Planet Finance and UST Ramifications
The DeFi world is still reeling from the damage done by Terra’s UST debacle, as interconnected systems sift through indirect damages now only just coming to light. Among them is the Planet Finance ecosystem, which unfortunately was utilized in both Don-key’s Sponsored BNB (847.33 BNB lost) and Rastafari pool (143.4 BNB and 7.4 ETH lost.)
What Happened:
As stated by Planet Finance, Chainlink’s price oracles failed when UST depegged, which caused a cascading effect of unexecuted liquidations. This resulted in losses for liquidity providers who paid out loans that should have been defaulted upon liquidation.
This went undetected by Don-key’s automated bot network because, until Saturday, all withdrawal requests were successfully executed.
You can see through the pool contract all transactions, and see the below transaction for example:
https://bscscan.com/tx/0x9a13531f2d9c89213c1ea6d63c8aedfcb86c9b5cfa37cae6196a6fdcb5fec279
Furthermore, Don-key had no reason to suspect platform failure as both Planet Finance’s UI and other on chain analytics showed, and still show all funds intact:
https://debank.com/profile/0x91c493ff470132244f62c9d85dc2adfe1589bc86
https://debank.com/profile/0x4733da8988c4d93a8209fb8c8f2a12075493032e
However, as the pools went through the course of a migration to a new strategy, Don-key’s bots got an error message, which looked in the form of a successful transaction but with zero amount received
https://bscscan.com/tx/0x1b35a936f7a3339beec75ec4b6db2c1cb394a1e81c7be61c9d853e58985ee154
The team immediately reached out to Planet Finance to learn how it was possible that Don-key successfully withdrew BNB throughout the last two weeks when the issue originated on May 7th and was still seeing on all matrix the full amount available.
They responded that someone must have paid back some of their borrowed BNB, which freed up withdrawal liquidity. This is odd considering Don-key’s bot was able to withdraw on a regular basis without a single transaction failing.
How Don-key is Responding:
In terms of damage control, all users who invested in the Sponsored BNB and Rastafarmi after UST depegged, will be fully refunded directly from Don-key’s treasury. Their LP tokens will be burnt and BNB air dropped shortly.
Sponsored BNB:
Sponsored BNB will be deprecated (no new entrants,) with $DON rewards continuing to be given out until Don-key announces a loyalty plan expected to launch in less than 14 days (Details very soon — but it will involve giving platform fees to V1 users.) Balance will not be reduced at this point and will reflect what we see in Planet Finance.
Rastafarmi
Rastafarmi will be deprecated (no new entrants), investors will see reduced balances on Don-key’s dashboard section with their remaining funds routed through a new strategy visible in the UI.
Furthermore, Don-key has launched today a bot that targets Planet Finance’s contract so that every time a borrower repays BNB to their contract, it is automatically requested for withdrawal. These BNB will be accumulated and available to claim on a designated pool that we will deploy in the near future. Disperse of said BNB is proportionality to all Sponsored BNB and Rastefarmi investors.
Example of first transaction the bot was able to recover from today of ~0.5BNB:
https://bscscan.com/tx/0x1534ae96092b4a509a81f459587881ede3ce169c45040fae77c7b7e096300ca6
Also, Planet Finance’s announced compensation program will reward users automatically — this as well will go into the claiming pool above.
Moving Forward:
Launching V2 in the most challenging DeFi climate in recorded history has forced us to reconsider yield farming as a retail-ready product. Yes, insurance will become increasingly more available as the space matures and Don-key’s own loyalty rewards program and relief fund will play a part in bridging the gap for investors between now and then; however, this pause in market euphoria affords us a more calculated view at how we can refine the product for the next market cycle; especially, as yield returns to DeFi.
At its core this will mean designing the platform so that it incentivizes profit realization when strategies perform well, while also giving investors better tools to more transparently assess strategies and better manage risk. A detailed overview of what this means will be rolled out in the coming weeks, along with an introduction to a “Bear Market” product, that will combine DCA-ing with low risk, low reward staking.
Stay Strong Don-keys. Together, you — the community, us — the team, and DeFi as an industry are co-evolving and experimenting in the early days of a space that will inevitably be worth trillions. As painful as these hiccups are in the early days, remain resilient. You can either accumulate during the lows of the market, or join us at the top of the next cycle.
Don-keys will not be shaken.
About Don-key Finance
Don-key.finance is the only social yield farming platform to democratize expertise in yield farming. Investors need profitable strategies and farmers need extra liquidity — Don-key brings them together in an open-source competition driven marketplace.
With just one-click everyday investors can route their liquidity — in whichever token they chose — through professionally designed strategies that are updated to chase the highest available APY while minimizing risk.
Competitive Yield Farming is a full-time job; Don-key does it, so you don’t have to.
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