Liquidations caused by unrepresentative oracle pricing of mSPY on Jan 3, 2022

I could be wrong but a 4% move in price cannot have caused a sudden 27% loss on your collateral (269K loss vs 1M collateral) unless you were highly leveraged. It looks like you had been holding a losing short position for a while, and then you got liquidated on a 4% after-hours jump in price. I feel sorry for the loss but I don’t think you should be bailed out for it, as nothing went wrong with the protocol. If you short an asset that has unlimited upside, you should be prepared to post more collateral or derisk when your collateral usage is almost maxed out. What happened is f****ed up but index can behave in a weird way, especially outside of trading hours, when liquidity is low.

Check the transactions I posted. The numbers I mentioned matched and they matched my decrease in net value. It’s the truth. Liquidating bring close to everything to the liquidator. Don’t agree with that but that’s the way it’s set up and I knew that. And yes, I was extremely leveraged and ok taking that risk. As long as representative pricing would have been reported… I shouldn’t have been liquidated. Wheather I was taking exteme risk or not is not the question in my opinion, if spy actually did go up all over the place by 4% at some point in time before me rebalancing, then you would never have heard of me. It would be 100% my fault. This is different.

I’m of the mind, that if you want something with the protocol to change, make a governance poll requesting the actual change that needs implementing. Next, request money. The protocol behaved as programmed. Maybe it needs to change, but that’s not the subject of this governance vote.

We need a dev team for that and they are working on it. I’m just an investor. I want changes to come and I suggested options to the dev team, but I don’t feel the details and implementation of that solution necessary has to come from the people impacted. It should be the whole community being worried and working on a solution.

Unfortunate to see this happen due to a sudden spike in unstable after-hours market price, but I think the important part of this conversation is to decide what should be done later to protect positions from these types of situations.
For example it could be something like having a delay on when the liquidation transaction can be sent by the liquidator after the position has gone under the liquidation threshold (Minimum collateral ratio). Or even something similar to Anchor, by not allowing users to create positions with collateral ratio too close to the minimum.
Either way, the community consensus through governance has to be met for these changes to happen with a more detailed and solid plan.

I voted NO (not that my very tiny amount will do anything) because i believe a single person should never be reimbursed on a supposed failure that affects several people. It’s a fairness principle.

Although I simpatize with your pain it seems to me that the majority of the responsibility it’s on your hands, and I hope you can learn from this in a positive way.

Basic investment rules on ALL investments books:

  • Don’t put all eggs in one basket;
  • High return means high risk; (there are no free lunchs)
  • Don’t invest money your are not willing to loose;
  • When you gain 100, someone lost 100 - it’s a market;
  • 90%+ of people investing loose more than what they make (mostly due to emotions);
  • Don’t (over) leverage;
  • Blockchain technology (and also Mirror) is highly experimental;

It seems to me that you are arguing also on an emotional note that I respect, but it’s not clear to me that you loose your life savings and what’s the real impact on that. I mean if you are 20yo that’s not really a big issue. I don’t know. I don’t judge. I don’t know your situation. Justa saying.

I hope we all can learn from this, and keep improving mirror protocol to be more safer to the wildness of the markets and of the world of possibilities, knowing that ww will never account for all scenarios.

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I know I took risks, if mirror had a system in place like it should have (dev team agrees) this wouldn’t have happened.
Thanks for voting and thanks for explaining here why. Don’t see how to reimburse everyone impacted if they don’t request it. It’s only 1 address per proposal, so you would need multiple proposals, majority costing more in fees / 1000 mir than the amount they would be asking for. I wish there was another way, but the dev team recommended and helped me set up this poll.

I’ll just chime in with my two cents. I’m voting No for the following reasons:

  • 4% is a very aggressive cushion, much lower than suggested. That decision was yours alone.
  • The platform worked as designed, and the 4% trade did actually occur

Personally, though, I think the system should be changed to not liquidate outside of regular trading hours (comment here on this if you like)

I’m sorry you lost so much, but you can make it back, and more. This strategy can generate 30% returns even with 200% collateral. Find some capital and try again!

Easier to find capital large amounts of capital than to get it done.
The 4% margin I left overnight was risky, but at the same time everyone seems to agree that is shouldn’t have happened and that some changes should be made to the protocol?

How are people feeling about the 14k that went from me to the mirror community just in fees? Should mirror owners benefit from this issue in oracle pricing?

Let me suggest another approach to your issue (I know nothing about life and where you stand but I’ll say it anyway).

Share your story, what you learn form it, what you did wrong, what you would do differently, share your knowledge, capitalize on it, get traction, if you have passion for it, and do it humbly and if you feel the need/will for it share a donations address for people that sympatize with you or benefit from it can give you back their $love :p)

Just my $UST 0.02

Could you reach out to me on telegram?
@Leen93

Reading through this thread, first, my condolences @leen. Like most others, I know crypto is a new technology and glitches can happen in these smart contracts, but still, if a technical error led to harm, I think the harmed party should be compensated. I don’t buy the Wild Wild West mantra use at your own risk. I’ll be following this case closely. How it’s handled will influence how I invest in crypto. Best of luck to you, @leen.

Yes, let us all contact the exchange that reported an actual trade and tell them to next time break the law and not report it as there are people who can get liquidated by those trades…

The dude put on a maximum risk position (4% over liquidation) and got blown out by an actual trade. Mirror should upgrade to prevent such events but the simple fact is there was no technical error.

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Exchanges report what they report, it’s what band protocol and mirror do with it in between, what price we feed directly to mirror, when mirror decides to liquidate eactly … These things need to change. I never said there was a technical error, the whole system is just not dealing with these outliers in the correct way. Wheather it happened or not, it should not have happened. I think we can both agree with that?

Of course, that’s why I replied to BoxedIn so he was aware.

100% needs to change. This risk is exactly why I don’t use Mirror to it’s full potential. Too much “oops, one trade price was weird” risk.

Should be a smoothed price feed function with a redundant alternative (e.g. Chainlink) to confirm. Collateral levels are by far high enough that we could wait a couple minutes / require multiple exchanges to report before liquidating.

I have mixed feelings on turning off oracle feed outside of market hours but so far leaving it on seems to do more harm than good, though I’d make the above changes first before doing this.

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I do agree that the liquidation should not have occurred and was due to a shortcoming in the system, so no, Mirror users should not benefit. I would support a separate request to refund to you any profit that Mirror made on the liquidation. Just make sure to detail the calculations.

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Doesn’t post 9 in this topic explain and show the calculations? Can you tell me what is not clear about it for you? Anything that needs more explanation? Thank you for your support

I hadn’t see that–it does look detailed. Thanks.

I am pretty sure something like also happened to me . I posted about it here. I was liquidated but not near the collateral ratio and no large price fluctuations. I posted about it here. Account hacked? - #2 by Mr.MIR

Of course you’re welcome to your opinion. I disagree. But, it’s illuminating to see how the community voted.