On March 13th, the Euler protocol was flash loan attacked, which resulted in a loss of over $195M. Despite the swift actions taken by DAO contributors, which mitigated the overall loss considerably, approximately 863K DOLA remained vulnerable due to exposure through the Aura Euler Fed (specifically, within the DOLA/bb-e-USD pool on Balancer). Post-event recovery efforts have been successful, with a significant majority of funds recouped from the offender and redirected to the impacted parties, including the Inverse Finance DAO, which is projected to recuperate beyond the initial ~863k of accrued bad debt.
In the wake of these events, a residual 8,408 DOLA remains within the DOLA/bb-e-USD pool on Balancer. Once operations resume post the stipulated ‘unpause’ date of June 8th, there lies an opportunity for the DAO to reclaim this remaining DOLA through a high-slippage fed contraction. To effectively execute this strategy, a modification in the maxLossWithdraw parameter is crucial, requiring an escalation from the existing 5% limit to 100%.
This proposal represents a highly specialized scenario where a substantial slippage contraction can be beneficially exploited by the DAO. To substantiate the viability of this approach, Proof-of-Concept (POC) simulations have been developed and executed, suggesting 8405 of the 8408 DOLA can be rescued if prompt action is taken.
In addition to increasing the maxLossWithdraw, this proposal seeks to remove the Aura Euler Fed as a DOLA minter. Due to the current state of the pool, there is no reason why fresh new DOLA being minted into the pool would benefit the DAO, so this proposal will disable this.
- Set maxLossWithdraw on Aura Euler Fed to 10,000 bps (100%).
- Remove Aura Euler Fed as a DOLA minter