Explanation on the incident of bad debts concerning DEX token in the liquidation process of the Defi

At 16:05 and 22:50 on January 15, 2023 (Singapore time), the DEX tokens were shorted by two accounts, c2w332t5ng4g and ss5gyke3paur, which caused the liquidation and bad debts in Lending Protocol; the total bad debts were 2,215,988.3116 DEX tokens. Approved by the Defibox DAO Board, the Defibox community will use the risk reserve of 20,000 EOS to pay off the bad debt.

Summary:

Causes: Due to the lack of liquidity of EOS+DEX, the price of DEX was manipulated in the short term. With the deposit and borrow, the lending protocol was overwhelmed and bad debts were formed.

Measures:

1. The lending protocol will delist DEX and DFS, which cannot be used as collateral in the future, and the lending function is closed; and DEX tokens, DFS tokens and EOS+DEX LP certificates are gradually delisted; 2. The lending protocol lowers the relevant parameters of BOX, USN, EOS+BOX、EOS+USN、USN+USDT、USN+BOX LP certificates. The parameters are all 50% LTV and 70% liquidation 3. DEX tokens and EOS+DEX LP certificates will be delisted under the USN protocol; 4. The USN protocol lowers BBOX、BOX, EOS+BOX, USN+BOX, EOS+USN or any other concerning LP related parameters;

Compensation plan:

The Newdex community will deposit 2,215,988.3116 DEX tokens in advance to the Defibox lending protocol to guarantee user withdrawals. At the same time, the Defibox community will use the risk reserve of 20,000 EOS to pay for this bad debt.