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:
- Enable the forced liquidation for the exploiter’s position, and liquidate 100% of its USDT and USDC positions.
- Seize remaining BNB post-liquidation.
- Claim, recover and send the XVS allocated to this account and other shortfalls accounts to the Venus distributor contract.
- Redeem the protocol liquidation fees generated by the liquidation.
- 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:
- 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.
- 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.
- Repayment of the Shortfall:
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Token conversion and withdrawal:
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BNB may be converted based on the required token amounts to repay the shortfall.
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These tokens will then be withdrawn to the Venus treasury wallet.
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Shortfall repayment:
- These same tokens may be used to repay any shortfall.
References
- Exploiters balance: DeBank | The Web3 Messenger & Best Web3 Portfolio Tracker
- BUSD Forced Liquidations VIP: Venus Protocol
- Forced Liquidations Documentation: Liquidations | Venus Protocol
