage)

But then again… we all have had the opportunity to understand the ramifications of the rules, suggest improvements, or choose not to partake.

If we want a vote for reimbursement to have any chance of succes. we need to consider it from the perspective of the Baln token holders. What is the investment thesis on reimbursing people being liquidated. On this i have some questions i would ask you all to consider:

  1. What is more damaging to the repution of the platform. Rules that turn out bad for some users, or changing the outcome of following the rules with impunity?
  2. Does balanced stand to gain more future profits by reimbursing people than by keeping the cash allready safe in wallet?
  3. is reimbursing liquidated positions the most advantageous way to spend that cash, or would it be more efficient to spend the money on marketing or development or whatever. Maybe even pay one of the big think tanks to suggest improvements on the protocol itself.

While i am against reimbursing liquidated positions right now. I would very much be willing to consider a proposal where those points are considered.

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In this case it’s not only a question about what is best for Balanced, that is a part of it but it’s mainly about protecting its users. That’s my opinion. This liquidation could have happened to anyone having even a small loan on this platform. What’s the point of using the fund to promote a broken DeFi? So that more people can be fooled? First, we must fix it, build up trust again, then think about expanding. Now it’s not safe for anyone to use the services on this platform. Much better to be margin trading on ByBit at this current moment.

And one more MAJOR point! The fees are the least that should be refunded, why? Because the ridiculously high penalty fees took a bunch of our collateral and that went DIRECTLY to the DAO fund. Hence, a great amount of the DAO fund is the money of the liquidated. It’s our money! I consider this stolen money as we have never seen a disclaimer or warning about this. Using this money to promote Balanced is yet another punch in our faces. Most of us were shocked to see our accounts completely empty with no history records, because Balanced took nearly 40% more than what was necessary to pay off the loan!