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Lending platform Venus responded to the liquidation event: it will lower the collateral coefficient and assess the upper limit of asset supply

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Venus will deploy the Grant program to leverage XVS to make up for system deficiencies

According to the news of Blockbeats, on May 19, Venus officially issued a statement to respond to the whole process of the resale of the lending platform, Venus, which was maliciously manipulated by a large bank and resulted in the system liquidation.

Venus表示「没有资金损失。尽管由于价格的快速下跌，余额出现了亏空，清算人充分利用了这种情况，Venus 将部署 grant 计划，利用 XVS 来弥补系统的不足......将降低各抵押系数，评估资产供应上限, 以确保在一定阈值下无法再加杠杆。」

以下为 Venus 官方发布《 Venus 事件报告- XVS 清算》全文：

This morning (Singapore time), the price of XVS has increased significantly due to heavy market orders and anticipation of our new reward token, VRT. With limited supply, these large orders have caused huge price swings in the market. As prices rose, dealers pledged and repeatedly lent more collateral to keep buying XVS. According to the agreement, the profit margins on these deals are very high. Then some traders locked in profits from higher prices, causing prices to fall. This was a domino effect, with a lot of market liquidation occurring in the XVS market as the XVS were sold in large numbers, causing prices to drop dramatically.

The clearing mechanism in the Venus agreement is somewhat similar to the way users leverage "long". The user can use the collateral to borrow more collateral to increase the position, and repurpose and adjust the position. The liquidator in the agreement will look for accounts whose positions exceed their margin and, in this case, they will borrow up to 50% of their positions and charge a 10% fee. These liquidators will then sell the collateral they have seized, in this case XVS, to get back their capital for liquidation. The only problem is that this 10% will fluctuate with the market, leading to a bigger slippage point, which will again lower the price of the seized assets. This will lead to continuous liquidation problems. As more liquidations occur, prices fall and the event enters a negative cycle until the liquidation is complete.

That's what's happening in the Venus protocol XVS market. That's bad news, but there's also good news that there's no money lost. Although the liquidator took full advantage of the hole in the balance due to the rapid price decline, Venus would deploy the GRANT program to leverage XVS to make up for the system shortfalls. They will not be sold to the market, but will be leveraged responsibly under the supervision of the Venus team, or traded off-market to partners who have signed long-term holding agreements.

To make sure this doesn't happen again, we'll review every asset supported on Venus and safely reduce each collateral factor. We will also work with our Oracle to find a better way to update prices and finally assess the supply ceiling of assets to ensure that no more leverage can be added under certain thresholds. In this case, the Venus agreement worked as expected, but the liquidator failed to complete the clearing in time, which subsequently led to a series of sell-offs in the clearing market. In the future, we will also create a user interface so that more members can participate in the clearing work and share the workload.

Thank you for your continued support of the Venus team.

Venus team