Recent Liquidations & building goodwill

Proposal Discussion WIP: DFP
#276

If you take only 30% of the emergency fund and 5% of the BALN from the DAO and divide it equally between all borrowers, everybody will get a little unsignificant share.

Here is why I think this is not a good proposal:

1: Most of the emergency fund is from the liquidated borrowers and should first and foremost be returned to them because of the error on this platform.

2: Distributing the funds equally between all borrowers makes no sense as a borrower of 1 bnusd gets just as much as a borrower of 100 000 bnusd. It should be a calculated and more sophisticated refund.

3: Only spending 30% of the emergency fund is way too little as a much bigger share of the emergency fund was built up by the liquidated borrowers between Jan 20th and Jan 24th.

4: The non-liquidated borrowers are favored over the liquidated borrowers, which is upside down given that the liquidated borrowers have funded the emergency fund.

@particleX proposal is the proposal I have supported from the start and if you would like the non-liquidated borrowers to get compensated, then go with @iconist proposal.

I agree with @Advocatus92 . The @arch proposal really belongs to a different thread. This thread is called “LIQUIDATION FEE DISCUSSION”. Hence, this thread should actually only contain proposals for the liquidated borrowers. Anything other is off topic and should be removed.

5 Likes
#277

Right. It really is a slap in the face to those unfairly liquidated, and would do nothing to restore faith in the platform. People need to understand that this is an event that should not have happened and should never happen again. Trying to ignore that fact and pretend it was something else gives the impression that it could easily happen again, and people will continue to be wary of borrowing until things are made right.

4 Likes
#278

If liquidated users are not getting 1/3 of their collateral back, I will never dare to use services on Balanced again because I will not trust that I am protected against errors. I will even reconsider my investments in ICX. I don’t think I am alone on this. To me it’s a no brainer when we have an emergency fund to cover this which by the way happens to consist of the liquidated money.

7 Likes
#279

  1. The platform had a big problem that day.

  2. Users with much lower liq price than market price got liquidated anyway.

  3. Those liquidation money went to the emergency fund.

  4. We demand that very same money back.

  5. Greedy folks want to use it for other things.

That’s basically how I see it right now.

7 Likes
#280

I also agree the platform failed and pushed us into liquidation and slowly they are trying to give us back nothing which is extremely scammy im waiting for the vote and im waiting for balanced to give back our funds which where wrongfully taken period or myself and alot of others will be taking steps forward to get our funds back.

6 Likes
#281

Title: Rate Adjustment to bring liquidations inline with BIP18 (Increase Liquidation LTV to 85%)

Eligibility to claim sICX: Any address liquidated before BIP 18 was enacted. Any funds not claimed after 6 weeks of initial dispersement revert to the Emergency Fund.

Amount of sICX to use: 18% of the liquidated sICX (the amount needed to adjust the rate from 67% to 85%)

Reasoning: In a gesture of goodwill, rate matching liquidation amount of previously liquidated position to the rate enacted following BIP 18.

BIP18: Increase Liquidation LTV to 85%

Given the recent volatility and community feedback, the current liquidation ratio of 67% seems too harsh on borrowers. An 85% LTV provides enough cushion for the DAO to service any bad debt from liquidations, enough incentive for liquidators to trigger liquidations, and a more reasonable penalty of 15% to liquidated borrowers.

2 Likes
Proposal Aggregator [No Comments]
Emergency fund - goodwill - blackswan event - refine proposal
#282

Title: Rate Adjustment to bring liquidations inline with BIP18 (Increase Liquidation LTV to 85%)

I think this is the best proposal.

Refunding an amount that brings previous liquidations in-line with the current Liquidation LTV that the DAO voted on seems fair.

I also think it is fair to extend this to all those liquidated before the recent event as well, since this is basically just a retroactive penalty adjustment.

2 Likes
#283

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.

#284

We shouldn’t add more proposals now. Let’s take a vote.

2 Likes
#285

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 .

#286

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?

6 Likes
#287

Couldn’t agree more. BALN stakers should weigh in the future of Balanced reputation when making their decision.

2 Likes
#288
#289

@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.

  1. 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.
  2. 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.
  3. 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:

  1. 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?
  2. 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?

2 Likes
#290

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.

2 Likes
#291

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.

#293

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.

1 Like
#294

Under the head ‘liquidation policy’

#295

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?

#296

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!

2 Likes