VIP-215 BUSD Debt Mitigation
As BUSD will be deprecated and support will cease on Binance soon, we are proposing the following immediate solution in order for BUSD depositors to regain access to their BUSD and swap them to other stablecoins.
Summary
If passed this VIP will perform the following actions:
- Authorize the MoveDebtDelegate contract, to borrow USDT or USDC on behalf of the account 0x489A8756C18C0b8B24EC2a2b9FF3D4d447F79BEc
- Accept the ownership of the MoveDebtDelegate (Governance will be the owner of this contract)
Details
At block 34266181 (Dec-11-2023 04:56:57 PM +UTC) the shortfall in the Venus BUSD market was 7,221,907 BUSD:
- 4,848,819 BUSD supplied by BUSD suppliers
- 2,373,087 BUSD allocated to the protocol reserves
The liquidity of the market is almost 0.
Binance will cease support for BUSD products on 2023-12-15. Given this context, this VIP aims to help provide liquidity to the BUSD market as soon as possible to allow BUSD suppliers to have access to their funds in the market.
The MoveDebtDelegate is a permissionless contract that will allow any wallet to interact with it via the function moveDebt. The expected flow is:
- External BUSD providers (any wallet) repay BUSD borrows on behalf of BUSD borrowers, via the MoveDebtDelegate contract
- In the same transaction, the MoveDebtDelegate contract will borrow the equivalent amount of USDT or USDC, on behalf of the account 0x489a8756c18c0b8b24ec2a2b9ff3d4d447f79bec, and it will send those tokens to the external BUSD provider, to compensate for their contribution
At the end of the operation, when every BUSD borrow is repaid:
- BUSD suppliers will be able to withdraw 100% of their funds. The BUSD shortfall will be zero
- The BUSD providers will receive in USDT and USDC the same amount provided in BUSD. Net value for these providers: 0
- The debt of the account 0x489a8756c18c0b8b24ec2a2b9ff3d4d447f79bec will be increased, distributed between USDT and USDC
There isn’t any economical incentive to interact with the MoveDebtDelegate: the USDT or USDC received from the MoveDebtDelegate contract will be the equivalent amount to the BUSD provided (according to the Venus oracles).
Security and additional considerations
We applied the following security procedures for this VIP:
- VIP simulation: in a simulation environment, validating the behavior of the MoveDebtDelegate contract is the expected one after the VIP
- SwapDebtDelegate, a contract similar to MoveDebtDelegate, was used in the VIP-99 Whitelist BNB Chain to swap BUSD debt from 0x489A8756C18C0b8B24EC2a2b9FF3D4d447F79BEc
Deployed contracts on main net
References
- VIP simulation
- Source code of the MoveDebtDelegate contract
- Previous shortfall repayments:
- VIP-191 Enable forced liquidations on the BUSD market
Voting: A VIP will be submitted soon to vote on this proposal.
