Do not bailout liquidated individuals with treasury funds

1. General Discussion
#142

I am a proponent of helping those forced into liquidation as long as the parameters/terms of restitution are clearly defined, so there can be no frivolous claims now or in the future. In my opinion, helping liquidated frogs is one way to ensure that a rock-solid community is created/maintained—which should be long-term net beneficial for all.

With that said, terms need to be set around the following to mitigate moral hazard, frivolous claims, and undue unfavorable economics for the community at large:

  1. Eligibility: Must be clearly defined and limited to only those forced into liquidation over the last several weeks. Those who sold voluntarily are not eligible.
  2. Restitution amounts: Repayment should be limited to treasury buybacks specifically tied to liquidation sales (i.e., buybacks within the period(s) from the 1st liquation to the last liquidation)–this is most likely several tranches (liq. event 1, liq. event 2, etc.)
    a. If this means those liquidated are made whole, then great, but more than likely, this means liquidated frogs will only receive a fraction of their initial account value. Unfortunately, setting restitution at 100% introduces highly unfavorable economics for others the community.
  3. Vesting: Restitution should be distributed (vested) over several months to prevent immediate sales of liquidated assets. This is a one-time “favor”, not a way to profit at the expense of others.
  4. Community approval: a supermajority (66% of votes cast) needs to vote in favor of restitution. Otherwise, there is a risk of alienating one segment of the community for another.
  5. Finally, this is a one-time action. Future liquidations are not approved. (Leveraging a highly speculative/volatile asset is extremely risky (understatement) and, as such, should be discouraged through the possibility of losing everything.)

On a side note: Abracadabra leverage should be better moderated given market conditions. Leverage ratios should be severely curtailed in down markets when general market volatility is elevated (like now). In up/low vol markets, leverage ratios can be returned to baseline. There are mathematical models for determining the likelihood that a price level will be hit given current volatility.

1 Like
#143

No promises were made. The backing price is treasury assets. Crypto assets. Price not stable. Come on people… we should not have to pay for gamblers or greed.

1 Like
#144

If this were to occur clearly defined structure and transparency would go a long way for community trust.

1 Like
#145
    1. permanently disable wMEMO leverage on abra 1) Buyback and burns should be random and not straight after a selloff. This would make is much more difficult for whale bots to manipulate the market 1) Possibly introduce a sell tax so that whales get rekt trying to manipulate the price 1) Switch to revenue share model ASAP
1 Like
#146

Well said. In total agreement. And they didn’t learn from the first time there was a liquidation cascade. So they go out and hurt us all again. They’ve already hurt us, now they want us to bail them out also?!

1 Like
#147

I do not like bailing out liq’d folks. I’ve been (3,3)ing like a conservative degen, since there is too much price risk to take on ANY amount of leverage. There is no safe price, just “less likely to get liq’d” not “zero chance to get liquidated”. That said, I also don’t want a large portion of people leave the frog nation never to return. We all benefit the bigger and stronger the community is.
As mentioned by others, maybe some long term vesting/unlock as compensation.

I am thinking of a vesting/unlock, where every epoch a certain % is unlocked. BUT we take $wMEMO wallet snapshots at epoch 0 and every epoch, and if the wallet sells their $wMEMO that unlock % goes to 0. So they have to hold wMEMO and stay in the frog nation to earn their vesting/unlocks. Once they leave their unlocks go to 0.
This sounds complex, but there is precedence with how Viperswap gives out emissions, and how vePTP boosts Platypus yields. So the smart contract code is mostly formed, just needs to be synthesized

1 Like
#148

People need to distinguish between “leverage responsibly” and “leverage aggressively”. And then ask yourself the below questions:

  • did the people who 9,9 contribute to the treasury or the development of wonderland? They deposited wmemo as collateral and this reduce supply of wmemo in the market. And some of them use their borrowing to buy more wmemo.
  • did the 9,9 people know that Dani and Sifu would replenish them before the liquidation cascade? No, they did not. And I can assure you that MOST/ALL of us (including Dani and Sifu) has set our liquidation price far below the buy-back/current mkt price of wmemo after the first liquidation cascade on 17/1. So please understand that if the buy back happened in time, we would not run into this dispute.
  • why do we call ourselves frog “Nation”? We built up the wonderland together (of course with different strategies) and when one part of the nation got hit by accident. What will other part of the nation or our leaders do? Look away?
  • was the liquidation cascade happened due to the overall market dip? No, BTC was stable or green before and after the liquidation.

Please reconsider and show your empathy toward those liquidated. NOT all of them are greedy and irresponsible investors.

1 Like
#149

It is not your money. The original idea was to pay back from the treasury with tokens bought back to stabilise the price. Doing that hurts the holders by diluting. There is even a possibility of a dump by those that get free token to recoup some losses.

#150

I feel sad for them but it’s not fair. What about the guys who sold before liquidation? What about the holders who lost a lot of value due to a bunch of gamblers? I would only support a fair solution.

#151

What if the people who got bail out agree to lock the refunded wmemo token for a period of time?

About dilution, there is no further wmemo will be minted, so I am not sure why this will introduce dilution? Can you elaborate?

For those who were able to repay and avoided liquidation, I agreed that it might sound unfair to them and we can propose to compensate them as well. And all the compensation will be in wmemo so it is fair for the 3,3 forks that we are all subject to the current low price of wmemo.

Overall, just want those 9,9 forks who got liquidated to regain their position (in wmemo) as what they had. I can’t speak for all people, but I will not leave a community after being helped like this.

#153

Danielle literally made the promise to buyback at backing

#154

Agreed. Makes no sense that we should be penalized for their decision to leverage knowing that the risks were high. Self-sovereignty includes taking responsibility for your choices people.