Unexpected mSQ Liquidation (Block Code 'Chad Money'?)

Can anyone explain the large liquidations of mSQ this evening under the transaction ‘Chad Money’ rather than the usual ‘Redeem, Swap, Auction’ transactions?

My position had over 200% collateral and was liquidated at a 120% premium to the current oracle price. While SQ was reporting earnings there doesn’t appear to be any price action that would warrant liquidations at this level.

If liquidation losses are capped at the original collateral value, and the liquidation is the result of a singular arbitrary trade that filled well outside of market pricing causing a momentary spike in the oracle price, then it creates a perverse incentive to be under-collateralised to limit the risk of these random oracle events - is that reasonably logical or am I missing something?

This is well covered in other posts, but look at the price reported by Nasdaq.

Look around at the other posts, it’s something we need to fix.

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That is just the name of a smart contract that someone has setup to do liquidations. The details of the transaction are recorded within the logs.

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Sorry to hear that, i watched the price action of mSQ yesterday and it was absolutely crazy. Would you mind sharing your liquidation Txn? I thought it would not make sense for liquidators to execute over 50% Premium, would be interesting to see how that worked

I was about to reply this exact same thing to OP. Looking at mSQ’s price action vs its premium I am wondering how the bot was able to profit/why it bought the CDP.

When the oracle price spikes, the mAsset is no longer “trading at a premium.” It is trading at a large discount.

This design/implementation bug needs to be fixed long time ago!

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That in conclusion means, that the liquidators are the ones that were hurt the most? I mean if they had to buy at 350 while the oracle price was 100 before, the common Collateral they can get will still be far less than than the cost of closing the position.
I was quite jealous of liquidators in the past because of their risk free instant returns, but that again shows the risk that comes with bad coding of such bots.

I think you have it backwards.
Hypothetical scenario:
Oracle says mSQ is $250
Pool price of mSQ is $130

You can buy mSQ debt from the Oracle and repay it from the pool for a nice profit.

Not an expert, just my understanding.

C95D412776C0D9C7A5D97634891222ED9331DA647125243AF69C67AA4D5EF613

This is the hash. It’s another disincentive to arb on the short side. Hurts the credibility of the protocol. And adds risk given it incentivises low collateral positions to reduce the loss in such random liquidation events. You wouldn’t receive a margin call let alone be liquidated at a >100% loss based on this price action through a traditional broker.

I was liquidated as well. Collateral was over 250% so didn’t think to check it every couple hours.
All earnings made from the last couple of months just gone like that.
Guess it’s time to take my capital out of mirror and pull the plug.

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In this case the liquidator made about 180$ profit, according to the logs he liquidated 19.77 mSQ at the exchange rate 191.59 aUST or about 238 UST, after buying the mSQ on Terraswap at price 229 UST. It’s interesting that according to the coinhall link above the price range of mSQ on that day was 118.50 low, 554.19 high.

How do you get 180$ Profit? Returned Collateral was 3789,2$, he burned 19,78 mSQ that he bought for 4531$, so for me that’s around 742$ Loss.

This is propably one of the least devastating liquidation transactions since it was at approx. 116% Premium. There must’ve been Liquidations that bought at over 300%

This “chad money” liquidation happened to me as well, except it was with markk. I even topped up the collateral 1 hour before the liquidation. WFT?
here is the hash:
117925A62BE64A919C40C1B7E82218B703DCC9A7FCA4F10818B14F904032D35C

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The key issue is that this type of random liquidations, happened also to mSPY, mFB, is simply too toxic for the protocol. It is the most urgent item requiring immediately attention. Unfortunately, SEC scare away TFL in the name of investor protection, causing TFL abandon this ship.

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The collateral is aUST so it was 3789 aUST which is like $4800

Like @Hank-O said the collateral was aUST. Assuming 1 aUST = 1.24 UST, 3789.2 aUST = 4699 UST and 4699-4531=168 UST. I got 180$ because after rounding the exchange rates were 238 and 229 so it’s roughly (238-229)*20=180. Why do you say there was 116% premium? It appears the pool price and the oracle price were much closer.

You’re right, my bad i thought collat was UST. 116% Premium to the real price (106$), not the spiked oracle price