On Dec. 14, the vast majority of the Compound Finance governance group voted in opposition to a proposed compensation plan for customers affected b
On Dec. 14, the vast majority of the Compound Finance governance group voted in opposition to a proposed compensation plan for customers affected by the Dai (DAI) liquidations that occurred on Nov. 26.
Figures from the Compound governance dashboard present 681,290 votes in opposition to with solely 212,952 votes in favor. Additionally, COMP whales like Polychain Capital and Dharma had been in opposition to the plan judging by their “no” votes forged.
As beforehand reported by Cointelegraph, some leveraged COMP farmers suffered huge liquidations amid a short lived glitch within the oracle worth feed for the Dai (DAI) stablecoin coming from Coinbase on Nov. 26. With Dai at a 30% premium, some merchants noticed their positions turn into undercollateralized — triggering the debt liquidation course of.
In whole, Compound liquidations on Nov. 26 amounted to about $89 million with over half of that sum because of the Dai worth glitch. In response, the venture proposed a compensation plan amounting to eight% of the liquidated quantity for affected wallets utilizing a 14-day COMP worth common.
If handed, the venture would have paid out 55,234.95 COMP as compensation to the 121 customers affected by the liquidations. This sum quantities to about 2% of the 24-hour COMP circulating provide.
With the 2 greatest losers on the day being “looper whales” — recursive COMP farmers — a flat 8% compensation plan did little to reimburse their substantial losses. Certainly, as identified by a poster named “Dmitry” on the proposal dialogue board, the 30% deviation within the Dai worth meant liquidations occurred at a median penalty price of 18%.
Some discussion board posters additionally raised points with the truth that 61% of the compensation bundle would go to 2 COMP farmers. Some group members argued that the plan rendered the losses incurred by “smaller farmers” insignificant.
Moderately than elevating the compensation share, a bit of the group known as for a cap on the reimbursement to the 2 largest wallets affected. Such a transfer would nonetheless hold the compensation outlay on the preliminary quantity stipulated by the proposal whereas making certain extra equitable distribution.
Different causes given for voting “no” embody criticisms in opposition to the venture that the proposal does nothing to handle the vulnerabilities that led to the liquidations within the first place. DeFi initiatives proceed to endure opportunistic profiteering exploits on account of sensible contract bugs and centralized worth oracles.