Proposal to Utilize Frontier DOLA Reserves to Pay Bad Debt
Summary
This proposal seeks to use the DOLA reserves available in Frontier’s DOLA market to pay down the DOLA borrow balance of 0xeA0c959BBb7476DDD6cD4204bDee82b790AA1562, which is currently classified as DOLA bad debt. This account’s bad debt accrued as a result of the April 2nd, 2022, price manipulation incident. This action is primarily an accounting move to provide a more accurate representation of the real DOLA bad debt figure.
Background
On Frontier, Inverse Finance’s now-deprecated variable-rate lending market, reserves are accumulated in the DOLA market by taking a 100% fee on interest accrued on borrowers’ outstanding balances. The reserve ratio was previously 20%, until in April 2023, when it was set to 100% to direct 100% of borrowers’ interest to the reserves. This was to stop bad debt from artificially inflating on-chain fed revenue. Periodically, the DAO votes to use accumulated DOLA reserves to pay down DOLA bad debt, in order for outstanding bad debt levels to be represented accurately.
Similar proposals have been executed by the DAO previously:
Execution
- Pull the 86k DOLA from reserves from Frontier’s DOLA market (anDOLA smart contract) to the DAO Treasury.
- Use the 86k DOLA reserves to pay down part of the DOLA borrow balance of 0xeA0c959BBb7476DDD6cD4204bDee82b790AA1562, reducing the DOLA bad debt figure
Results
This proposal will result in the repayment of $86k of DOLA bad debt. Please use the Bad Debt Dashboard to track and keep up-to-date with bad debt.
On-Chain Actions
- Reduce anDOLA reserves by 86,000 DOLA
- Approve 86,000 DOLA to the anDOLA Frontier market
- repayBorrowBehalf the DOLA borrow balance of 0xeA0c959BBb7476DDD6cD4204bDee82b790AA1562 by 86,000