Compensation to Venus Users for WBETH Depegging

[devitavenus]

We have to put users first, I’m definitely voting yes <3

[DrDuckQuack]

@0xshyu

Thank you for this thoughtful and well-articulated response. You’ve raised important points around protocol integrity, moral hazard, and the long-term credibility of deterministic liquidations.

We fully agree that maintaining predictable, rule-based liquidations is critical to preserving trust in the protocol. The intent behind proposing reimbursement is not to override that foundation, but to recognize the unique circumstances of this incident — where an external oracle input briefly deviated in an extreme and unprecedented way, resulting in losses that may not reflect user mismanagement or market fundamentals.

That said, your suggestions for post-reimbursement improvements are especially valuable. Enhancing oracle safeguards, reviewing collateral parameters for liquid staking tokens, introducing circuit-breakers or minimum liquidity checks, and exploring opt-in insurance mechanisms are all excellent directions. Venus Labs will incorporate these ideas into our broader risk management review.

We also agree that if the community chooses to move forward with compensation, it should be framed clearly as a one-time, governance-approved exception — not a precedent for future bailouts.

Appreciate your thoughtful contribution to this discussion. Constructive perspectives like yours help ensure Venus remains both resilient and fair to all participants.

Thank you for the thoughtful follow-up and for clarifying the intent. I appreciate the shared focus on preserving predictable, rule-based liquidations while recognizing the extraordinary nature of this event. Your openness to strengthening safeguards (oracle hygiene, collateral parameters, circuit-breakers, and optional insurance) is reassuring.

I still have some reservations about reimbursements because of the long-term incentive effects, but I understand the community’s desire to address this specific incident. If compensation moves forward, I’d be supportive of a narrowly scoped, governance-approved exception with clear, objective criteria and no ongoing precedent—ideally paired with a transparent post-mortem and the risk controls you outlined.

Thanks again for engaging constructively.

[0xshyu]

Hi, I wanted to come back to this thread to further explain where the risk fund comes from. You can refer to the tokenomics page on Venus Docs to read more and verify this information.

20% of the protocol’s reserves (primarily from borrow fees) as well as 20% of the protocol’s additional income stream (this comes from liquidation penalties and other sources of income from future product releases) are currently being disbursed to the risk fund, which sits at about $26M right now.

As for what is fair compensation, we’re actively working on that, and concrete numbers and reasons will be provided in each VIP for each batch of compensations.

Regarding the BNB burn, this was done in repayment to a huge liquidation which helped to clear bad debt on Venus. You may refer to this community post to understand the reason behind the BNB burn, which was voted on by the DAO.

I believe that even after compensating users, Venus will still be able to maintain a healthy risk fund size. Furthermore, more funds will continue to flow into the risk fund from protocol revenue, which will eventually replenish and boost the risk fund. I hope this can ease your concerns, and if you have further doubts, please feel free to share them and I will definitely look into it.

[DrDuckQuack]

Thank you for the detailed clarification regarding the origin and current state of the risk fund. I appreciate the transparency and the effort to provide data-backed context. I would also like to better understand what specific criteria will be used to determine eligibility for compensation for instance, whether it will depend on the magnitude of the loss, holding duration, transaction timestamps, or other verifiable parameters. Transparency on this point would help users clearly understand how fairness will be ensured across all affected participants.

[mopgawka]

I thought long and hard about what happened and came to the conclusion that this was not an ordinary situation.

Yes, it can be viewed from the perspective of overestimating risks, but honestly, I haven’t seen many situations with such large asset depegs.

I think this is one of those rare cases when the protocol needs to support the victims and fairly compensate them for their losses.

This way, we will not only help the community, but also show our determination and willingness to take responsibility and help users, as we have repeatedly demonstrated.