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AIP-21.2: Adjusting bad debt repayment scheme from the stkBNB de-peg event

Following the passage of AIP-21.1, we are now conducting the 2nd vote for this AIP. The second vote will be a single choice voting.
  • Option1: Reducing repayment % taken from Gov Vault; if this wins, it will lead to Vote 3.1
  • Option2: Do a one-time payment (at a discount) to affected wallets; if this wins, it will lead to Vote 3.2
  • Option3: Stop Repayment; no subsequent voting is required
For more information, reads the thread below:

Background:

StkBNB experienced a depeg back in December 2022 due to an exploit in Ankr BNB (aBNBc). Alpaca Guard worked as intended and managed to save a noteworthy % of positions from liquidation. However, due to the extent and duration of the depeg, some LYF positions on the stkBNB-BNB pairs were still liquidated and the platform incurred some bad debt.
Subsequently, the Alpaca community voted on the AIP-12 to repay the bad debt over time from 50% of the protocol revenue that would have gone to the Governance Vault's stakers in accordance to the Insurance Plan.
More recently, some community members have expressed their desired to revisit the bad debt repayment plan for this event.

Rationale:

Safety is one of Alpaca’s Finance main value proposition to the users and we believe the insurance plan plays an important role in the decision making process for lenders deploying capital on our platform.
That being said, given the current market condition and the the fact that it wasn’t technically Alpaca Finance’s fault, we are putting this topic up for a vote. Please note that the scope of this AIP is limited to the revoting / adjustment on the debt repayment for the specific stkBNB event. The Insurance Plan structure itself should be kept as is.

Implementation:

Please see below for various options / levers we can use to adjust the bad debt repayment:
  • Reducing the bad debt repayment % taken from the Governance Vault
  • Stop the repayment entirely
  • Do a one-time payment (at a discount) to affected wallets
Below is a model which shows how adjusting the % for repayment and including AF1.0 lending performance fee would impact the Gov Vault APR% and the estimated repayment duration:
We will be conducting a series of votes to determine the final solution.

Voting:

The voting structure for this AIP will be as follow:

Vote#1: Whether to make changes to the stkBNB bad debt repayment

The first vote will be a simple YES or NO vote on whether to make an adjustment to the bad debt repayment structure associated with stkBNB
  • A YES would lead to vote#2
  • A NO would leave the repayment as is. No subsequent voting is required.

Vote#2: How to implement the changes

The second vote will be a single choice voting.
  • Option1: Reducing repayment % taken from Gov Vault; if this wins, it will lead to Vote 3.1
  • Option2: Do a one-time payment (at a discount) to affected wallets; if this wins, it will lead to Vote 3.2
  • Option3: Stop Repayment; no subsequent voting is required

Vote#3.1: Reducing repayment % taken from Gov Vault

This will be a single choice voting, where we will vote on how many % should be taken from the Gov Vault instead of the current 50%
The voting choices will be:
  • 25%
  • 33%
  • 40%

Vote#3.2: One-time payment

The source for the one-time payment will be coming from the extra ALPACA from February emission (~350k ALPACA) The vote will be to determine how many % of the ALPACA token will be used
This is a single choice voting where the choices will be:
  • 50%
  • 75%
  • 100%

Resolution:

  • The community voted to stop bad debt repayment scheme from the stkBNB de-peg event.

References: