The @iconist proposal favors the non-liquidated borrowers as well so I see this have a high chance of succeeding
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I’m just going to hop in to point this out again real quick. Based on some recent comments it seems this hasn’t sunk in for some people so I just want to try again to make sure you (and others) understand.
A 33% return would be giving back 100% of the value to anybody liquidated. There would be absolutely no economic penalty whatsoever, outside of losing leverage, so please please try to think this through by referring to this post. I’m hoping as many people understand this as possible in order to have the best result of a vote as possible.
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Will do! Also a good idea to let the BALN come from the emergency reserve. What you describe here is indeed what I intended. One snapshot block somewhere between Jan 21 and Jan 24 and a distribution pro-rata the amount of debt.
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Exactly, 1/3 is perfect, then we can show goodwill to the non-liquidated borrowers as well as suggested before. I think this is the perfect option for everybody affected.
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The non-liquidated borrowers also got an advantage that the liquidated borrowers did not have, after the recent votes by bringing the liq price lower (LTV).
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And it’s important to give refunds based on the user’s collateral. A percentage calculation. Doesn’t make sense to split it evenly among all.
I left the specific block open for now and am open to suggestions. Otherwise also the distribution method that arch describes in his proposal could be used but that may overcomplicate things in my proposal
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If you go back to what I typed a few comments up, yes it’s 100% of value liquidated, but doesn’t account for the amount of ICx purchased in an attempt to stave off liquidation of a faulty rebalance system. My case is pennies compared to others, but it’s very similar to others but at a much smaller scale. Someone like ICxholder that pumped thousands of dollars worth of ICx to counteract the rebalance but still ultimately got liquidated. That is a second level of financial losses that isn’t addressed in any proprosal, but are a direct a result of a faulty rebalance system.
While that sentence is accurate 33% = 100% it doesn’t take into account the efforts that some of those liquidated took to counter the faulty rebalance system.
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In accordance with this I have altered the proposal from 5% of ~2mil DAO BALN holdings = ~100k units to 15% of Emergency fund (720k) Baln holdings = ~100k units.
This is to also note to anyone following along, the change in that term of my proposal.
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I want to state again: The UI doesnt state any penalty fee. Therefore no penalty can be imposed. Otherwise this would be just a scam.
It already has a bad taste since the user has no idea when he got liquidated at which price. Such a lack of transparecny is just shocking.
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Please stop repeating and yelling scam. We are trying to have a constructive conversation to come to a mutual agreement. Comments like these do not help.
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There are many people here who still misunderstand the two problems (overagressive rebalancing and the false UI). So this has to be repeated everytime someone falsly states that its the fault of the liquidated people.
So I am going to make some assumptions:
- You don’t think everyone agrees with you, hence needing to publicise it
- You would like everyone to agree with you.
Please in your words, if it is ‘not the fault of the liquidated people’ how the people that didn’t get liquidated avoided it.
I want to hear you describe how someone that sold a ton of other assets at a loss and propped up their loan is ‘just lucky’, or whatever other excuse.
I want to hear how all the people that did understand their product and managed to keep it up, are somehow special and didn’t instead stress and work hard at managing their position.
I want to see you turn away a far larger percentage of people that weren’t liquidated than were from supporting pretty much anything after this.
@Advocatus92 as Bot mentioned, everybody is trying to have a productive conversation. I will reply to your post here, but then it’s time to move on. Any more posts about this will be removed. I don’t want this highly productive thread to start digressing.
I’ll address your points below:
Liquidation has no formal definition like this that I’ve seen, especially not in this context. See the definition of liquidate on investopedia. It simply means to turn assets to cash. There is no formal liquidation definition that you keep referring to. I’ve seen definitions of partial liquidation and margin calls that could apply, but certainly not some broad-stroke definition of Liquidate that automatically means your debt is paid and you get back everything else.
Additionally, the specific definition in the context of Balanced is mentioned in the docs here. If you type in “liquidate” in the search bar of the docs, it’s mentioned quite a few places actually.
Additionally, the specific definition of liquidation in the context of Balanced is mentioned in the Disclaimer, which is forced in to be seen by every user at the time of signing in.
Screenshot from disclaimer
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Your definition is right. The collateral gets turned to cash to repay the loan. Thats it!
Partial liquidation didnt happen because unfortunately balanced doesnt support this. Margin call is also not supported by the platform.
If you expect of every user to read the documentation then at least have a disclaimer and a warning before using the platform. I doubt thats what balance is aiming for. Why even show any information on the platform if you leave out the important information of a unreasonable high penalty fee.
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Now I was reading the docs with the liquidation policy. Even here the penalty fee is not mentioned.
In the docs is rightly stated that this liquidation should encourage users to manage their position. Why you keep the unreasonable high penalty fee a secret I dont understand. This goes goes against it.
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I did not get liquidated nor do I have a loan; I am a concerned Balanced token holder. This was a severely negative event as far as sentiment goes, and people become very skeptical when things such as this occur. 1/3 was the amount taken during this travesty, and 1/3 is amount that should be returned, especially when it is well within means and the funds come from those liquidated in the first place. I believe that failure to provide that (or especially anything at all) would leave the impression to many that this is and was some type of elaborate scheme in order for people to make lots of money. That would be the impression at least, which is not good publicity, especially with all of the negative events occurring recently in crypto. This would most likely severely negatively affect the price of all Balanced tokens and transfer to all assets associated with it. A quick reversal or refund is the norm for preventing bad publicity when something like this occurs, and it needs to be done soon in order to restore faith in the platform.
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Please review @benny_options reply on this. You have got this backwards. No one is stealing 2/3 from you.
A 33% return would be giving back 100% of the value to anybody liquidated. There would be absolutely no economic penalty whatsoever, outside of losing leverage
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As an avid Balanced user, I have also been a previous borrower and want to express my deepest sympathies for those of us who have been liquidated. I hope anyone who has been liquidated or financially hurt will bounce back stronger from this experience. Having said this, I want to weigh in on the following items:
Q1: Is Balanced rebalancing feature flawed?
A: No.
Q2: Then, who’s to blame for this?
A: All of us since we were all informed about how rebalancing works from the beginning.
Q3: Does Balanced need to protect its users from their own demise?
A: I believe we have a responsibility to protect our users.
Q4: How do we protect our users?
A: We need more safety measures put in place such as limiting collateral factor of the ICX supplied as collateral. Users should only be allowed to borrow against let’s say 10% of their collateral or some low % to protect them from aggressive risk management that would jeopardize the entire platform. I also think this isn’t going to be a black swan event in crypto where markets are very volatile, we need stricter limits to safeguard our users.
Q5: What compensation is fair from the Emergency Fund?
A: from inception of Balanced, there should be a way to average all users’ loan balance up to now. [(one user’s average loan balance over the lifetime of Balanced) / (total average balance of all loans on Balanced since inception)] x Emergency Fund to be distributed for compensation.
It seems like some people who were not liquidated at the latest event had to take immense measures to risk manage to avoid more losses. Maybe taking an average of the entire loan balance of all users from inception of balanced and prorating it this way would help all who were involved in borrowing?
Overall, I support using Emergency Fund for helping out those who were hurt. These are growing pains that us new users are experiencing. I believe for goodwill and future growth of the platform, we have to use these funds to help those who were hurt. But going forward, I believe these rebalancing events will happen more often and we shouldn’t consider this a black swan event, rather an event we will be better prepared for in the future.
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No matter what the solution is, it has to be a solution that compensates the liquidated borrowers as best as possible as they lost everything even with a low liq price. The non-liquidated borrowers should get a compensation too as they had to sell other assets at a loss to save their position. However, they still maintained their position and have plenty of time now to plan accordingly after all warnings. All users have suffered but the liquidated borrowers obviously suffered the most as they are left with nothing. Those who don’t agree with that are maybe working for their self interest and not the truth. Even the loan of the liquidated many had to use to make ends meet but it wasn’t enough against the massive rebalancing. I wonder who made a big buck here with their liquidation bots. Seems fishy everything if I should be completely honest with you.
When using leverage in trading, the only thing that users should worry about is their liq price and plan risk management accordingly, which many did. When rebalancing both ways and high penelty fees also come into the equation, it gets very advanced and challenging. Let’s make A well CALCULATED refund to the victims and go on making this platform better for the future.
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