Recent Liquidations & building goodwill

Yes i think its time to vote now seriously everyone has over discussed lets all stay calm and let the vote take place.

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I feel like this thread has gone form
How to help the people effected by liquidations to how can everyone some type of refund.

This was about the people who lost EVERYTHING.
Yes I get some people had to put money in to save their positions that didn’t get liquidated but lost money I get it, BUT people who were liquidated put money in to save their positions and still got liquidated. They lost their coins and additional money that is not even be figured in to this.

Even if I was refunded 100% I would still actually be at a lost.

Let’s please keep this on the topic it should be.

This thread has really shown who cares about the over all community and who is only here to benefit themselves.

Now let’s please get this to a vote and stop delaying

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Hey folks - seems this thread got a bit of out hand since I last checked.

Going forward, this thread is to be used only to make new proposals to build goodwill or discuss parameter changes to existing proposals. Opinions on existing proposals will be expressed through voting on-chain, not through this thread. I feel it will be much more productive this way.

As for when to take this proposals to vote, anybody can submit a vote at anytime. I have spoken to a few community members that planned ~1 week of discussion prior to submitting to a vote. I’d expect them to make the proposals on Monday, given a new proposal was recently shared as well.

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Thank you for stepping and glad to hear that their is discussions on when to put this to vote.

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Hey @Chiel mate… loving your proposal. looking at all these comments your proposal covers two groups that seem pretty ticked off… Borrowers who are not liquidated and still using Balanced and borrowers that were liquidated. Can I get a bit of feedback into your proposal before it goes up?

What do you think of raising both amounts? We can make a bigger bang, I think it needs to be meaningful to both parties.

For borrowers that didn’t get liquidated, 100k BALN split between all borrowers at Jan 24th or whatever probably won’t do much eh? Too little split between too many… How about 500k? Maybe 750k? Your call, but the more the better, I think it’s a good time to spend some BALN on goodwill mate. This group put in a lot of work and you want their vote!

Liquidated borrowers… 25% is still taking a bit extra than was needed for liquidator payouts, but 33% would maybe be too unfair to people who maintained their position? How about a middle ground at like 30% eh? Maybe if you give enough BALN to the non-liquidated group, they’ll still support a 33% proposal? I know I would still support this proposal at 33% return and a fatter BALN allocation to borrowers.

idk mate, I’m no expert, but I’m thinking you can juice up this proposal and make both groups happier, get the vote of em both. Thanks mate…

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Title: Building goodwill

Return 35% 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

Eligibility to claim BALN: All borrowers on a yet to be specified block between Jan 21st and Jan 24th 2022

Amount of sICX to use: 35% of the liquidated amount held in the emergency reserve.

Amount of BALN to use: 800k BALN from the emergency reserve.

Make Balanced great again!

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I don’t think voters would like an additional big amount of BALN to be thrown into the market.

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Mate… maybe change that 35% to a 30%… Rewarding people for getting liquidated will rub people the wrong way. No higher than 33% else it definitely ticks people off because they were better off getting liquidated than trying to keep their position alive…

That’s not true. People sold funds and still got liquidated so lost other money and tokens!

It’s very hard to proportion I do admit! But they’re not better even at a refund of fees many will still be down hard

But I do agree not to rub others up the wrong way!

Like stated earlier, the liquidated borrowers wouldn’t choose this outcome before the liquidation as they sold much of their assets in the lows in order to save their position and still lost it, plus the high penalty fee etc. Won’t mention all the points again. Point being, no matter what the solution is of those proposed, many of them have lost much because their bigger collateral is gone in a rising market.

In my proposal, the non-liquidated borrowers also get a good deal, because I know many of them had to sell their assets at low prices to keep their positions alive. Even though the liquidated borrowers got hit hardest, I definitely see the points of the non-liquidated borrowers as well. Therefore, I think this is a good compromise.

I have never seen our community so splitted and damaged before. That’s why I proposed to give as much as we can back so that we can get back to build for the future. The funds won’t work for us staying in the emergency fund. It’s like refusing to use all the water you have to put out a house on fire.

Thanks for considering this.

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I agree with this. Somewhere between 30-33% for goodwill of those liquidated to keep them on and continue borrowing (more educated now). Rest could be distributed to all borrowers along with a lesser amount of BALN (100K-200k?) in order to keep goodwill with everyone affected and not flood the market.

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Any update regarding the vote @benny_options?

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To be clear, anybody can propose any of these votes on-chain at anytime using the “Vote” tab in the app.

Having said that, my plan as a community member is to discuss with a few other community devs tonight to make sure that each proposal is technologically feasible.

From there, each of these proposals will go up as a “Text Proposal”. Then the proposal that gets the highest approval rating during the Text Proposal voting stage will go to a second vote that would trigger the actual disbursement, assuming that the winning vote leads to a disbursement.

This is the best way to handle several proposals given our current voting structure, though anybody can decide their own process and lead it as they see fit if they would like.

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Apologies for having taken so long to get this written up that it is coming at the last minute.

I have been hesitant to get back into this discussion since it has been so contested. I also knew I wouldn’t be able to resist spending many hours on a more detailed analysis, so here it is. I’d just like it to be over so we can move on, but some valid points have been made that it was not only those who were liquidated that suffered a loss. And those of us who avoided it might feel they are getting the short end of the stick after having gone the extra distance to keep the platform functioning.

I have one other observation I’d like to make that may further stir things up, but it should be pointed out. When we experienced reverse rebalancing it added collateral as well as debt to our positions, so by the time people were liquidated they had significantly more collateral than they did before the rebalancing started. So, 1/3 of the final liquidated amount would also be significantly more than 1/3 of the originally held collateral. Let’s follow through an example position. I recall one person saying they had a liquidation price of 0.40 bnUSD at the beginning and they were liquidated at about 0.60 bnUSD / sICX. If we take a starting state with

100k sICX collateral, that gives about
27k bnUSD loan

Rebalancing prices ranged from 0.88 bnUSD / sICX to 0.60 bnUSD / sICX, but let’s assume a worse price from the range was applied for all sICX added and take the sICX price to be 0.80 bnUSD / sICX, which is on the high side of the likely average.

If we take the amount of sICX added to the position as a variable x, and the liquidation price to be 0.60 bnUSD / sICX, then

(2/3) * (coll@liq) * 0.60 bnUSD / sICX = loan@liq

or,

(2/3) * (100k + x) * 0.60 bnUSD / sICX = 27k bnUSD + x * 0.80 bnUSD / sICX

0.4 * (100k + x) = 27k + 0.80 * x

13k = 0.40 * x

x = 32.5k sICX added to the collateral position by the time of liquidation.

By the time of liquidation they would have had 32.5% more collateral than at the start. While I don’t have exact numbers for this, it does seem close to what I actually saw happening. The 0.4 → 0.6 liquidation price move is close to what happened. It could have been more.

The point is that due to reverse rebalancing some of the people who were liquidated will be getting back more than 1/3 of the collateral they had before the price started to collapse. That is not the case for the first to be liquidated, but the first happened at a price closer to 0.85 bnUSD / sICX, before reverse rebalancing had any effect.

Let’s continue with the example to see what the state would be if collateral equal to 1/3 of the amount liquidated were returned.

Return 1/3 scenario
Collateral liquidated = 132.5k sICX
Amount to return = 132.5k / 3 = 44.17k sICX = 44.17% of original collateral
Value of return at the time of liquidation = 44.17 * 0.6 = 26.5 bnUSD

Value that the account would have had at the liquidation price if reverse rebalancing had not happened = collateral value - debt = 60k - 27k = 33k bnUSD
Returned value % = 100% * 26.5 / 33 = 80.3%

Honestly, that is not what I was expecting! The account liquidated after experiencing rebalancing is getting back more than 1/3 of the amount of sICX it started with, but it is at a loss wrt its starting sICX value, while an account that was liquidated at the highest price and suffered no rebalancing would receive all of their lost sICX in return. A flat return of 1/3 across all liquidated parties does not seem fair, but sorting it out to the point of perfect fairness appears more difficult the more we look at it.

This illustrates how differently we all experienced the event and how difficult it is to come up with a tailored solution for each account. The biggest factor that makes it difficult to devise a blanket solution is the variety of paths we all took in our battle to avoid liquidation, successful or not. We see in the above example that across the liquidated accounts we could easily have a range from 0% to -20% impact on account value with a simple 1/3 return solution. The same is no doubt true if we were to compare across non-liquidated cases. An account that did not have to pay off any debt simply ended up buying more sICX at a low price and will not suffer any effective loss in the end, even without any payout, while another that had to sell a lot of assets at a low price to pay off debt could end up sustaining a significant loss.

The complexity of a proposed solution will determine how much work it will take the community devs to implement it. Let’s go for a proposal that tries to account for the varying impact of rebalancing on the liquidated accounts. Roughly, those accounts liquidated later experienced more rebalancing and more loss. Without accounting for exact timing, the amount of rebalancing, and many other factors unique to each case it is impossible to calculate this exactly.

If we approximate the effects of rebalancing as linear over the time period from first liquidation to final liquidation, I’d suggest that we scale the return accordingly so that the first liquidation receives a return of 26% of liquidated collateral and the final liquidation receives 33.33% of liquidated collateral. With the timestamp of each liquidation event this should be a relatively easy adjustment to make.

For those of us who avoided liquidation it is even more difficult to devise a simple and fair way to make up for the excessive impact that reverse rebalancing had. Originally, I did not even think it would be necessary since the system was operating as designed even if it was putting us under pressure due to a short squeeze that many had never experienced before. For these, I’d suggest a nominal goodwill gesture proportional to the amount of debt held, followed by an increased incentive for borrowers going forward. For the goodwill gesture we could use the remainder of the sICX in the emergency reserve, which will be about 500k sICX. That will result in about a 5% sICX return based on the debt held on 1/20. As an encouragement for future borrowers I’d suggest we reduce the origination fee to 0.5% and award a bonus of 100k BALN from the reserve to borrowers proportionally for three months.

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

Amount of BALN available in the Emergency Reserve: 720,881.53

Based on the above reasoning, here is my revised proposal:
Title: Return all sICX held in the Emergency Reserve, along with 3 months of doubled BALN rewards to borrowers, redirected from the DAOfund, and reduce the origination fee to 0.5%.

Eligibility to claim sICX: All those holding a Balanced debt position on Jan 20th 2022

Amount of sICX and BALN to use: All sICX held in the emergency reserve, plus about 300k BALN, to be apportioned as follows: Between 26% and 33.33% of seized collateral will be awarded to borrowers liquidated between Jan 20th and Jan 24th 2022 scaled by timestamp linearly between the time of the first liquidation and the time of the last liquidation. The remaining sICX, expected to be about 500k, will be awarded to non-liquidated borrowers proportional to debt on Jan 20th, 2022. Additionally, 3 months of doubled BALN rewards to borrowers redirected from the DAOfund.

Note: It was pointed out to me that the 300k BALN award from the emergency reserve is effectively the same as redirecting 12.5% of rewards from the DAOfund emission to double the ongoing borrower incentive, so I have updated that part of the proposal accordingly.

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This is a great proposal that benefits all … even those not liquidated.

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The voting has began! Doesn’t look good for anyone liquidated!!

If you were affected, buy as much BALN as possible and cast your vote! (more the better)

Baln voting weight is locked before the vote

I have a suggestion for another time. It should be enough with a 51% yes.

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From the docs:

For a proposal to be approved, at least 20% of eligible BALN needs to vote, and 66.67% need to be in favor.