AIP-32: Distribution Plan to Lenders of Stablecoins from THE Liquidation
Background:
When THE was listed by Binance, it caused an incident for THE lenders in our money markets; details here.
During this incident, our liquidation bot was able to save about $50k of lender funds, which we plan to distribute to the lenders who took a shortfall. This discussion post is about how to distribute those funds.
Rationale:
We are proposing a vote between 2 methods of distribution.
More Details:
A total of 29 accounts were affected.
23 out of 29 are small accounts.
6 out of 29 are medium to large accounts.
The largest account held 721,957.14 THE (worth ~$144k pre-incident). This account managed to withdraw 304,814.88 THE (worth ~$752k post-incident). Thus, when viewed in fiat, this was the only user to likely make a profit on his THE from the listing.
Method 1: Fully cover small lenders first, because they are more likely to be unsophisticated users, and in order to help the largest number of people. This would cost approximately $16,366.54 and cover all 23 small accounts. Then, distribute the remainder to the 5 medium-sized and larger lenders in proportion of their stuck balances, with the exception of the largest lender who likely made a profit.
Method 2: Proportional distribution to all lenders affected. This would mean a significant portion of the $50k would be taken by the largest lender, leaving less for other lenders, but it`s a straightforward distribution method.
Execution:
The funds will be distributed directly to affected users' wallets after the voting concluded.
Voting:
This AIP will be a single choice voting with two options for distribution as described above.
Method 1: Cover small lenders first
Method 2: Pro-rata
Resolution:
The community voted to cover small lenders first.
References:
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