Polychain has decided to vote “AGAINST” Compound Proposal #032.
While we sympathize with those who were affected by the dislocated DAI price and subsequent liquidations, we believe that CP #032 sets a potentially dangerous precedent for a few reasons:
- This proposal provides reimbursement before a clear path to fixing the issue has been established. We would like to see a little more clarity around potential solutions before finalizing any form of reimbursement.
- This proposal reimburses users even when the protocol worked as designed, and may encourage further systemic risk. We do not want to set the precedent that tail risk should be subsidized by the COMP governance process.
- This proposal suggests reimbursement denominated in COMP to a small group of users affected by the issue, despite displaying behaviors that are not aligned with the long-term interest of the protocol. We would prefer a reimbursement proposal denominated in the asset that was liquidated, but are understanding of the additional technical complexity.
We would like to see continued discussion and proposals that work towards improving oracle robustness, implementing insurance funds to provide a finite backstop for unexpected protocol behavior, and exploring alternative methods of reimbursement.
The community has come to a loose consensus that the current oracle system worked as designed, but not as expected. The actual market price of DAI on Coinbase was accurate at the time of liquidation. Regardless of the outcome for CP #032, it is very clear to us that the governing community must work to reduce market risk and improve oracle resilience.
We are voting “AGAINST” this particular proposal, but remain open-minded as it relates to potential reimbursement. We applaud the efforts of @kybx86 to solve these key issues, and we look forward to working with them and the rest of the community to reach a possible solution.