BALN Reserve Discussion

As early contributors have been busy preparing for the liquid staking pivot, a community member has pointed out that certain users have a very high Balanced debt balance because of high APY. We have done an analysis, and noticed that there are few users who should have been liquidated, but haven’t been liquidated as the liquidation was turned off when the exploit happened. Furthermore, some of these users’ debt token balance is higher than their collateral value. As a result, we would like to propose the following:

  1. Reduce the interest rates of Balanced tokens to prevent the debt token balance to further increase from the current state. We would like to propose changing Rslope2 of Balanced token interest rate model from 4 to 0. This would effectively change the borrow rate from 408% to 8% for BALN reserve.
  2. Encourage all the users to repay their debt and redeem their collateral from Omm, especially if their risk factor is high to avoid being liquidated. After few weeks of liquidation announcements, liquidation will be turned on again so that users can start liquidating addresses that have bad debt.
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I agree, got nothing to add haha

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Completely in agreement with the proposed changes