Recently, Compound deployed buggy code that created price feed issues for the cETH market. A fix is underway and expected to be executed in ~6 days (around August 5/6, 2022).
Members of the Compound community have flagged Index Coop’s ETH2X-FLI product as being at risk of liquidation when a fix is deployed. What is being done by the core team at Set and Index Coop to ensure this does not occur? Have you been in touch with the Compound core devs?
Thanks for raising this.
We are aware and members of the product team have been active in the compound discord.
We have also tweeted about it and published a blog:
There is still work to be done to consider all the possible outcomes based on ETH price and if ETH2_FLI on main net moves from NAV.
@allan.g - anything to add?
You’ve covered it well, OA!
We are indeed in touch with the Compound team and we are also preparing contingency plans in the event that the ETH2x-FLI position is at risk of liquidation when the prior price feed is restored.
The Compound Pause Guardian also has the authority to stay liquidations for a specified amount of time after Proposal 119 is implemented. This would offer the ETH2x-FLI keeper systems ample time to rebalance as soon as the fix goes into effect. We will be closely monitoring the product and engaging the Pause Guardian if necessary ahead of the fix.
Hi @allan.g , any updates you can share with the community?
Hey @unknownx - we’ve been monitoring the ETH2x-FLI leverage ratio closely over the last few days and it has consistently stayed within its safe range. This is largely attributed to the price of ETH being greater than or roughly equal to the price of ETH when the issue first arose.
The Current Leverage Ratio is currently at ~2.02x, well within the safe range of 1.7x - 2.3x and quite close to the target leverage ratio of 2.00x. This is all verifiable at the contract as well and most easily accessed through the hyperlinks above!
We will continue monitoring the leverage ratio and the price of ETH up until Proposal 119 is executed and after to ensure that the automated leverage management performs as expected.