A good way to fix problem mAssets

Set the minimum collateral ratio of problem mAssets to 15000%. Then the price feed can be turn on again.

It is a ridiculous idea because it would cause all previously existing position to be liquidated.

But why would anyone liquidate positions with almost worthless collateral? I think this change can be proposed in Govern → Parameters → Modify collateral parameters, the multiplier can be changed for each of the 4 affected mAssets. Although it will be hard for any poll to pass without voting support from TFL or other large holders.

Interesting. Was thinking about how best to squeeze the multiple borrow/short positions of the attackers. Considered we should drain the LP (already low) and then buy fast enough to cause them to have to cover. As the mCrypto assets increased in value the positions would liquidate.

But not sure how the oracle plays into that.

Would be awesome if they lost money in the end.

Sorry but you’re wrong, the collateral used for arbitrage was LUNC and it was profitable to abandon the positions after minting and selling the mAssets.

The problem with raising the CR to something really high is that if wipes out users who had properly opened shorts before the oracle bug.

One alternative that might be to do a “delist collateral” gov poll for each of the 4 broken mAssets and then turn the oracles back on for a couple days to allow people who minted before the exploit to close their CDPs/claim their collateral. Then after a couple days, do a regular delisting of the 4 broken mAssets.

This isn’t perfect because users who bought the mAsset prior to the exploit will still end up taking the loss for the most part and pre-exploit minters end up coming out ahead of where they should be. Also, I’m not 100% certain that the “delist collateral” poll works for mAssets (AFAIK it has never been used to delist an mAsset). However, by doing the “delist collateral” first and then the regular delisting, it prevents users who exploited the oracle price bug from also burning their ill-gotten mAssets against pre-exploit, properly backed CDPs.

1 Like

Perhaps positions with mBTC/mETH/mDOT/mGLXY collateral should be wiped out because they are no longer properly collateralized? Just to be clear, typical positions with UST/aUST collateral wouldn’t be affected.

Delisting mAssets will give some creators of bots/scripts another chance to profit by quickly emptying UST, aUST and other valuable collateral from other users’ positions. Giving users a few days to close positions won’t help much, many or most positions will probably remain. The vast majority of mBTC/mETH/mDOT/mGLXY holders will only be able to burn them for LUNC in return. This is the most unfair option IMO and either modifying collateral multipliers for these mAssets or permanently delisting them as collateral would be better workarounds (although there is no perfect solution).

serious question. What is wrong with leaving it the way it is? Its not clear to me what is not working properly now other than the mCrypto mDOT,GLXY pools. i have been able to short farm if the borrow amount is small and the pool is LP is not tiny.

i’m sure i am missing something wrt the oracle feed.

I have no financial interest here, so this is just observations. The amount of value left in Mirror is pretty small now and there are many problems. I wouldn’t recommend anyone to be using the platform now anyway, but that said the one set of people who I think still deserve to be protected are those who minted pre-exploit using proper collateral levels.

Specifically, there are people who pre-exploit minted/shorted mBTC, mETH, mDOT, and mGLXY with proper collateral levels and who can not close/manage those positions because the oracle is off. So someone who shorted mBTC with UST/aUST collateral and maintained a safe 250% CR is currently unable to close the position or even withdraw the over-collateralized portion of the CDP. The “delist collateral + oracle on + delist broken mAssets” would be to benefit them.

You are right that the oracle being off for the broken mAssets prevents contagion to all the other mAssets, so in that sense things are ok. And the broken mAssets could just be delisted which would let the pre-exploit minters withdraw the over-collateralized portion of their CDP (i.e. the portion above 100%). However, just doing a simple delisting (without the “delist collateral + oracle on” steps) would mean that anyone who hold say mBTC (including people who hold it because they exploited the oracle bug) would be able to burn it against the pre-exploit CDPs to claim that collateral. Effectively, there would be a race to burn against the pre-exploit CDPs because those are the only ones that have real collateral backing them. And its very likely that some of the exploiters would end up not just with the proceeds from exploiting the LP but also win the race for some of the collateral from the properly collateralized CDPs.

I don’t know this for a fact, but I doubt there are many (maybe even zero) CDPs with mBTC/mETH/mDOT/mGLXY collateral. These are all quite volatile and pre-exploit traded at significant premiums which is about the worst combination you can have when selecting a collateral asset.

thanks for the thoughtful response. To be clear i am just trading what UST/Luna i have left in Terra Classic to try and salvage something in this broken ecosystem. I suspect it’s what an emerging market trader must feel like when they are trading domestic assets after a depeg and hyperinflation in their country, i.e., the returns on local assets look attractive until you try and buy something made outside your home country.

I agree completely that you should not create a new opportunity for people to front-run honest minters. But their collateral is likely worthless outside of Terra Classic anyway. A 20,000 position of USTC can barely pay its own gas fees to get out of Terra. The LP are down to 500k USTC and short farm yields are higher so i am assuming the amount of legitimate/honest short positions are even smaller, thus making the effort to find a cure more expensive than the value of a potential loss. This is why i go back to just farming at the absurd APRs, converting the MIR to more UST and then in a few weeks the position has been fully returned.

Yes, and these are exactly the CDPs which would be affected by changing collateral multipliers. Protecting these positions as a reason not to change the multipliers doesn’t make sense. The current multipliers are 1.33… for LUNC and MIR and 1 for UST, aUST and all mAssets. They are a property of the asset used as collateral and shouldn’t be confused with MCRs which are a property of the mAsset being minted.

1 Like

Does someone know if the undercollateralized CDPs from the broken mAssets could “infect” other already delisted mAssets such as mIAU (Delisted) and mVIXY (Delisted).

By that I mean… right now 1 mIAU (Delisted) can be burned for about 18 UST. Let’s say there are 1000 mIAU (Delisted) still in circulation with a total of 18,000 UST held in the smart contract as collateral. If we delist mDOT with an oracle price of 10 UST, 1000 of circulating supply and 1000 UST of total collateral (instead of 10,000 UST because of bad debt)… do we end up with 19,000 UST of collateral for the mIAU (Delisted) AND mDOT positions?

If broken mAssets can infect already delisted mAssets, I am assuming that by the same logic they would also infect mAssets to be delisted in the future (which is not good assuming we will probably have a delisting of everything at some point before closing the protocol).

No, you can only burn a delisted mAsset against the same mAsset’s positions.

Thanks for the answer!