I think the mechanics were drastically under realized that a positive rebalance of that magnitude would ever run positions that were conservative into a forced liquidation. I do think its worth reimbursing the liquidation fee for this reason to maintain community and goodwill. By not reimbursing the DAO takes this one time “fee”, but ultimately looses a large piece of the community. By reimbursing the liquidation fee I think it would maintain the community. I think for Balanced to truly grow and succeed that growing the community is the most important aspect. I think reimbursing the liquidation fee would have a higher net positive impact on the DAO overall vs simply keeping it. A few people complaining with bad takes on the message boards are the minority, not the full picture.
Right! Many people had a low liquidation price (for example in the 30 cent range which is not over leveraged) and got struck by forced loans which brought up the liquidation price just when the market crashed. And our collateral is locked so we can’t sell out. What an excellent scam! Why do I get furious? Because many of us have been in Icon for several years, then trusted that Balanced was a BANK and left our savings there and got liquidated because of system failure. Much of the DAO fund is now the liquidated people’s money (penalty fees) and should be returned asap!
Let me also add that there is nothing really fixed so far. Not only is the change of the peg no good advertising for a stable coin but also the missing information about the liquidation penalty and the agressive rebalancing has to to be added to the ui. Finally we dont even know if the protocol is stable enough right now. We will see if bitcoin dumps further…
You are right! The DAO emergency fund consists of liquidation money. It’s not something big to ask for at all to have this money return to the real owners. If this is not an emergency, then what is? I think all people ever liquidated on Balanced should have this returned as everybody has got an unfair penalty fee which was never informed about. Let’s send this money to a smart contact where the liquidated can claim their share in a 3 month time. Anything unclaimed returns back to the DAO. If this is not done I will never dare to use Balanced again, I think I’m not alone.
Let me also add that the purpose of a penalty fee is to encourage people to initiate liquidation. So all the excess amount going to the DAO makes no sense.
- The bonus for retiring bnUSD against the forced liquidation pool will be up to 10% of the bnUSD retired
What does it exactly mean the bonus will be up to 10%? How is this decided if there is no bidding system in place? …let me just state that with all those rebalancing and forced liquidation some people made a lot of money.
Firstly, thank you to everybody who has participated in the discussion on this thread. This event has brought out the best and worst of the community, and I can comfortably say that most of those participating in the meaningful discussion here have done so with professionalism and respect. For that, we should all be grateful.
After reading the comments, I am in agreement with what most are saying. The below post (among others) really hits the nail on the head imo.
I’ll further emphasize that the purposes of this are purely goodwill from my perspective. There is a happy medium to this discussion. Did people over-leverage? Some did, some didn’t. Did users take the time to fully understand rebalancing, read tooltips, read docs, etc.? Some did, some didn’t.
Overall, the best thing to do for the DAO, in my opinion as just another BALN staker, is to use the sICX in the Emergency Reserve to allow people who were liquidated during this recent perfect storm/black-swan event to claim the collateral that was leftover after the system paid off their debt.
The next steps from this point are taking shape. A few community devs are going to start preparing a smart contract to receive funds from the Emergency Reserve and allow users to claim if the DAO votes to do so. Other community devs pulled the liquidation data starting from block 45,100,000. All data is verifiable on blockchain.
Liquidated Accounts: 174
Amount of sICX liquidated: 5,862,934.76 (note, this is not net of debt, this is the total amount of collateral liquidated)
Amount of sICX available in the Emergency Reserve: 2,268,364.66
We still have time to evaluate different proposals. Given the situation, I think it would be an interesting idea to vote on at least one Text Proposal, see which one gets the most support, then do the actual vote to disburse the funds (assuming a proposal like that wins). If anybody wants a proposal voted on, they need to either stake 0.1% of BALN supply to submit it themselves or they need to find somebody that has staked 0.1% of BALN supply to support their proposal and make it themselves. This is always the case for any proposal, but no need to take my word for it, all the contracts are open source and available for download from the blockchain.
I’d recommend the following standardized format for proposals, but of course, you can use any format. I think it would be a good timeline to have all proposals up for vote starting next week.
Title: [High-level on sentence overview of your proposal]
Eligibility to claim sICX: [qualifications to be able to claim, i.e. liquidated between Jan20th and Jan 24th 2022]
Amount of sICX to use: [A number of sICX to make available to claim, this would be distributed pro-rata based on the liquidated amount of each user]
Overall, it’s great to see the governance participation and discussion. I hope to see this not only in black-swan events but in general Balanced governance going forward. Active governance, as we’ve all seen, is quite important.
Thank you sir and everyone in the DAO. I am confident we will get through this and be stronger than ever soon. Times like these when dealt with appropriately have the ability to strength the community and are pivotal moments. I urge the DAO to think big picture. Big thanks to everyone who has been working tirelessly.
This sounds like a great solution for the affected ones and for the very future of the DAO and Balanced. It’s in times like these we are tested and I’m sure we’ll get through this.
I am happy to see steps being taken and communication being put out. I do however still 100% back the idea of full refunds.
This can be done by returning the amount of total Sicx at time of liquidation and also putting the user back in to the loan they were in.
This way the emergency fund only pays back a portion and the rest of the Sicx is coming from the loan being retaken back out. This I feel would be the best option. I do understand why some would be against it, butin his type of scenario I feel this is best while we all have further discussion one how to make the Dex better for everyone.
I see your point here, but this would take considerably longer (making people even more nervous and frustrated as they wait), be considerably more difficult from a development perspective, and have an identical impact from a net worth perspective. When calculating net worth, debt is negative.
Here is an example, hope this helps!
Bob:
Collateral = 100
Debt = 67
Net Worth = 33
Alice:
Collateral = 33
Debt = 0
Net Worth = 33
Bob and Alice have identical net worth. Giving back 1/3 of a borrower’s collateral at time of liquidation would be identical, in net worth terms, to what you suggested because people were liquidated at 66.67% LTV.
I can see how that makes sense and would be difficult. So pretty much the idea would for example and easy number if I had perfectly 100,000 Sicx at time of liquidation then with this refund being 1/3 I would get back 33,333.33?
I still feel that’s a little low, but I also do feel that is better then losing everything.
Hmm, perhaps shoot me a DM? I’ll try to explain 1 more time, but the sentence I quoted above has me concerned that you didn’t grasp the fact that they are identical. I’ll use your example.
Bob prior to liquidation:
Collateral = 100,000 worth of sICX
Debt = 67,000
Net Worth = 33,000
Bob After liquidation and after this possible reimbursement process:
Collateral = 33,000 worth of sICX (based on the price at time of liquidation)
Debt = 0
Net Worth = 33,000
They are identical, nothing is lost. Giving back anymore than 33,000 would actually be paying people to get liquidated, so that’s why I was confused by your comment. Hope this helps. If you still don’t understand, please DM me as to not clutter the thread.
Although I of course would prefer 100% of my coins back as i didn’t expect the rebalancing …
Im willing to accept that I for one (not saying everyone else included) didn’t read as much into it as I should have and understood everything.
I am grateful for something rather than nothing as no body has to do anything.
I think other users not affected will also agree with it as they are only losing the loan!
Agreed here also. That’s seems pretty fair to me.
Allright allright! As much I would love a 100% refund (who doesn’t) of all my 200.000 ICX that got liquidated lets also be honest with each other and to ourselfs. Nobody saw this shitstorm coming and nobody was expecting this kind of effect of reversed balancing. yea, I know the feeling! Watching painfully how your liquidation price is going up and you can’t do shit about it feels very helpless. But you know when your loaning money you take a risk of getting liquidated. We all knew what we where getting into. I think this proposal is more then fair, realistic and suited.
But most of all, lets make sure this will never happen again and think of better ways to revise the rebalancing mechanisms.
I understand it’s a more difficult ‘solution’, but I also agree on this one. Some people indeed lost because of bad choices, but others lost important (life) investments in a project they truly believe in, because of circumstances that could not have been foreseen and they were impossible to escape from this liquidation. Offcourse we made the choice to take out a loan ourselves, but even if you did very responsible, it took you off guard.
Offcourse I would be happy with A refund of the liquidation fee rather than NO refund, but I will be left with mixed feelings and a dent in my confidence.
I just feel bad… Always defended the project in my private community and now I lost a big part of my investments with it 
I respect everybody’s meaning about this situation and I will also respect every outcome, these are just my thoughts.
I am excited to see proposals discussed. As a voter, I am way more likely to vote in favour of a proposal that has had input from the community before being posted for a vote.
Suggest to use standard liquidation fee, align with all player. we can lower 0.5% to 1% as special discount compare to other platform
The thing is now we need someone who is willing to put up BALN to create the proposal for everyone to vote on.
From what it seems everyone is open to doing is whatever the amount of Sicx that was liquidated you would get back 33% of it.
Example you were liquidated 100,000 Sicx. You’d back 33,333.33 Sicx
You would also have to go and claim it somewhere in the app from what I understand from one of @benny_options posts in here ( correct me if I’m wrong on having to claim)
Title: Return 1/3 of seized collateral to all borrowers liquidated between Jan 20th and Jan 24th 2022
Eligibility to claim sICX: Balanced borrowers liquidated between Jan 20th and Jan 24th 2022
Amount of sICX to use: 1/3 of the liquidated amount - 1.954M sICX out of the 2.27M sICX held in the emergency reserve.
Hey guys, Just copying this from the other thread…
There is general agreement that some refund should be made, and it is clear that the system spun out of control with unexpected rebalancing dynamics that hurt most of us, but some more than others. Since this is different than the May crash I’d propose the following only apply for those liquidated in the most recent crash.
At the time of liquidation accounts had an LTV of 100:150, so 2/3 of the collateral value went to covering the debt and 1/3 went to incentives or into the emergency reserve fund.
Proposal: Balanced DAO refunds 1/3 of liquidated collateral value to those who were liquidated. This will restore those who were liquidated back to the value they held at the time of liquidation.
- The emergency reserve holds sufficient sICX to cover this. Roughly 1.954M sICX would be paid out from a reserve of about 2.27M sICX.
- This means Balanced would be covering the value of the incentive fees out of previously accumulated sICX. This seems like the sort of emergency this was retained for.
- Those who were liquidated would thus be made whole to the value they held at the time of liquidation, plus they would be free of any debt, so they would be free to redeposit with Balanced or not.
- To accomplish this we’ll need some smart contract work - @benny_options - can you check with the devs to see what is possible or already in progress?
- A vote will be proposed to take this course of action.
- Another vote would be proposed with the specific list of refunded addresses and amounts so everyone can see and confirm.
- Considering that we seem to have had as high of vote participation in the 1-day votes as we did with recent 5-day votes we could also go with shorter vote durations for these in order to get the funds available sooner.
It seems like this level of refund is required. Is it enough? If someone else has an idea for another specific proposal please detail it out for us.
Balanced will have to go further to incentivize borrowers to take on the risk of a loan going forward, and serious thought needs to be given to other approaches to maintaining the bnUSD peg.