DAI Liquidation - Compensation

I think you missed something or just fail to reply to the right person.
I am liquidated in “DAI liquidation event” and of course I think that is not my fault in risk management. It is a clear manipulation of the centralized price discovery source with frontrunning elements.
Where you find this: “because they were yield farming and dumping the COMP”?
Maybe you got it in the wrong context.
I personally use Compound to save cryptocurrencies while remaining liquid in business.
It’s just not clear to me what kind of benefits Compound protocol has from yield farming when someone doing leverage with stablecoin pairs? For me its just COMP exploitation without long-term benefits for protocol.

Unfortunately, in this situation we depend on VC funds which are early investors and hold the majority of voting rights. We can’t even do it proposal because treshold is too high. So much about decentralization…
I did not come across any quality argument of those who are against compensation.

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Someone should reach out to a16z (Andreessen Horowitz), Polychain Capital, Gauntlet, and Paradigm with a good case for why they should vote to compensate affected users

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I think VC would be happy to earn revenus from investment rather than only capital gains

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It would be nice to hear their opinion about this situation. Coinbase Venture is also an investor with voting power?

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Compound should definitely compensate affected users and prevent putting the compound protocol reputation in line.

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There should be some form of compensation (disclaimer: i was among the ones getting liquidated for supplying eth and borrowing DAI)

I was literally sitting in front of compound to check the risk and getting more collateral in to reduce risk, checked the global average price of ETH and dai to see if the risk was getting higher, while my borrow limit suddenly spiked from ~60-65% to 100%… the night before it was sitting at a presumably safe ~50%… and I was actually planning in the second to add more collateral which was just hard because gas was at 500-1000 and tx’s failing across the board.

I’d be fine with the liquidation if the price of ETH and dai would have globally spiked, but not only was the DAI price much higher than average, but also the ETH price at the same time, creating this squeeze.

Fairest would probably to put it to a vote, and let governance decide on the amount of compensation. Even a small % would go a long way for the status of the project.

Before the hack I considered compound the most trustworthy and solid dapp in the whole space (and i’m a heavy dex trader and eth user since 2016)… this attack wasn’t a huge loss for me but completely changed my view of the project unfortunately, and I bet it was similar for many others in the space.

Thats why I think we need a

  • sustainable oracle solution first
  • and partial or full compensation (20-100%) decided by gov (compound is liquid/big enough to easily absorb a full compensation, but gov might obv be biased in their fiduciary interests)
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making a proposal for a vote require a lot of comp tokens , i think most of the victims don’t have enough comp to make a proposal for a vote and the big holders of comp don’t care enough about compensating the users since there’s no much talk about this issue in Discord most of the discussion is moved here , and it feels it’s like a close conversation between the victims rather than the community at large , i feel the community will continue to ignore the compensation until it’s a forgotten topic

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I see a few misunderstandings of the governance process in this thread, so I thought I’d chime in with some updates.

  1. It only takes 100 COMP to create a proposal and gather support; yesterday, @kybx86 created created an Autonomous Proposal to increase the DAI Reserve Factor to 15%, which he indicated is the first step in a process to compensate users. You can delegate votes to 0x5576a4db81a44cb7158fc8d5ae752cb44f57be76 to support this change; if the proposal receives 100k votes, it will enter the formal voting process to upgrade the protocol. This is a tangible example of how changes to the protocol are made by the community.
  2. Gauntlet has proposed upgrading the protocol to be able to distribute COMP; this is a pre-requisite (as discussed in the original post above) to compensating users.

The community is responsible (and capable) of self-organizing; every single user of the protocol is a COMP holder, and has the ability to drive changes to the protocol. Everyone in this thread has received some amount of COMP to participate with. Wheels are in motion – vote, delegate your votes, and find ways to help if you can.

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They dont ignore us

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Am aware of this proposal and this was already i development before the incident and the main purpose of it is pay for grant not compensation , that same functionality can be used to pay for compensation if there’s a positive outcome of a potential vote for compensation …this proposal was going regardless if the liquidation incident

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Thank you for sharing my post! Finally i got full access to my account after staff review.

ok, but in some way refers to “liquidation incident”?
I see that you are active in the development and you obviously have more knowledge than me, so I have to ask you:

  1. What is the purpose of reserves if not insurance of protocol users in “DAI manipulation event” (from my perspective it is pure manipulation)?
  2. Do you think if affected users will be compensated in COMP token, makes a COMP token cash? Because affected users are active users of the protocol and the majority of them hold a significant share of their assets in the protocol.
  3. What are the negative implications in case the affected users get compensation?
  4. Is a protocol gambling with the reputation if ignore this “liquidation incident”?

Thanks for the mentorship :grinning:

29,000 votes left. Who has a comp, vote please

I don’t understand from where you come up with the assumption that am active in the development and that am more knowledgeable than you are (unless it’s sarcasm) , just that you we are in the same page i believe users affected in the incident should be compensated i don’t think there’s any negative impact on the protocol i think it’s a positive thing and it will increase trust in protocol in the long run , in terms of how the compensation should be either comp tokens or ctokens or a combination of both seems fair to me .

perhaps a misunderstanding,
there was no bad intention.
Thank you for answers

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Esteemed kybx86 has created a thread “Compensation Proposal: Distribute COMP to Affected Users in the DAI Liquidations” - I suggest everybody to move there, to that thread for the discussion of the specifics.

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Thank you @Dmitry for cross-posting.

I’d like to point out is not just a thread, but that there’s an actual proposal deployed live in governance to implement this compensation.

You can view the CAP here: https://compound.finance/governance/address/0x2f04664b18fb9b6d49124fcc876b52a4ba797718

And if you support it, you can delegate COMP to its address: 0x2f04664b18fb9b6d49124fcc876b52a4ba797718

Thank you! Can you explain how to “delegate” for people who haven’t done it before?

Edit: Thanks! Figured it out

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