I like this proposal. Maybe we could simplify it a bit so its coded faster: Just use sICX from emergency reserve. We could say we use 2M. 1.5M for liquidated and 0.5M for borrowers. Nice full numbers are also easier to be communicated.
We shouldn’t add more proposals now. Let’s take a vote.
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Is there a way to get a summation of all points in a short form, I want to make a well informed decision in voting .
This reverse rebalancing, non-informed high penalty fee and early lock up of collateral have ruined 4 years of hard work for many. Even the loan which was not enough to stop the reverse rebalancing. Left with nothing. We don’t expect a little compensation. The 1/3 proposals are the least we accept for getting screwed.
We would much rather have our positions back with the low liq price, that’s why I say 1/3 is the least we accept. Balanced is let go easily with this deal. Trust me.
Imagine setting a liq price of 40 cent, getting liquidated when market price is over 70 cent, then the price goes for a rally again and you have No funds left because the platform took it. I don’t have words anymore. No other DeFi platform does this! It should speak for itself. We trusted this platform being the bank of Icon since day 1. Now we expect to have back our funds stolen from us. Then we should think about improving this platform. If we don’t correct this by giving our funds back, you can just forget about users still wanting to take up loans on Balanced in the future. You should ask yourself what is more important to you.
Keeping the sICX in the emergency fund, don’t use it for anything while nobody wants to use loan services on Balanced again or use the liquidated money to give back to the liquidated for the error and just maybe have a chance to save the reputation of Balanced. What is more important to you?
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Couldn’t agree more. BALN stakers should weigh in the future of Balanced reputation when making their decision.
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@BillGates thanks for your suggestion i’ll respond to it later in this post.
In this post I would like to respond to some suggestions/feedback but firstly elaborate as to why I beleive that such a proposal is most fair and best for the protocol.
Let me start with three starting points that I strongly beleive in. I think it is important that a general agreement is made on points like these before any proposal can truly succeed. Some are facts others are open to interpretation so you are welcome to respond to both these points as my proposal.
- The Balance protocol did not malfunction, glitch or steal and acted according to the set parameters that we are all responsible for as BALN holders. However, the set parameters were not suited for the market conditions present on 20-24th of Jan causing an unintended and hard to predict short squeeze making it very difficult to maintain a loan.
- I believe that a compensation is fair towards the liquidated borrowers. The penelty for liquidation was too high in this situation and most accounts that got liquidated did not play a high risk game.
- I also believe that a reward/appriciation is fair to all borrowers. As a borrower I was actually scared for a moment, not for the price drop but because I feared that during the night more and more borrowers would close their loan making the effect exponentially worse. In my opinion this reward/appriciation is therefore mostly intended for those that hold on to the loan and experienced the rebalancing the longest.
These points are the fundation of my proposal so if you agree or partly agree with them consider helping to make it a proposal that has a good chance to pass.
Now I will respond on my feedback and also on some other proposals.
First @arch: I understand this proposal and totaly agree with the sentiment but I feel that this is not fairest solution. The liquidated accounts only get a small reward/appriciation due to having the loan a less amount of time. Making the penelty for liquidation way too high in my opinion. There is some logic that this proposal is the fairest but I think that since we are a community there is room for empathy.
@AwaxJago: I personally still believe that a 25% refund is the way to go as it would not affect any other users of the balance protocol. It would be like it never happened and the liquidator penalty is still in place. However, if it turns out that 25% will not be supported this would be a fair second best and would agree to it if this would come to vote. Although I would definitly still like to add my second act to rewarding all borrowers.
Now to respond on some actually given feedback:
@BillGates Understand your points and would definitly be open to some changes. Just two points/questions:
- The 0.5M you suggested is significantly more value than the 100K BALN proposed. Is this just an example of nice round numbers or do you feel that a larger reward is fair?
- The reason that i chose BALN instead of sICX is because I see BALN as an appriciation token that users receive for using the protocol. In my mind it is therefore the best token to distribute as an interpretation but in the end it doesn’t really mater ofcourse. @benny_options is it more difficult to use both BALN and sICX or does that not really matter?
@Bot123456789 : Your suggestion to set the snapshot date not at the very very end but a bit sooner seems fair so I will make the change.
@benny_options : I will specify the snapshot day! As of now I am thinking about 21st of Jan based on @Bot123456789 's feedback. However an average over all days also sound good. Would that make it more difficult to program?
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Could you please say where it does state that there is a penalty fee of 33%? Its neither on the UI nor hidden somehwhere in the docs. This process here is not ideal. First we need to agree the existence of this flaw. You say the protocol worked properly. Then put the responsibility to those who coded the platform and just left out the existence of an unreasonable high penalty fee on the ui.
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In the documents this was stated. It may surely be possible that this could haven been displayed more clearly but because I personally was informed about this it is not one of my keypoints/arguments for a compensation. Feel free to make your own proposal (mostly coppied if you agree further) and add your argument but that is not mine.
Im going to explain why I believe it is imperative for the solution to include all borrowers and for them to be equal.
The high liquidation fee is something all borrowers were faced with, that exact fee, is a large driver in the actions of many borrowers that kept their positions alive. I mean I personally considered letting it close and might have it was on a CEX, which does liquidate and then returns the difference, but I would never do that on Balanced. The lesson I learnt from my last liquidation(unrelated to Balanced) was not to prop things up. But this one was different, so required different steps.
To not address that non-liquidated borrowers faced the SAME thing we feel liquidated borrowers faced and that we feel the liquidated borrowers should be compensated for, is directly harmful to the platform. They are, again I might add, right as this moment, still supporting the platform, and did throughout the volatility and did for far longer periods of time.
The entire time, the liquidation penalty was 33%. They knew, thus they acted. This is not a proposal for the liquidated, this is proposal for Balanced stakers to not alienise and damage sentiment with existing borrowers.
We cannot say, we need to compensate all the liquidated parties, without directly and unrevocably proclaim to the non liquidated parties - “well what you experienced was way easier, so tough tities”. I mean, we can say that, and thats fine if we do nothing, but nothing will damage sentiment and optics more than that against current borrowers.
If thats not something people agree with, thats okay too, but thats my perspective.
EDIT: I want to point out something that people seem to miss from my proposal, the liquidated parties get counted by a factor of 1.5 times.
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Under the head ‘liquidation policy’
Please give me the wording. There isnt even mentioned the word liquidation penalty. So you must be interpreting somewhere. I would like to know where?
Thanks for the edit. I read it before but must admit that I forgot about it during writing my responce. My appologies. However that 1.5x compensates mostly the shorter timeframe they had the loan open and not really the fee. And that is probably ofcourse intended by the proposal. It is a fair solution but I personally believe something extra for the liquidated accounts is fair.
Thanks for the responce!
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I am actually also open to higher values… potentially. The important thing to me, is the valueing of all borrowers, as they all experianced the exact same Balanced parameters.
(And some for far longer)
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It wasnt even the borrowers who saved the protocol but those emergency measueres and bitcoin not further dropping. Everybody would have been liquidated if it continued.
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He can’t give it to you because there is none.
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Had I known about this fee I would rather be margin trading elsewhere instead of borrowing on this platform. This high penalty fee is a major risk and should be a big disclaimer before taking up a loan and it’s very unprofessional to not even include it in the docs. What’s even more unprofessional is not giving it back to the liquidated when the platform failed completely. Whether Balanced is here with a bigger user base 1 year from now depends on this vote. I don’t see the point of bringing the refund lower than 1/3 when we have the money ready and it’s basically the liquidated users’ money. It’s the least that should be accepted imo as we would rather have our positions still open with our low liq price. Getting 1/3 back is basically capitulating and selling at the bottom. What else should the emergency fund be used on? Court cases?
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Crypto loans should always be safer than margin trading. However, Bybit is safer than Balanced as it is now. If you had a 40 cent liq price on Bybit during the crash you would have kept your position and you could close it anytime on the way up for example. Here the funds are locked since way above 1 dollar mark and you can be liquidated anytime no matter how good your risk management is and you have to watch your position 24/7 and have funds ready at all times. Something is terribly wrong. Our affected users in our own community should get their 1/3 back. It’s their money when you think about it as their penalty fee went straight to the emergency fund. It’s the least that should be done in order to save face of Balanced.
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Guys,
I would urge all of you to take the following under consideration: The goal of this discussion is to ask Baln holders to give a sign of goodwill to people adversely affected by last weeks short squeeze. The only role the balanced team has in this, is to facilitate the discussion, maybe guide it or deliver infrastructure. But in the end the Decision (as all platform decisions) will lie with the balanced token holders (especially the stakers).
An explanation how this would serve their best interest might be heard and considered. But in my experience, it doesn’t help to act entitled, or antagonising the people you expect to help out. The last couple of days the most vocal people participating in the discussion have done a bang up job of antagonising the people ultimately deciding.
I would like to propose a 1 week cooloff period, during which the discussion thread gets locked and everyone has some time to read up on the underlying mechanics of what happened. Especially but not limited by:
- Short squeeze
- Rebalancing
- Liquidation mechanics (and the reason they are important).
Another interesting topic of research would be how sudden price drops affect other markets. (especially the 2008 housing crash can be considered very informing).
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I dont know how a vote cast at this time will pan out, but i can give the perspective of someone who has done research into rebalancing, liquidation fees and the use of leverage in general, and who has decided well in advance of the airdrop to pay off all loans, and move into unleveraged positions in the wake of uncertain times. I expect most people with sizeable BALN positions to have done the same.
While i went into last week without any leveraged positions, when shit hit the fan i took out a loan (above my normal risk tolerance) to help out people who got into a vulnerable position, and have allways profited from being in this position. And share the burden.
I also was a big supporter of a giveaway to help out the ones hurt most by the short squeeze.
For me personally, the entitlement, and the blame casting of some people here, have made me reconsider my position to a vote of no support.
The only reason i post this here, is becouse i know this is an emotional response to all the abuse flying around the forum the last couple of days. And i know most of the people who had their positions seriously diminished actually knew and understood the risks involved, and are behaving accordingly.
Personally i think it would be a shame for a few bad apples to decide the faith of the many.
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