Following the execution of VIP-221 which reduced the CF of BUSD to 30%, we are prepared for the final CF reduction as part of the BUSD deprecation planned plan outlined in previous posts .
Over the past months, the community has approved several proposals in its efforts to wind down the market, in light of Paxos stopping to support BUSD in February 2024. The efforts to date included:
Freezing new supply and borrow by reducing supply and borrow caps to 0.
Increasing BUSD Reserve Factor to 100%
Pause MINT - complementary to setting supply caps to 0
Pausing BORROW - complementary to setting borrow caps to 0
Pausing ENTER_MARKET - will not allow users to start using BUSD as collateral. Users who have already enabled BUSD as collateral will not be affected by this update.
Setting XVS rewards in the BUSD market to 0.
Adjusting BUSD IR curves
Implementing the “Forced Liquidation” mechanism which was designed to liquidate accounts holding BUSD borrow positions, thereby returning BUSD to the Venus Core Pool and allowing users to redeem their supplied BUSD.
Repayment of BUSD insolvent accounts
In light of Binance’s announcement that it will cease to support BUSD and in our continued efforts of deprecating the market on Venus, we recommend gradually winding the Collateral Factor for BUSD to 0.
Our initial step involves reducing the Collateral Factor by 10% to 0.72. This approach aims to minimize the number of accounts subject to liquidation. Currently, this reduction would result in 45 accounts affected with a total liquidation value of approximately $28.2K.
We propose executing this change only after the completion of the final shortfall repayment, allowing users to redeem their BUSD supply. To avert potential liquidations, we advise those utilizing BUSD as collateral to repay their borrows and redeem BUSD holdings before the implementation of this proposal.
Following the initial CF reduction, we plan to recommend more aggressive CF reductions to expedite the market deprecation. We urge users to proactively wind down their BUSD collateralized positions ahead of time to avoid liquidations should the community decide to adopt this approach.
Currently, this reduction would result in 659 accounts affected with a total liquidation value of approximately $65K. The list of accounts at risk of liquidation can be found here .
Following this CF reduction, BUSD will no longer be available to be used as collateral on the Venus Core Pool.
We urge users to proactively wind down their BUSD collateralized positions ahead of time to avoid liquidations should the community decide to adopt this recommendation.
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