In February the protocol experienced downtime for traders and a deficit of free liquidity for iETH holders. We’ve created a plan to compensate traders for that downtime and restore liquidity to the iETH pool.
The Trader Compensation Plan
Making Traders Whole
We’ve allocated 2,060,000 vesting BZRX to a fund for traders impacted by the downtime. Anyone impacted by the freeze may apply to receive a share of the tokens proportional to the size of the positions open on the day the protocol was down, Feb 18, 2020.
bZx v2 is structured such that you can always exit your position even if the protocol or price feed is compromised. There will be no conditions under which the ability to exit positions is disabled.
Restoring Liquidity to the iETH Pool
If iETH holders wish to leave the pool immediately, they will be given the option to purchase BZRX at a discount using their iETH. The BZRX will be locked in a 4 year vesting contract with a six month cliff. If lenders do not wish to pursue this path, we have an additional mechanism in place to restore liquidity for iETH holders.
Half of all fees collected from loans, trading, and lending will be converted to ETH on a weekly basis and sent to the iETH pool, creating free liquidity for lenders. This will continue until such time as the outstanding debt on the pool is paid off, or the bZxDAO votes to change this state of affairs. We will shield the existing and developing free liquidity of the iETH pool by creating a separate pool from which borrowers can draw free liquidity.
How to Participate
We have taken a snapshot of addresses eligible for the Lender Rescue and Trader Compensation Programs. Only lenders that are already in the iETH pool will be eligible, and only traders that experienced downtime in February will be eligible.
We will provide a simple interface to let users participate in the programs described above. Instructions will be released in a follow-up announcement next month.