Cryptocurrencies may improve governance of the financial sector, but they haven’t taught cryptophiles to reach out to the unlucky. The Compound community (COMP) has spoken out against a plan to compensate for the losses suffered by some due to the liquidations of DAI.
Too bad for the victims: democracy has spoken
On December 14, 2020, the community COMP voted against a compensation plan for users affected by the liquidations of DAI of November 26, 2020.
681,290 recorded votes were against and 212,952 voted in favor of the plan. Some traders from Compound were liquidated as a result of a data malfunction in the price Oracle of DAI from Coinbase.
With a 30% premium for the DAI, the positions of some traders became sub-collateralized, triggering the liquidation process.
The total amount of the latter is said to be $ 89 million, half of which is related to the price oracle.
The proposed compensation plan suggested compensation at 8% of the liquidated amount for the affected portfolios, using an average of the prices of the COMP over 14 days.
No question of feeding the whales
For the 2 biggest losing portfolios, this 8% plan would not have paid off their substantial losses.
Some community members also raised that 61% of all compensation would go to 2 yieldfarmers.
The losses suffered by others then became insignificant. Part of the community is said to have called for a cap for these 2 whales, ensuring a fair distribution of the amount of compensation.
One of the reasons given for voting against the proposal is the lack of measures to address the vulnerabilities that led to these liquidations.
DeFi projects continue to fall victim to opportunists exploiting bugs in smart contracts and price oracles.
The majority have spoken and everyone must bow to their decision. Cryptocurrencies brought decentralization in finance, but there are still whales and sharks there. Small fish have a say in the cryptosphere and defend their interests. The 2 whales, victims of DAI’s liquidation, must find other ways to recover. Not sure that by voting against these support measures, the community is pushing developers to fix the vulnerabilities that are causing the problem.
Litecoin, welcome in the Silver Age