Impact on Green Planet due to Terra’s Meltdown
What unfolded over the last week with LUNA & UST sent shockwaves throughout our entire industry. It had cascading effects across the entire space that affected countless protocols including Planet. We saw the TVL of all of DeFi go from $250 Billion to $144 Billion (according to DeFi Llama).
Due to a combination of factors such as the prices of aUST, UST, and LUNA dropping rapidly, Chainlink price feeds being suspended on very short notice, the wormhole bridge being down due to the Terra blockchain halted, there was no way for cross chain liquidations to work, which resulted in a shortfall of approximately $14.3 million on Green Planet.
Timeline of Events
On Thursday May 12 at about 09:20 UTC, Chainlink’s price feed for LUNA hit a price floor threshold and was suspended by Chainlink at a price of $0.107. The LUNA market on Green Planet continued operating while the spot price continued to fall.
After discovering this discrepancy we took immediate action, and the collateral factor for the LUNA market was set to 0. This stopped any further borrowing of other assets against LUNA collateral.
As chaos ensued across the Terra ecosystem, liquidations were functioning on Green Planet as they normally do.
On May 12th, The Terra blockchain was officially halted at a block height of 7603700. This froze the ability for liquidators to properly complete liquidations on accounts with aUST as collateral. The bridge stopped functioning due to the chain being halted as well. This created a deficit in several other markets on Green Planet due to the inability to liquidate debt by profitably seizing the aUST collateral to convert back to UST on the Terra blockchain.
Roughly 2 hours later the Terra blockchain resumed block production.
On Friday May 13th at about 03:22 UTC, despite UST markets still trading on all major exchanges like Binance and FTX, Chainlink price feeds were suspended for UST and aUST. This created a discrepancy between the last given price from the price feed and the spot price of UST.
After discovering these Chainlink price feeds were suspended the same action was taken on UST & aUST, the collateral factor was adjusted to 0 to stop any further borrowing of other assets. Supplying and borrowing was then paused across all markets on Green Planet.
Any markets with shortfalls will be redeployed on Green Planet over the next couple weeks and re-open for deposits. All paused markets will be retired and moved to the finished tab.
To reduce any future impact from unanticipated price feed suspension, we’ll be exploring the possibility of implementing expanded systems to monitor & ensure feeds are working as intended. If a price feed were to stop responding after a certain number of blocks and/or there are any irregular price discrepancies, action would be taken to pause borrowing temporarily to protect the protocol.
In addition to this, we’re going to continue conversations with Chainlink to further minimize any future risk and understand if any further actions can be taken.
We’ve reached out to the BNB Accelerator Fund and Chainlink to discuss other ways to help affected users. We will update the community if there are any updates from these conversations.
This week we’ll be posting a proposal on Planet’s Governance.
In this proposal we will lay out an idea to allocate a percentage of ongoing protocol fees generated on Green Planet towards making affected users whole. If this were to pass, the progress towards remediation would begin immediately. This percentage could increase in the future if the community were to decide this via a future proposal.
We’ll be releasing a full list of the effected wallets so that the community can transparently follow along.
Some Thoughts For The Community
We wanted to re-emphasize on behalf of the community that our heart goes out to everyone affected by this. We truly care about everyone in the Planet family. The events discussed above effected not just Planet but 100’s of protocols across the entire space.
Our motivation has exponentially increased for the following reasons:
1. To help make anyone whole who was affected by this
2. Seeing the love this community has for Planet even in uncertain times
3. We see obstacles as challenges to overcome that enable us to grow
The mission remains the same, to Decentralize The Planet’s Finances. This goal is bigger than any of us individually. Everyone deserves access to this new world and we think Planet will be the protocol to lead us there.
There are exciting things in the pipeline for Planet. We’ll be sharing an in-depth roadmap for Planet that will cover everything that’s in progress and future developments in another medium article to release this week. We’ve recently welcomed 5 new developers that are currently specifically focused on Pink Planet.
Everyone working on Planet is in this for the long haul. We’ll continue to keep contributing to Planet for years to come. Times like these, as hard as they are, present opportunities for growth on the other side. You’ll see many ‘fly by night’ DeFi protocols close up shop and wait for the next bull run to pop back up with a different name. We believe Planet should use these times to establish better foundations, partnerships, and opportunities for all Aquanauts.