Message to Vai minters

Winter is coming,

Venus protocol is on the verge of implementing the stability fee, you still have time to repay your debt at a discount. Liquidity is quite thin only $1.5 million on Binance order book at par or above. Only $820,000 on Pancake swap and over $169 million VAI mint that needs to be repaid.

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A lot of intelligent private investors have removed liquidity from the market which could create a short squeeze/margin call situation.

The minted VAI will incur a stability fee which is effectively continuously accruing interest that is due upon repayment of the borrowed token.

Each adjustment of the stability fee will require a VIP, which as we know can take a few weeks to pass, if the rate is set at 40% how many weeks can you survive?

Downward pressure is already biting, and with a lot of VAI already in private hands, it might be time to get out while you can, some of you where happy to sell at $0.70 will you be happy to buy it back at $1.30?

If we get another downturn in the Crypto markets a lot of people could well be liquidated out of their VAI position.

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Ditto.
I own a big bunch of non-minted VAI and I’m not ready to sell it at a discount. Not even at par.

On the negative side, barring for the short squeeze, the VAI ecosystem for holders continues to shrink, not like it had ever been significant.
BTC/VAI pair on Binance no longer exists, Harvest has ceased to insensitive its VAI compounder, eventually killing it (because fees>yield), ditto for Acryptos, and same for Rabbit or Alpaca leveraged pairs where the yield is lower than the impermanent losses. And cream never enabled VAI as a collateral. So, sorry minters, but you’ll have to pay compensations for this.

@fat

over $169 million VAI mint that needs to be repaid

Most is simply stacked by the minter, including the giant 100M whale. The remaining part ~19M is in Pancake and Biswap pairs, plus Binance CEX.

some of you where happy to sell at $0.70 will you be happy to buy it back at $1.30?

I couldn’t have formulated that better :heart:

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Guys dont sell vai until 1.5$
No new vai can be minted
So if minters want to repay they must buyback from market

Which means they need to pay don’t matter which price is vai

If whales got liqudiate vai can see 3-4$
Hodl it buy it

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I agree we might get to $1.5 but I don’t think $4 - 5$ is likely as the debt won’t be valued that high.

Liquidators need to make a profit, the collateral will need to be worth more than what they are forced to pay for VAI on the market. Same for minters if the collateral is worth less than it costs to buy the VAI then they will just take the L

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I took the $3 price as a joke.
Considering the collateral ratios, max price may be, yes, rather in the $1.4 range

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It’s possible we see a flash crash to that level, once we see the stability fee mechanism in action.

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This doesnt make any sense. I think VAI HODLers are missing the fact that Venus WANTS VAI to be at $1. So if the value of a VAI goes over $1 then they will eliminate the apr on the VAI minters.

Also, if the price of VAI got really crazy, why not remove your favorite coins from Venus and let the account get liquidated rather than paying a premium to buy VAI to pay down the minted debt.

You have to pay back your debt to remove your coins that’s how it works, if you get liquidated someone else pays back your debt and seizes your coins.

They will need to make a VIP for that to adjust the interest which takes a minimum of 4 days to go live after it has been proposed. Venus protocol normally takes 2-3 weeks to get anything going, then it has to pass a vote. (maybe they can make the stability fee more dynamic and base it off a live price feed, but from the discussions I’ve seen it looks like this will be set manually.)

Better to remove manually and pay back the debt. that is nearly 20% premium based on current VAI prices.

I see a lot of your posts Fat they are usually quite negative. No disrespect, but why are you here?

I realize how the liquidation works. If you remove all the coins you want to keep and only leave enough to cover your debt, an amount you are willing to lose, you could let the account get liquidated instead of paying the absurd VAI prices you guys are hoping youll get.

Our friend @fat has his own style of harsh wording, but he has so far been among the first to trigger attention about the catastrophic VAI loss of peg and has been surprisingly wise at predicting Binance would delist a VAI pair (it happened).

Could be VAI next if the project doesn’t shape up.

Also his computation are overall correct about how narrow liquidity exists under peg for the free-floating VAI, around 1M. Other VAI would have to be paid at premium, due to the dry Order book (Binance) or Pancake xy=k formula. Historically VAI has already peaked at 1.10, we could see this again.
But $1.4 is barely a theoretical max and $3 is non-sense I think.

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I’m looking at $1.10, liquidators are netting a premium of around 10% on liquidations. The rest is speculation on thin order books.

We already got the insane prices, an overcollateralised stablecoin was selling for $0.70 on the $1.

As order books are thin, liquidations would be a gift, for the liquidator as you can trade out large amounts of Vai that has already been bought at a heavy discount without moving the price back up.

On a positive note we are still 8% off the peg and you still have time to make profit on this trade!

for the liquidator

Venus liquidation is a profitable but hard game, for each opportunity there’re like 20 transactions in the block with one success and other are failures (plus they pay for the gas). It would be a big bet for a liquidator to lock VAI funds in a hope for a future big VAI liquidation. I’m not saying it’s a bad bet, but it would require a lot of chance (success tx + liquidation is VAI + volume is big).

Why do you think it’s so hard?

This liquidation is the one that succeeded, on block 11163884
but in the same block, I count 13 other attempts by other liquidators, which, of course, failed. It means that even with a bot that reacts instantly (read: tx sent in the first possible block) you have 8% chance of success.

Edit: I observed that 0x49f45e5731c3dbe222849604e8475e02ba64e73b tends to get many big liquidations, using only 5 gwei as gas price, the minimum. So it may not be simply chance. Maybe that guy has a direct connection to a BSC miner, or is a miner himself. Any way, he made thousands while i’m typing this message.

re-edit: ok, I think I got it: those 14 liquidators are the exact same guy using 14 wallets who send the same tx at the same time, flooding the current block to avoid other people frontrunning him. The BNB he wastes as gas is negligible regarding the 10Ks he makes on liquidations. Pretty smart I admit.

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In case someone doubts this, look at what happened a few minutes ago: a 35K big sell moved the VAI price by 4%. Guess what would do a 500K move?

Very clumsy trading, feels like they are trying to paint the tape.

You could sell 300k on Pancake swap and have less of an impact.

Fascinating, I was thinking they would be using super high gas prices.

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Ditto. I had hard times reverse-engineering his strategy, and would I be a liquidator, i’d have used, yes, naively, big gas. Flooding the block is very smart, and looks efficient.

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