Venus, the largest lending platform on the Coin Smartchain, is in another violent crisis.
On the night of May 18, 2021 a giant whale spent tens of millions of dollars for a short period of time to pull and double the price of XVS from over $70 to $144, then used the pulled up price of XVS as collateral to lend 4,100 bitcoins and nearly 10,000 Ether at a pledge rate of 80%.
The subsequent retreat of the XVS coin price led to the serial liquidation of the pledged XVS and the formation of nearly $ billion in bad debts by Venus.
Microblog user Blockchain Wang Dayou observed this giant whale’s action. Blockchain Wang Dayou posted a blog after 3:00 am.
Venus has a big investor who lent 4100 large pancakes at the high point of xvs price, 9600 Ether, which will be in continuous liquidation. The liquidated xvs dumped into the market may cause a cascading drop in coin prices. Now I don’t know if it’s a bug or if the xvs were deliberately pulled up last night as collateral to boost the amount available for lending (how this big account has nearly 200w xvs) .
Twitter user Jordy Roelofs provided an address 0xEF044206Db68E40520BfA82D45419d498b4bc7Bf, and you can see that a large number of XVS were cleared at this address.
Vulnerability or project side shipments
In response to this operation of the large XVS account, some users said that this is actually equivalent to shipping in disguise, and at a high price, because the XVS market depth is not enough.
In addition to this manipulation of liquidation by artificial use of rule loopholes, Venus encountered a lending crisis at the beginning of its launch. venus added tokens CAN as collateral at will after its launch, which led to 3,000 BTC being borrowed short at the time (see previous article in Golden Finance for details).
As for Venus this liquidation event is someone exploiting the loophole or the project side shipping? The community is suspicious for two main reasons.
1, XVS total circulation of 10 million, and this time the giant whale on the use of 2 million XVS; 2, May 8 the community voted for a new proposal to increase the XVS pledge rate from 60% to 80%. The time interval is so close that one has to think about it.
Venus’ collateral assets include: BTCB, ETH, BNB, XVS, SXP, USDT, BUSD, USDC. two uncommon tokens are XVS and SXP. SXP is the token of Swipe wallet, and in the incident of using CAN to borrow 3000 BTC, CAN is the IWO project of Swipe wallet team. It can be said that the teams behind the three tokens XVS, CAN and SXP have a great relationship.
On the afternoon of May 19, 2021, in response, Venus posted an article explaining the events of this large XVS liquidation event, “Previously, due to the large number of market orders and expectations for the new reward token VRT, XVS price saw a significant increase, as a result, traders pledged and repeatedly lent more collateral to continue buying XVS. Subsequently, some traders took advantage of the Subsequently, some traders locked in their profits from the price increase, causing the price to fall, and the price to drop dramatically due to the large number of XVS sales, which in turn triggered a significant amount of market liquidation in the XVS market.”
The liquidation mechanism in the Venus protocol is somewhat similar to how users leverage “long” positions. Users can use collateral to borrow more collateral to increase their positions, and to repurpose and adjust their positions. The liquidators in the agreement will look for accounts with positions that exceed their margin, in this case they will borrow up to 50% of the limit to liquidate the position and charge a 10% fee. These liquidators will then sell the collateral they have seized, in this case XVS, to get back the capital they used to liquidate. The only problem is that this 10% will fluctuate with market volatility, leading to greater slippage, which will again lower the price of the impounded assets. This would lead to continuous liquidation problems. As more liquidations occur, prices fall and events enter a negative cycle until the liquidation is complete.
Venus states, “Despite the fact that the balances are in deficit due to the rapid drop in prices and the liquidators are taking full advantage of the situation, Venus will deploy the GRANT program to use XVS to make up the shortfall in the system. They will not be sold into the market, but will be leveraged for reconciliation under the supervision of the Venus team. To ensure that such an event does not occur again, each asset backed on Venus will be revisited and the respective collateralization factors will be safely reduced.”
“In this incident, the Venus protocol worked properly as expected, but the clearer was not able to complete the clearing in a timely manner, which subsequently led to a continuous sell-off in the clearing market. In the future, a user interface will also be created so that more members can participate in the clearing process and share the clearing workload.”
In response to this response, one user commented, “To make up for Venus’ wear and tear, the Venus team issued an additional amount of XVS to itself and made up for the less money it made by trading over-the-counter.”
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/loophole-or-project-side-shipments-bscs-largest-lending-platform-venus-gets-jacked-for-nearly-100-million/
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