Proposal: BNB Bridge exploiter account remediation

Summary

This proposal aims to give BNB Chain the discretion to seize the BNB Bridge exploiter’s collateral and repay its debts while avoiding any market liquidation of BNB.

As of December 11, 2023, the exploiter’s balance holds 630,240.00 BNB as supply, along with 58,440,000 USDT and 37,440,000 USDC as borrow. To utilize the supply amount, it is required to first repay the debt. To resolve this, the forced liquidation mechanism will be used, where BNB Chain will have the discretion to exercise the operation. After liquidation, the full amount may be used to make repayment towards the protocol’s shortfall.

This process will require the execution of the following steps:

  1. Enable the forced liquidation for the exploiter’s position, and liquidate 100% of its USDT and USDC positions.
  2. Seize remaining BNB post-liquidation.
  3. Claim, seize and send the XVS allocated to this account to the Venus treasury.
  4. Redeem the protocol liquidation fees generated by the liquidation.
  5. Potentially repay any shortfall

Description

This proposal presents a plan to safely reduce the exploiter’s debts and potentially address Venus Protocol’s shortfall by using the exploiter’s funds. It details all the steps required for the execution of the process:

Financial Calculations and Projections:

  • Total Supply and Valuation:
    • The exploiter’s balance holds 630,240.00 BNB.
  • Outstanding Borrow Amounts:
    • There are outstanding borrowings of 58,440,000 USDT and 37,440,000 USDC which need to be settled to fully utilize the BNB supply.
  • XVS Emissions:
    • The exploiter’s accrued XVS emissions amount to 128,666.39 XVS. This balance will be claimed and sent to Venus treasury. If needed it will be used as part of the remaining shortfall repayment plan.
  • Shortfall Repayment and Post-Repayment Estimation:
    • If the amount remaining after settling the exploiter’s debt is sufficient to cover any shortfall it may be applied
    • If the remaining amount after settling the exploiter’s debt is not enough to cover total shortfall, Venus will use the risk fund.

Repayment Process:

  1. Repay the exploiter’s debt using forced liquidation:
  • Enable forced liquidations on the BNB market:
    • Similar to the forced liquidation mechanism, deployed for the BUSD market. This process will make use of the deployed liquidator contract to enable forced liquidations exclusively for the USDC and USDT markets and the exploiter’s account. Additionally, the contract already gives exclusive rights to BNB Chain to liquidate the exploiter’s BNB position.
    • The liquidation process will incur a 10% fee, which will be distributed as follows:
      • 5% will be awarded to the community treasury. This amount will be later redeemed and withdrawn to address the shortfall.
      • 5% will be awarded to BNB Chain. This amount will be included in the total amount for the shortfall repayment.
  1. Exploiters BNB and XVS withdrawal
  • Asset recovery:
    • Following the settlement of outstanding debts, the remaining BNB from the exploiter’s holdings will be acquired.
    • The protocol fees generated from the liquidation will be redeemed.
    • The allocated XVS rewards for this account will be claimed and seized.
    • The final outcome of this process will result in all tokens claimed and seized.
  1. Repayment of the Shortfall:
  • Token conversion and withdrawal:

  • BNB may be converted based on the required token amounts to repay the shortfall.

  • These tokens will then be withdrawn to the Venus treasury wallet.

  • Shortfall repayment:

    • These same tokens may be used to repay any shortfall.

References

12 Likes

Debt free soon! The best proposal of 2023!

8 Likes

Excellent news, this is very beneficial for the protocol

5 Likes

Best proposal Venus for the better

4 Likes

Sounds great, that means we will get out of debt or we will be close to it?

2 Likes

Thanks BNBchain Core and Venus teams to manage and solve this debt issue. This proposal is really good! :slight_smile:

3 Likes

Una de las mejores propuestas de Venus este año 2023, pues coloca al protocolo en una muy buena posición de sólidez y garante del buen manejo de los activos y responsabilidad con la comunidad.

2 Likes

Oh this is GOOD NEWS! This means all debts will be solved? What a nice way to end 2023!
2024 will be simply amazing for all Venus users.

3 Likes

Fantastic proposal! This plan efficiently tackles the BNB Bridge exploiter’s account, ensuring a secure recovery process without resorting to market liquidation. The step-by-step execution, from forced liquidation to protocol fee redemption, is clear and strategic.

The proposal’s emphasis on asset recovery and the use of XVS emissions for shortfall repayment reflects a responsible approach. In short, a commendable solution to a complex problem! :clap:

3 Likes

Well thought out but what’s happening to the 128k XVS that will be seized from the address. I was under the impression it was lost forever but it seems now, if it can be recovered sending it to the Venus treasury is fair.

1 Like

It’s a proposal that reduces risk and makes Venus more stable!

2 Likes

time to give freedom to venus protocol, no more hackers funds and no more fud.

2 Likes