Hello, I hope everyone is having a good 2021 so far. Let’s keep the ball rolling on fixing the issues that were highlighted in the thanksgiving false liquidation event, while the attack vector itself is being fixed.
Here I’m laying out a quick mock proposal for compensation for the victims of the exploit, which I wish to turn into a full proposal.
Specifically I’d like to get feedback from those that were against the previous proposal as this one seeks to address the issues that prevented its approval.
The two criticisms of the previous proposal were:
- The distribution of compensation was in COMP
- Too much of it was going to whales
Since it seems compensating in the assets liquidated is infeasible or unpopular, the first issue may be solved simply by drawing from DAI reserves which, based on conversation, seems to be an agreeable solution. It also may have positive secondary effects towards mitigating future exploits of the faulty oracle system assuming this proposal is merged before the attack vector is addressed.
The second issue may be solved using my previous computation of raw damages, found here:
script: https://pastebin.com/DcsXXxcJ 1
output: https://pastebin.com/y9s6997E 3
This is a more accurate computation of damages from the false liquidations than the previous proposal. A side effect of this is that same asset liquidations have drastically lowered damages as the manipulated DAI price was not a factor in these cases. As such the large whale receives a lower, but more accurate, proportion of the total compensation, whereas smaller users receive larger.
I believe this should be sufficient to address concern number 2. Although I appreciate @wario’s hard work so far, I do not think it makes sense or is necessary to modulate compensation amounts arbitrarily based on user behavior.
This proposal would raise the USD compensation amount from ~$6.8M to ~$7.5M if 100% of damages were compensated. If those that were against the previous proposal have issues with this amount, a simple percentage of the total amount should be suggested and agreed upon! (e.g. 90% would bring it down to approximately the previous compensation amount of $6.8M)
I plan to start working with the original proposal author, @kybx86, to draft a new proposal using this method. The next steps would be to use on-chain data to compute the actual numbers for damages then encode it into a proposal.
Let’s come together to make things right with Compounds users and improve the protocol!