Unclear user manual information and locking mechanism about requirement ratio 180% and missing feature

Dear Community,

Last week at 2021-09-07 15:06:06 (+UTC) I was liquidated. I had no clear indication that my vault would be locked at 180%, and due to a missing feature that was added only after my liquidation, I was trapped almost five hours, thinking there was a bug in the system, and unable to make the appropriate maneuvers to save myself from liquidation and lower entry. I am proposing to the community for my vault to be returned to me. It was confiscated with my holdings at the time of liquidation with 214.15 KSM and a 64,134 kUSD loan.

When I liquidated there was no clear representation of the consequences of going under 180% while still being over 160%. The collateral provided, in this case $KSM, locks at a requirement ratio of 180% to help guarantee stable coin protocol solvency, however I could not see any clear indication for this. My first alarm was set based on price when the ratio reached 200%, and from that point I was waiting carefully incase the price dropped to 180% which was when I was ready to pull some $KSM out to sell in order to pay off a portion of my loan and balance my safe ratio to avoid liquidation at 160%. When the ratio hit 190%, the collateral ratio colour changed to yellow. Then, when my ratio went under the 180%, where my second alarm was set for price, my vault was frozen without any sign or notification. As soon as my vault became locked, I immediately began counting everything manually because there was no display feature that could show me how much $KSM I should put in. While the price continued dropping, I transferred my DOT from the JS Wallet to the exchange and I swapped my DOT to the stable coin and I turned stable coin to $KSM and I transferred $KSM to my JS wallet and I transferred funds to my Karura blockchain, and I did this in less than fifteen minutes. At this time, I immediately began searching for urgent assistance from the community. I was thinking there was a bug regarding the frozen vault and that the Acala Team would know about it, and be able to sort it out. My discord was having connection issues but I asked around, across Telegram and Slack groups, and no one could explain why my vault was showing a yellow warning sign, while simultaneously being frozen. Moreover, no one seemed to have any idea about the consequences of going under the 180% ratio.

I never thought I was taking too much risk because I was in control of the situation, given my previous experiences. Even around 200% my portfolio health had been displaying a “SAFE” designation in green. My liquidation ratio was showing in red at 160% with no indication in between that the vault could lock. After 190% the collateral ratio colour code changed to yellow with “warning” (and this display feature remained consistent without change even as the collateral ratio dropped under 180%). I never even imagined that the vault could lock at 180% ratio because there was no indication or sign. I still feel that yellow is a very confusing colour code to pair with a frozen vault for end users in UI especially without signage, because internationally yellow does not mean stop, yellow means you have time to prepare to stop or decide what you would like to do.

On 2021-09-07 10:22:12 (+UTC) I added my last emergency holding on the side of approx. 19.7 KSM . (you could see in blockchain) (Subscan | Substrate based blockchain explorer) and on Karura the system was showing my new ratio as 198%. However, when the transaction settled the ratio was reduced to 179%. My vault was still locked and so I continued searching for help because I was still thinking there was a bug in the system. This was probably due to real time oracle update but usually Ethereum base platforms have at least 20 min to 1 hour stable ratio, to not cause this type of scenario for end users. I’ve recreated this situation within a new active vault and when i add extra collateral, there continues to be a funny ratio play situation happening, making the user very confused. The numbers are still changing even when the price is stable- this is something extra that the team may want to investigate.

From 2021-09-07 10:22:12 (+UTC), it wasn’t until 2021-09-07 15:06:06 (+UTC) that I was liquidated- almost five hours after the point of my vault initially freezing, (you could see in blockchain) (Subscan | Substrate based blockchain explorer). Karura_Vault__CHART
When you look at these charts, you can see clearly that I didn’t liquidate from a constant price drop, nor from taking unnecessary risk, nor from lack of risk management. I just got locked because of unclear information and I could not maneuver during this time period. I wanted to close my vault when the price was around $370 - $380, I was planning to sell my holdings and actually get better entry around $300, buy the dip and create approximately around extra 40 - 50 KSM, but instead of that, I got locked in the system and the main sharp price drop came after 5 hours later. It was a painful 5 hours, and left me with a feeling of shock and confusion.

A couple of days after my liquidation, the team responded to my feedback by implementing a new feature to the vault that states, “Close Vault By Swapping Collateral” under 180%, because they saw the gap of the missing feature. After my liquidation, even the ambassador mentioned they had not been aware of the 180% requirement ratio locking mechanism. Had this feature “Close Vault By Swapping Collateral” been in place a few days earlier, I could have closed my vault in under a second. Moreover, If I had known that going under the 180% CRATIO would lead to freezing my vault, I would have set up my alarms for 220% as opposed to 180%.Still today users are not aware about this 180% locking mechanism, but at least they have the option to close their vault under that ratio now. I am very knowledgeable with other lending platforms and I would never give permission to drop under a 200% ratio. Previously, I have been able to manage my risk properly, maintaining control over the situation. A 200% and 210% ratio is very healthy for Ethereum based loans. If there had been clear indication that my vault would be locked at 180%, I could have swapped my extra $KSM to $KUSD under 1 minute, paid to the vault as $KUSD and avoided liquidation. Instead, I was locked in without any back up because I already put all my extra $KSM in the vault for an emergency situation. I never thought I was taking too much risk because I was fully in control; the screens are always open in front of me and I never leave my vault unattended with a 210% ratio anyway. Moreover, I always put up my ratio by swapping collateral over 300% when I leave my computer, or go to sleep while my alarm set in place with a clear exit plan.

The total of my loan @ 64,134 kUSD (12% liquidation fee of said 64,134 kUSD is 7696 KUSD, add the 7696 kUSD to my 64,134 loan and that’s a total of 71,830 kUSD) which got swapped for 214.15 KSM, that would be aprox ~335.65 kUSD per KSM. When liquidation happened, i had 317.9 KSM in my vault. After liquidation I received approximately 103.75 KSM back and the system basically sold my 214.15 KSM. I was so upset at that point because i felt abandoned and rekt. I had to sell my DOT holdings so I could add to my vault as KSM. I have read and researched almost everything about Karura since the beginning. I contributed to the Karura crowdloan and ACALA treasury events and I used the testnet prior to that; moreover, I use every option in real time in the Karura system right now. I am very knowledgeable and I am not a beginner; I have been in this space for a fairly long time. I can not even imagine if someone was a beginner, what they could do in that scenario. I believe our community will shape the world in the way we want and I serve unofficially almost every other platform for Dotsama ecosystem and ACALA community. I have not seen any information regarding funds being locked in the vault when going under 180% collateralisation, prior to this happening to me.

I am an organic gardener from the Daintree Rainforest, Far North Queensland, Australia. We run a community project called Platypus Dreaming Collective. We help purchase rainforest land that has been deforested and regenerate it to a natural state. I am a family man and father of two babies under three years old… I am not a gambler; I’m not a day trader either. I run five online businesses and I have 2 bachelor degrees and an MBA degree. I know how to manage risk and my vault did not liquidate because of a sharp price drop, nor by lack of experience with risk management. I managed to save my vault from a sharp price drop in the first place even under the circumstances, but I could not do any further maneuvers after that because my vault was locked and there was no other option to close my vault in that time. This has put me in hardship financially and mentally. I am fully aware of using Karura system at my own risk and in line with my risk management, however I do not feel that what happened to me was fair under these conditions. I am appealing to the community for my vault to be returned to me, when it was confiscated with my holdings at the time of liquidation with 214.15 KSM and a 64,134 kUSD loan. I​ am seeking community guidance with metta.

3 Likes

Hi @PolkaPus
thank you for your heartful post. Sorry that you got liquidated.
we will provide some analysis on your case and recommendations, so that the community can ultimately make a determination on it.

4 Likes

Wow, what a story. And good on you to have the balls to try the dapp with so much conviction from the very beginning.

It looks like your experience will help Karura and Acala shape and strengthen the protocol ever further.

I support your case. It would be awesome if the treasure could re-fund you.

Good luck!

2 Likes

You are certainly testing the system. Sounds like you should be refunded - isn’t that what Kusama network is all about?
I will be watching the outcome with interest.

2 Likes

Thanks for posting this.

Some more details identified via onchain data.

For address sL5vYdcwtv84c4M9SeUxTyBX421PJ3FDB2adxgkVuZr8GSM

The last position update before the liquidation:

At this time (2021-09-07 10:22:12 (+UTC)), the position is

  • collateral: 298.2KSM
  • debit: a bit less than 64134 KUSD

The collateral ratio displayed on frontend is using the onchain oracle price. Consider some delays between making transaction vs having it confirmed onchain, here are the oracle feeds in previous 30 blocks (6 minutes):

block number:  493156
block hash:  0x9e0d2c52f3458b5312bbe72157ea87e590f1b34972ccd9293542da2b2a6074d5
price: [
  [
    { Token: 'KSM' },
    {
      value: '358,050,000,000,000,000,000',
    }
  ]
]

block number:  493151
block hash:  0x41c402284360ded512f0f804943b103aa627a0485c99222b8573e7deb023a0a6
price: [
  [
    { Token: 'KSM' },
    {
      value: '359,105,000,000,000,000,000',
    }
  ]
]

block number:  493146
block hash:  0x4d1857b9c9dc28f611bf883c2d33af22a3956c5d8ec0da0bcbc07555d6446ab2
price: [
  [
    { Token: 'KSM' },
    {
      value: '359,105,000,000,000,000,000',
    }
  ]
]

block number:  493141
block hash:  0xdfffe2e256c420850b715d476294bf29e85ea48207c189bc2734a250b8c10f09
price: [
  [
    { Token: 'KSM' },
    {
      value: '363,970,000,000,000,000,000',
    }
  ]
]

block number:  493136
block hash:  0x1b5b8c70cfee076f47c6dab0bb02f7c52e4d232f8274136d7ec95e93de889f6d
price: [
  [
    { Token: 'KSM' },
    {
      value: '364,300,000,000,000,000,000',
    }
  ]
]

block number:  493131
block hash:  0x2b5234086917043c95ed638557fe0ef68d588bf871c3aef59cdc1944be129610
price: [
  [
    { Token: 'KSM' },
    {
      value: '364,499,725,000,000,000,000',
    }
  ]
]

So the onchain price of KSM at the time making collateral adjustment should be between 358.0 ~ 364.5 USD and the collateral ratio display should be between 166.5% ~ 169.5%.

After the additional deposit of 19.7 KSM, the oracle price is 358 USD, the oracle price in 10 mins period is between 358.0 ~ 358.9 USD. So the collateral ratio displayed should be between 177.5% ~ 177.9%.

This is the liquidation event:

At the liquidation time, the onchain KSM price is 308 USD. The collateral ratio of the loan is roughly 317.9 * 308 / 64134.7 = 152.7% which is below the liquidation ratio.

The debit is 64,134.7 KUSD and liquidation penalty is 12% of the debit, which is 7696.2 KUSD.

214.2 KSM is sold on Karura Swap for 71830.9KUSD which pays for the debit and liquidation penalty.

The remaining 103.7 KSM is transferred back to the owner account.

Some exact numbers:

KSM sold during liquidation: 214.156506529542 KSM
kUSD swapped: 71,830.87955409805 kUSD
Total debit at liquidation time: 64,134.713887587546 kUSD
Liquidation penalty: 7,696.165666510504 kUSD
KSM refunded: 103.756813470458

1 Like

We have identified some area of improvements of the Karura dApp and are working improving it. Some improvements are already deployed, including the ability to one click close position via Karura Swap.

It is technically unfeasible to revert the liquidation and restore the position.

The liquidation fee is currently held on the Stablecoin protocol treasury account as surplus. It is possible to use democracy module to make a force transfer to transfer funds back to liquidated address to compensate the lost.

If any want to make this happen, a democracy proposal is required, which requires 100 KAR as deposit. The deposit will be refunded when the proposal become a referenda.

The Stablecoin protocol treasury address is qmmNufxeWaAUp4SVa1Vi1owrzP1xhR6XKdorEcck17RF498

The steps to submit a democracy proposal:

  1. Go to democracy page: Polkadot/Substrate Portal
  2. Calculate the hash of the proposal. Click the “Submit preimage” button to and fill in the details:

    In this case, the proposal is perform a currencies.transfer onbehalf of the Stablecoin protocol treasury account (qmmNufxeWaAUp4SVa1Vi1owrzP1xhR6XKdorEcck17RF498), and transfer 7696.165666510504 kUSD to sL5vYdcwtv84c4M9SeUxTyBX421PJ3FDB2adxgkVuZr8GSM
  3. Note down the preimage: 0x5700b72d33f1eadb46eb5936c717c55dcdbc2ae1598d64d521d166afabb7a5e4
  4. Close this dialog. No need to submit preimage at this stage.
  5. Click the “Submit proposal” button, and fill in the preimage hash calculated above
  6. Click “Submit proposal” button to submit the proposal. Note that it will require at least 100 KAR deposit.
  7. The proposal should be created, and will become a referenda at end of this launch period, assuming it is the most supported proposal.
  8. KAR holders can vote for it
  9. If the proposal passed, you can submit the preimage using step 2. In this time click the “Submit preimage” button to submit it onchain.
  10. Wait for enactment period to end and the proposal will be executed.
5 Likes

@xlc
First, thank you so much for the advanced guide and clarification on @PolkaPus’s case. It’s very nice to see that we’re a community and trying to help each other out and I think this proposal will be a very exciting thing for the community, I’m stoked to watch the outcome. :star_struck:

I just have one little clarification question on all the information you kindly provided. If someone would create a proposal on @PolkaPus’s behalf or he does it himself, is it only technically possible to create the proposal for the liquidation fee of 7696.2 KUSD?

Because if I understood that right, @PolkaPus asks for the whole liquidation amount of 71830.9KUSD (the collateral liquidation + the liquidation fee)

Thank you in advance! :slightly_smiling_face:

1 Like

It is technically possible to create a proposal for any amount. You can follow my instruction and replace the amount 7696.165666510504 to any number. But in order to ensure the integrality of the protocols, I would encourage the community to vote against proposals that requests any unreasonable amount of tokens.

The only lost is the liquidation fee. There was a debit of 64,134.713887587546 kUSD and got paid off during the liquidation with 71,830.87955409805 kUSD from the swap.

2 Likes

@xlc Thank you so much for the response, that’s what I thought, I just wanted to clarify, because that question came up multiple times. :upside_down_face:

1 Like

Exactly. He is asking for the 71830.9KUSD and that makes full sense to me.

This is Karura dapp technical fault. Liquidating him at the lower price. Not fair.

Go for a full refund proposal. We’ll back you up.

1 Like

I think this might be a misunderstanding about the nature of Kusama. Kusama is not a testnet. Assets on chain have real economic value, and actions on the chain have real economic consequences.

DeFi is not without risk, and management of that risk is entirely the responsibility of the user. Refunds for poor risk management should not even be considered.

4 Likes

The protocol worked as expected. Liquidation occurs when prices are dropping, and being forced to sell off assets at the bottom is a major downside to getting liquidated. Another downside is the punitive liquidation fee, which is intended to act as further disincentive to holding risky debt positions.

There was no technical malfunction or deceptive communication here. I don’t see how anything has been unfair.

2 Likes

issue is here, i think you did not read proposal properly, i hope you will read again after this, English is not my main language but i will try my best ok, this is nothing to do with poor risk management as i mentioned! If you did not even know your vault would lock, how could manage your risk properly and i managed my risk properly! i just can not get out from system because missing feature and unclear UI and clearly you could see there are almost 5 hours difference in my liquduation , if i put you in car to drive without break 5 hours! see what happens, i locked in the system without any option! A couple of days after my liquidation, the team responded to my feedback by implementing a new feature to the vault that states, “Close Vault By Swapping Collateral” under 180%, because they saw the technical gap of the missing feature. this was clearly technical issue! not risk management because of my feedback at least other ppl will not find themselves in my situation! there was technical issues! 3 technical issues first one! unclear manual information, noone knows about 180% locking mechanism at all, not mention am aware of it anywhere not in UI and locking vault even ambassador not know really about it,and if you say you know you are in very few ppl! because i know alot about karura! 190% the collateral ratio colour code changes to yellow with “warning” (and this display feature remained consistent without change even as the collateral ratio dropped under 180%).without any signage! you do not even know your vault is locked! second one funny play in new ratio, it is still happening today right now and 3rd one no break in the system so if you would like to get out, you can not get out! free fall you are there. you can not design car without break! and saying this is user risk management unfortunately… i am not asking refunds for poor management here and i am not just asking this for my situation at all, i am sure there are plenty ppl in same situation but they do not have a voice ,time or they can not speak English or they do not wanna put their address publicly here. so i am asking technical community step up and talk for all community and go thru all chain data and return ppl vaults for ppl in my situation. this is not personal situation at all…

2 Likes

I understand this 110% as I’ve been using DeFi protocols for a while successfully. And I also have been liquidates due to price drops. However in this case there were UI issues and as he says a missing feature. Because of this issue the team has responded ADDING those elements and clarifying previously missing info. I think we need to put it to vote. Democracy will speak louder.

2 Likes

Thank you all for your responses. I still believe this is not merely a risk-management issue- this was a technical issue facing the Karura community that contributed to my liquidation, and I therefore encourage the technical community to step up and put this referenda forward for the betterment of everyone. I am sorry for taking your time and I can imagine you are really busy, and I appreciate that you are continuing to respond to the issues the community is having in these early days.

I would like to be really clear,strong text I’m not greedy, and I’m not bitter at all. I have a strong faith in our community. I just want fair justice for all the community, in these very early days. With respect and metta, I’m not in agreeance that the only cost was the liquidation fee which is 7696 KUSD. While my entries are over $420 USD for each KSM, my total holdings of 214 KSM cost me more than $95,000 USD, and my debit is 64,134 KUSD and liquidation penalty is 12% of the debit, which is 7696 KUSD. So 214.2 KSM was sold on Karura Swap for 71830 KUSD which pays for the debit and liquidation penalty. At the liquidation time, the on chain KSM price is 308 USD, this event leaving me approximately $30K USD (approx. 70 KSM) shorter than my entries. Just thinking my only loss is 7696 KUSD (approx. 22 KSM) is not realistic, in my opinion, and is misleading to the community who may not understand finance. I would like you to pay attention to these figures. If I wasn’t locked out of my vault, I could have managed my vault properly, and I was not facing with this loss.

I’m asking clearly for my vault to be returned to me with 214.2 KSM and a 64,134 KUSD loan in a healthy ratio- this is my debt, which I am happy to pay in a healthy ratio. I want to be as clear as possible, I’m not proposing for extra tokens. I’m not seeking compensation or anything like that. I only want my vault returned to me, so I can manage it properly. If only 7696 KUSD is returned to me, I can only manage 22 KSM, and that leaves me in an unfair situation. When the price returns to a reliable ratio of around 200%, the team could return my vault as it was and I could take care of it from there…

My English is not good enough to understand that detailed referenda explanation so I am trying to understand everything here. I’m using a Grammarly program, so if anywhere does not make sense, please do not hesitate to ask me any questions for which I am happy to answer. I don’t want to make too much noise and as a supporter and community member, I am passionate about this project becoming successful. I have faith in the technical community and the community itself and that’s why I am a supporter of ACALA, which I believe will shape the new earth in our hands. I’m not merely writing this because I want my money returned- although for sure I want my vault returned to me. I have mixed feelings and I will respond in further detail with assistance… I am not only asking to revert the liquidation and restore the position, my intention is to point out three clear technical issues which make the KARURA SYSTEM really hard and unreliable for end users because of an unclear user manual and user interface.

In response to what happened in my situation, one of biggest technical issues has now been sorted out with the implantation of a new feature, “Close Vault By Swapping Collateral”, making the UI experience clearer for future users . It was mentioned in response to my proposal, “we have identified some area of improvements of the Karura dApp and are working improving it. Some improvements are already deployed, including the ability to one click close position via Karura Swap.” At least now, users have the chance to not get locked in the system and stop the liquidation. This new feature, that was implemented as a response to the feedback I offered about my liquidation, addresses a pre-existing technical issue- so I’m therefore left wondering why the assumption has been put forward that my liquidation was somehow caused by a lack of risk management. I really feel in this situation, that I was driving a car without a break- and I crashed, simply because there was no break. I didn’t crash because I was an incapable driver, nor because of a lack of risk management skills. I am not a beginner in the Karura community- I have a system to manage my risk, and I have a plan for clear exits. However, an unclear user manual and funny new ratio gauges on the interface made my plan impossible to use. My risk management strategy fell apart because there was no indication whatsoever that the vault would lock at 180%. It is a positive move forward that change has been made, however, I regret that it was not put in place sooner, as this basic UI feature could have provided me with the appropriate indication that would have prevented my liquidation from occurring in the first place. In that way, I could have had a chance at lower entries to balance my portfolio. I’ve been managing my risk with the same strategy since Defi has existed, and I never get liquidated. I have ten screens, with all my vaults open in front of me, with clear control over them 24/7. All my ratios are in place with an alarm, and I always keep my ratio in a healthy “safe” position, and if my position goes under that ratio, it doesn’t matter how quick, I can act really fast and I can sell a small portion of my collateral and pay my loan slowly and I can balance the price fluctuation, in any type of scenario. We can argue we all have a different way of managing risk, but I always sell and add a small portion of my collateral, keeping my collateral ratio healthy. This doesn’t mean I’m taking an unhealthy risk.

My suggestion for the technical community is to develop plenty of clear signage in UI for locking mechanism, and particularly to consider improving the yellow warning sign. I would also encourage that after the vault has locked, some clearer signage is put in place, so that users can understand clearly that their vault has in fact locked, and aren’t left feeling that there is a bug in the system, as I was. There was no change to the yellow warning sign when the ratio dropped below 180% and the vault froze. I had no idea what was even happening. Undoubtedly, our community would appreciate clear technical indicators. I am sure the team have a better plan to educate the community about the 180% locking mechanism as well, so again, if these things had of been in place, I could have avoided liquidation. With the appropriate indicators of a 180% vault locking mechanism, I could have managed my vault around 220%, instead of setting my alarms at 180%. Stating that, “no technical malfunction or deceptive communication here. I don’t see how anything has been unfair”, as suggested by one of our community members, is in my opinion not realistic.

I’m left wondering how, as a community, we can acknowledge the missing technical features in the system that contributed to liquidation, yet pass it off as “lack of risk management”, without any real support. I know I’m not alone in this. I am aware this is an experimental phase, but we are in really early ages to lay me down in this situation. We are still a very small community and I’m still optimistic for a fair outcome. I’m really thankful for the ambassadors who helped me to put this proposal together in the first place. However, I didn’t feel there was any resolution yet, and just to say that “the liquidation cannot be reverted as it is technically unfeasible” falls short. In this response, there is no clear outcome for the community- because this is beyond an individual issue. To state “in order to ensure the integrality of the protocols…” I feel undermines the overall integrity of the project and community. To be honest, I have mixed feelings. I feel let down by the initial response I received that suggested “the request is for an unreasonable amount of tokens”. I feel like my concerns have been misunderstood. I’m not a greedy person at all- and I’m not here for the money, just seeking a fair outcome that will shape our community for the future.

How we start our culture is how we thrive. How our community handles these early day technical issues and their impact on end users and new members is going to influence how we grow, and create something monumental. I am optimistic this situation can further shape and strengthen the protocol. Had the user manual and UI interface been clear with any type of sign indicating the 180% locking mechanism, I could have made a well informed decision. If I could see clearly that my vault would be locked at 180%, I never would have taken this risk, I never would have allowed my ratio to drop to 180%, where my second alarm was set. I would have always kept in healthy and ‘safe’ ratios. These ratios can differ for every different person and strategy. We can not put every user in same category and we can not expect a formula 1 driver and a daily driver to use the same strategy. We could argue all day long who takes more risk and who do not take, but this topic is very fragile and changes for ever user. The main point here is the unclear locking mechanism and missing exit feature that the team recently implanted. Please pay attention to those ones. Those are all technical issues that I would like to see the community address. This is still not full a de-centralised community, we are not in that phase yet and we would like to see our team leader put their leadership a little bit further. This issue is taking up all my mental game, so I hope we can reach a positive and fair outcome for the future of our community.

I’m asking clearly for my vault to be returned to me with 214.2 KSM and a 64,134 KUSD loan am happy to pay in a healthy ratio, I’m happy to pay this at a healthy ratio. When the price returns to a reliable ratio of around 200%, the team could return my vault as it was and I could take care of it from there, that’s all am seeking guidance with metta…

1 Like

I need to emphasize this once more. The code is open sourced, and if you are willing to code something to make the technically feasible, contributions are welcome.

2 Likes

I apologise for my lack of understanding here, I am not a coder and I had to look up what unfeasible meant as English is not my first language, and I have support in my correspondence, due to the language barrier. I am not trying to be rude here but humbly asking for your guidance and assistance.

with all my respect this is not really what happened because my lost is not only liquidation fee, much more than that, with my entries and i lost my vault because this process and missing feature, i just would like my vault return to me with my holdings and my debt, pls tell me what next i need to do, we are all in very long lock down and my psychology is not really good affecting my family atm , and you wrotre me that, i need to start this proposal and you will give someone to me help to write a referenda in Acala feedback page, those steps are very complicated and i have 2 babies here and i do not feel good, pls help. I’m not in agreeance that the only cost was the liquidation fee which is 7696 KUSD.While my entries are over $420 USD for each KSM, my total holdings of 214.2 KSM cost me more than $95,000 USD, and my debit is 64,134 KUSD and liquidation penalty is 12% of the debit, which is 7696 KUSD. So 214.2 KSM was sold on Karura Swap for 71830 KUSD which pays for the debit and liquidation penalty. At the liquidation time, the on chain KSM price is 308 USD, this event leaving me approximately $30K USD (approx. 70 KSM) shorter than my entries. Just thinking my only loss is 7696 KUSD made me feel hopeless , .If I wasn’t locked out of my vault, I could have managed my vault properly, and I was not facing with this loss. pls show me way to out of this, thanks

Wow this saddens me to hear this. Great work for telling your story.
Can anybody actually explain to me what is this 180% locking machanism? if there is no clear indication we should recover his lost coins.
This is very important in this early days for our community. I hope this gets resolved

1 Like

There is a minimum collateral requirement of 180%. If your collateral ratio falls below that, you cannot mint additional kUSD or withdraw your collateral. You will need to pay back some or all of the kUSD that you owe in order to regain access to your collateral.

PolkaPus got himself into trouble by minting kUSD, purchasing KSM with the debt, using that as collateral to mint more kUSD, in order to continue layering on debt in this manner until he was in too deep to bail himself out when the price dropped 30%. Losing a significant amount of money was unavoidable. Whether he was going to get liquidated or find himself scrambling to sell off collateral as prices plummeted, he put himself in the absolute worst position for a dramatic price drop.

This whole entire situation is very unfortunate, but no DeFi protocol can survive by refunding people who take excessive risk and lose money.

2 Likes