Venus' vulneability

I would like to share the explanation of what happened a few days ago regarding $XVS’ price spike and insolvent liquidations.
Reported by @FrankResearchera, TheBlock’s analyst


how that money is gonna get repaid?

seems like $XVS price is so easy to manipulate.

He is absolutely right. I witnessed this market manipulation as it was happening and wanted to write about it.

Since the position to liquidate was so big (200M$+), no liquidators had enough funds on hand. So, liquidators had to sell the XVS they were seizing to be able to liquidate some more.

What’s worst is that closed deposits of XVS when this was happening. XVS price on BSC (on Pancake and other AMM) quickly became much lower than what it was trading on and there was no way to arbitrage it.

Because of this, it was not profitable to liquidate that position until the XVS price normalized on BSC. It took many many hours to liquidate it all, which is a very dangerous thing for venus depositors.

Lessons for Venus developers:

  • 80% collateral factor is way too high for tokens that are thinly traded like XVS, especially if they are only traded on 1 exchange where the price can be manipulated.

  • 15% liquidation incentive is too high. It causes cascading liquidations as we saw on that day. 10% was fine and should have stayed like that.

@xyz I would really like to know your point of view of what happen on that day.


I couldn’t withdraw XVS from my exchange around this time due to wallet maintenance - perhaps, because of the airdrop?

The last amendments to the protocol facilitated this beautifully - it seems too much of a coincidence to me.

I still doubt Joselito is a real person. I believe it is a pseudonym under which this syndicate operate. And I wouldn’t be surprised if it went all the way up to CZ.


Instead of burning 10 million I guess best would be to take the snapshot of back dated block exactly the hour when all this xvs last incident happen and give 1:1 bonus to xvs holders and vxvs of that block when all this started to happen, just before that buying and manupulation started bcz many long term xvs investors lost huge amount in that pump and dump of price, @JoselitoLizarondo @NoOneVII


There is too much amateurish in Venus’ team to be a trustworthy platform for big investors.
Venus must be reformed, starting from listening to the community.
Otherwise that will simply be a gain for the creators and a loss for the investors

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Venus just announced a proposal to reduce collateral factor significantly for some assets, so that should at least reduce the risk of that happening again in the future.

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Hi, do you think there is any truth in this Medium article implicating the Venus/Swipe team to the liquidation event?