Change USDN and USDC collateral factors to 80% and change liquidateDebtAmount to 1%

Proposal ID
HBUSKTSQN9LCTejBs2ByipuagNGVxm4dBdH6615SMg43

The main problem of the current situation on Vires is the address with 400M USDT/USDC debt looped with USDN collateral: (The Liquidity Protocol for Lending and Borrowing Assets – VIRES.FINANCE). This proposal is about liquidating this address faster or pushing the address to repay.

  1. Make USDN and USDC collateral factors (900) equal to USDT (800). These stable coins should not have different collateral factors.

  2. Change liquidateDebtAmount * 2 to liquidateDebtAmount * 100 in transferDebt method temporarily. So only 1% of debt can be liquidated at once. This is necessary to make the liquidations less impactful on the market. Once the whale is liquidated, change it back.

Transaction Payload

{
  "type": 12,
  "version": 2,
  "data": [
    {
      "key": "DG2xFkPdDwKUoBkzGAhQtLpSGzfXLiCYPEzeKH2Ad24p_CollateralFactor",
      "type": "integer",
      "value": 800
    },
    {
      "key": "6XtHjpXbs9RRJP2Sr9GUyVqzACcby9TkThHXnjVC5CDJ_CollateralFactor",
      "type": "integer",
      "value": 800
    }
  ],
  "senderPublicKey": "3gQ8QUfoGQW6YVuhUv3zuqsbmxbV5F2FAuDXJqVKD6C9",
  "fee": 100000000,
  "feeAssetId": "WAVES",
  "timestamp": 1649665558500
}
3 Likes

USDN CF needs to be lower, i agree with that.
Not sure about USDC CF. If all Stable collaterals are the same , we can come across this situation again. I think, until USDN liquidity reach a certain point inside and outside of the ecosystem we have to lower CF of USDN more than other stables.

(Lowering USDN CF doesn’t solve our current problem but it will make harder to use that loop again,although not impossible. They just need ~%10 more USDN )

Instead of muliplication liquidateDebtAmount * 2, shouldnt it be liquidateDebtAmount / 2 (liquidateDebtAmount / 100) respectively. I could be wrong, not sure about whole formulations

However ,i agree with slow liquidation process. Otherwise, there is no market anywhere to handle that much of USDN, unless borrowers liquadate themselves with other accounts ( That way they can get back their USDN much cheaper and use them to lock Neutrino for Waves )

Would love to read other people’s opinion on this.
Respect

2 Likes

Assuming USDN=$1 and treat it equal to USDT/USDC while ignoring the real-time price is not healthy.
And also I do not believe that gigantic USDN whale is outside the inner Waves circle. So we are now trying to save this whale with a second proposal?

It all seems like everything was and is about to save this account and not the real users.

Are we going to change the rules everytime whenever the majority holders (few people with lots of power) pleases? This is the definition of a totalitarian system.

Add:
Also, this 500M USDN account is not the only one, there were 2 more accounts with same positions, worth 200M USDN total.
So who is gonna believe that this “group” has more than half the USDN supply BUT doesn’t have enough Vires to decide the result of any proposal? The “whale” will decide the result anyway.

2 Likes

I don’t care, just liquidiate the whale and give us USDC/T back. And if possible change timeframe for voting to only 1 day, this’s an emergency situation.

1 Like

Great idea. I was worried about the liquidity if this whale gets liquidated. YES

I am ok with this. Another way of making the whale liquidate sooner would be to raise skew APR to 200% or above. This way, you do not have to bring down collateral factor and it will be harder next time someone tries. Though these factors seem reasonnable. The fact of liquidating it bit by bit is a good thing as we certainly do not want USDN to depeg again.

Remain one question though, what happens if the whales get liquidated? Are these USDN converted back to USDC/T?

5 Likes

That would make the whale get liquidate quicker hence it won’t pass.
They are trying to win more time before everything collapses I believe.

Finally, a proposal that actually makes sense.

The liquidators take over the debt position. So they can either just keep the position, or close it by repaying the USDT/C. In the latter case, there will be more USDT/C available to withdraw.

Thanks, anyone taking over this positionn will do it for the fees (10% I think?) and try not to destabilize the market while closing it I believe. But they will have to be quick anyway because of the huge APR gap between USDC/T and USDN. So, question is, who will consider making a risky move like this as USDN depeg is still in everyone’s mind?

Lacking an admin answer to this post, 1000% YES here…

Well, apparently the team is responsible for the problem.

Sasha posted a partial repayment link on Twitter as far as I can tell.

However, there is still no available withdrawl despite the payment.

https://t.co/0K3SpeMPZq :)

— Sasha Ivanov 🌊 (1 ➝ 2) (@sasha35625) April 11, 2022
2 Likes

Oh, cool, you guys repaid 900k of the 400M USDC/USDT you borrowed! That's a start at least.. You know this wallet is DIRECTLY linked to https://t.co/4NqHQsTUzf -- same dev behind the Neutrino contract. It's unreal that you won't even TRY to deny it.

— Oris Dorch (@OrisDorch) April 11, 2022

Finally something that makes moderate sense

Why is the transfer debt change not reflected in the transaction payload above?

“Make the Whale bleed”???
Pointing to latest proposal?
Who’s the f… Whale, guys?

Where is this indicated in the proposed tx payload?

2 Likes

USDN collateral factor should lower than USDT USDC, for example 70%.
If collateral factors are the same, the same loops come again.

4 Likes

I’m conflicted about this.
Maybe I am wrong, but consequences of activities by a few Whales have caused a liquidity squeeze and high APYs on lent funds.
Maybe I read this wrong but;
Surely, this disequilibrium will eventually balance out with the high APYs bringing in more liquidity, allowing impatient lenders to withdraw. Eventually, the APYs will start coming down when, mainly, long term lenders like myself are left.
Perhaps I have this wrong, but isn’t this a more organic way of letting the situation resolve, that will also encourage faster Vires growth overall. Knee jerk reactions to these natural cycles could damage perception of Vires long term?

1 Like

The bleeding whale does not seem to be about to be liquidated!
“Don’t touch a working system” is surely indisputable wisdom. But in an emergency situation, when it is really clear what is wrong and what the threat is, timely solutions are needed. If there is enough time to think them through, perhaps not just short-term fixes.

I agree.
There IS a difference between custodial stable coins and algorithmic stable coins.