Summary
This proposal recommends the transfer and injection of 147,630 wUSDM from the Venus Treasury on ZKSync to the Venus market via the WUSDMLiquidator contract. The goal is to fully restore liquidity and allow all current wUSDM suppliers to withdraw their assets, following the partial recovery implemented in the initial VIP-502.
Context
On February 27, 2024, the Venus ZKsync deployment suffered a $902K loss due to a manipulation of Mountain Protocol’s wUSDM exchange rate oracle. Since then:
- $185K was recovered
- ~$400K in wUSDM was injected via VIP-502
- ~$352K in WETH, USDT, and USDC.e debt was liquidated
- A remaining ~$400K in debt is still held by the
WUSDMLiquidatorcontract
Despite the partial intervention, users holding wUSDM are still unable to exit their positions, as liquidity remains insufficient.
Current Status
The following wallets currently supply wUSDM on Venus ZKsync:
| Address | Balance (wUSDM) |
|---|---|
0x7386...f85 |
69,213.88 |
0x5ac6...8b3 |
33,513.72 |
0x1e9c...380 |
22,653.99 |
0xb2e9...599 |
7,680.99 |
0xffcf...192 |
2,359.52 |
0xe4f6...7bf |
1,617.15 |
0xccd7...487 |
940.18 |
| Total | 137,979.43 wUSDM (~$149,151.35) |
Without further liquidity injection, these users remain locked and unable to redeem their assets.
Proposal Details
This proposal suggests:
-
Withdrawing 147,630 wUSDM from the Venus Treasury on ZKSync:
0xB2e9174e23382f7744CebF7e0Be54cA001D95599
These funds were accrued from the protocol due to the high wUSDM supply rate after the exploit. -
Supplying the funds via the existing
WUSDMLiquidatorcontract:
0x0192ffefb1dddb9d30afcccb12f60ceaad490807
This account was used in VIP-502 and already manages the recovery operation. Injecting liquidity through this account will improve its health factor and ensure transparent accounting for the remaining bad debt. -
Allowing current wUSDM suppliers to withdraw their full balances
and restoring the market to operational health.
Rationale
This injection:
- Fulfills the restoration promise to users still impacted by the oracle manipulation
- Avoids unnecessary prolonged lock-up of legitimate user assets
- Uses existing treasury funds earned by the protocol itself
- Helps improve the health factor of the
WUSDMLiquidator, enabling better long-term debt management and reducing risk of additional protocol bad debt
Next Steps
If the community supports this approach, we propose:
- Publishing a Snapshot vote to gauge sentiment on this second-phase liquidity injection
- Proceeding with a new VIP on ZKSync to execute the transfer and supply
Considerations
- This action does not fully close out the $400K debt held by the
WUSDMLiquidator. Future planning and discussion will be required to manage this liability. - No new risk is introduced, as all execution is handled through a known and restricted contract with parameters and accounts hardcoded.