Hello! The violent BOX price fluctuation event that occurred on March 29, 2023 has aroused widespread concern and discussion in the community. The cause of the event and the results of the processing are explained as follows:
Gluedog, a member of the third Defibox DAO Board, sold about 118,000 BOX tokens within 10 minutes, and at the same time drove some BOX debt positions in the USN and Lend contracts to explode, and then bought low and sold high within 2 hours, resulting in about 60,000 BOX liquidated, with the largest drop of -48% on the day, and the total transaction volume was about 570,000 BOX. Although this move is a free market behavior, it is obviously suspected of price manipulation, which has caused major liquidation losses to many users of BOX; This also creates a distrust among the Board, the Defibox executive team and the community. Gluedog voluntarily resigned from the position of Board member in the next day.
The third DAO Board issued the following public statement regarding this incident, combined with the public discussion of the community and the internal discussion of the Board:
1. Defibox is a rapidly developing decentralized blockchain project. The DAO Board encourages users to hold tokens for a long time and actively participate in the construction of Defibox; encourages large players to exit in a more stable way and opposes market price manipulation. As DAO Board members and observers, we should set an example and condemn irresponsible price manipulation. Defibox will also launch multi-channel exit mechanisms such as OTC contracts in the future to avoid significant fluctuations in the secondary market.
2. Since the incident was a market behavior, the Defibox DAO Board expressed apology to the BOX community users who were damaged in this incident, and reminded users again to pay attention to the high volatility of cryptocurrencies, control the leverage ratio, and strengthen risk management.
3. Defibox DAO was established to optimize the governance of Defibox in a decentralized way, and promote the community to participate in the long-term development and construction of Defibox. To better develop the Defibox project and maintain the interests of BOX users is the highest principle of Defibox DAO.
After comprehensive consideration, in order to maintain the Defi free market while increasing risk control, the following measures will be taken:
1) Adjust BOX risk parameters to greatly reduce the risk of BOX staking liquidation. (The liquidation ratio in the Lend protocol will be gradually reduced to 50% according to the actual situation)
2) Reduce the BOX burning ratio and increase the BOX/EOS market-making pool ratio to improve liquidity. (This proposal awaits a resolution by the Board.)
3) The vacant positions of the members of the third DAO Board will be elected by the candidates based on the rank of election (announced after the candidates are confirmed).
4)Optimize the governance of DAO. Both Defibox and DAO are in a relatively early stage of exploration and rapid development. We encourage talents and strategic investors who have long-term investment vision and believe in long-term projects to join the community, optimize DAO governance, and promote the community to work together to build a better Defibox project.
According to Board resolution, we made the following changes(April 7, 2023):
1. Reduce the BOX burning ratio and increase the BOX/EOS market-making pool ratio to improve liquidity. (It is planned to be adjusted to 40% burning, 10% automatic market making; originally 45% burning, 5% automatic market making
2. New 5 board members + Defibox team multisig for protecting community assets, remove Gluedog multisig list and add EdenCapital as multisig for community assets
Thank you for your support and attention to Defibox
Defibox Project Executive Team
April 6, 2023
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