Anthias.xyz x Alpaca Liquidation Health Tooling Grant Proposal

Community Discussion & Proposal
1

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Proposal Overview :fish: x :llama:

Simple Summary

The Anthias team is proposing a grant to build an Alpaca-specific liquidation health dashboard for the Alpaca borrowing and lending market. This analytics dashboard will exist for the Alpaca community, enabling stakeholders within the Alpaca borrowing & lending ecosystem to manage liquidation cascade risk and more

About Anthias + Abstract

The Anthias team is composed of three members of Dartmouth Blockchain. Our philosophy is to continually provide value to the blockchain ecosystem through shipping useful products and research. We have extensive experience in DeFi, having contributed at Yeti Finance, Primitive Finance, Temple DAO, and more. We have shipped multiple grants for Euler and Aave and have recently been approved for integrations with Compound V2 and V3 as well as Exactly Protocol.

This liquidation dashboard will improve the Alpaca stakeholder/token holder experience by allowing users to identify wallets close to liquidation on Alpaca and position themselves accordingly. The recent crash of May 2022 was caused largely by a series of liquidation cascades as large whale wallets were liquidated. As liquidators sold massive amounts of collateral on exchanges, collateral prices dropped, which resulted in more liquidations. We created Anthias to democratize liquidation health data of all wallets, so all users are able to manage liquidation risk more effectively.

Previous Work Showcase / Who Supports Anthias?

  • Aave

    • We created our initial dashboard in June of 2022 to monitor liquidation health on Aave after the Terra/Luna collapse.
    • We completed our first grant for Aave in October of 2022. In this grant, we expanded our initial Aave dashboard to allow users to view historical liquidation health data in order to develop an even clearer picture around market risk.

  • Euler

    • We completed our first grant for Euler in September of 2022. This grant was to integrate our initial liquidation health dashboard with Euler.
    • Our second Euler grant was completed in January of 2023. With this grant, we expanded our tool suite for Euler to do Value at Risk monitoring and simulations, in-depth asset and health score filtering, and a more granular wallet view to show covariance among assets individual users were borrowing and supplying.

  • Compound

    • We were approved for our first integration with Compound V2 and V3 in March of 2023. This grant is to integrate our initial liquidation health dashboard with both Compound V2 and V3.

  • Exactly

    • We were approved for our first integration with Exactly Protocol in February of 2023. This grant is to integrate our initial liquidation health dashboard with Exactly on both Ethereum and Optimism.

Motivation

There are a number of risk vectors in borrowing and lending protocols, including smart contract risk, price oracle manipulation risk, governance / pool management risk, and market risk (liquidations + bad debt). As protocols like Alpaca continue to onboard more users, it is increasingly important to equip users with necessary risk-management analytics for healthy activity. Safeguarding users against risk ensures the long-term sustainability of the protocol, as well as an improved user experience (competitive differentiation with other borrowing and lending protocols).

Projects like Gauntlet Network and RiskDAO have showcased what is possible with on-chain analytics for DeFi. On a longer term horizon, we hope to expand on previous projects in two ways: historical data and granular daily data. We will store various metrics (some already live at Anthias.xyz), including Aggregate Liquidation Health, Total Collateral Value at Risk, Wallets at Risk, and more. Users will be able to monitor the historical trends of these metrics, while also viewing granular breakdowns of these metrics per day. We see Anthias as a useful public good for various stakeholders within the Alpaca ecosystem to manage risk: the DAO governors, users (borrowers and lenders), and researchers. The Anthias team prides itself on making risk management tools usable by all stakeholders–we will continue that mission via these tools for the Alpaca community.

Specification & Implementation

We are proposing a grant to fund the development of integrating a Alpaca dashboard with Anthias.xyz for the Alpaca borrowing and lending market with the deliverables listed below:

  • Live metrics presented: Active Wallets, Wallets at Risk, and Aggregate Liquidation Score
  • Table view presented: Active Wallets (includes address, supply amount, borrow amount, and liquidation health)
  • Graph view presented: Active wallets (includes liquidation health and wallet size visualization)
  • The ability for users to download a CSV of the data presented in the Table View, so that data can be used in modeling
  • Wallet View that displays collateral and debt by asset for individual wallets

Cost

  • The cost of this integration for our team will be $17k upon completion of the dashboard. This payment will be used for the following costs:
    • Database storage ($500)
    • Server hosting ($50)
    • Nodes ($450)
    • Contributor compensation ($16,000)

The deliverables will be live at www.anthias.xyz/Alpaca. These dashboards will be live for 6 months at which point the community can determine whether it would like to fund the Anthias team on a per-quarter basis to maintain server costs.

How long will development take?

We estimate development time to take 6-7 weeks from approval. Based on feedback from community members, we plan to continue iterating and shipping out new and useful features.

Voting

  • Yes - I approve the proposal
  • No - I do not approve the proposal.
2

Hi there, long term holder

Thank you for sharing this proposal to the community. While I appreciate the effort and dedication that the Anthias team has put into building this Alpaca-specific liquidation health dashboard, I have to say that I do not approve of the proposal at this time.

My main concern is the cost, as $17k seems like a significant amount of money for a new team. Additionally, from what I can see in the proposal, the dashboard doesn’t seem to offer any significant innovations or features that are not already available in other similar tools.

I believe that in order to justify the cost and garner community support, the Anthias team needs to provide more details about what sets their dashboard apart from other options, and what unique benefits it offers to the Alpaca ecosystem. Without this information, I cannot justify supporting this proposal.

Thank you for your understanding, and I hope to see more innovative proposals in the future.

3

Hey @AlpacaBerg - thanks so much for reading through the proposal and leaving your thoughts. Here are my thoughts about your concerns:

Price: On price, this grant is relatively inexpensive compared to other grants in the space with similar deliverables that often are approved for upwards of $60,000. We seek to build a long-term relationship with Alpaca, so we do not charge astronomical prices like these.

Feature suite: Before posting the proposal, we consulted with multiple community members to make sure that the Alpaca community did not already have any tools like these, and we only posted the proposal after knowing that this was a unique value proposition.

On top of this, we have been chatting with more community members and have decided to include our Value at Risk simulation tooling as well as our in-depth Wallet View to this integration for free. You can see more about these tools here in the grant we recently finished for Euler: Snapshot

You can also test out our Value at Risk simulation tool via our Aave integration: Anthias

If you have any follow-up questions or ideas, feel free to send them here or message me directly. We would love your support and hope to work with the entire Alpaca community soon.

4

Sorry we have bad debt and probably 90% of stakers will don’t want any more money paid to other system.

5

Hey @AlpacaBerg - can you elaborate here? Not sure if I fully understand. There is excessive bad debt on the protocol?

6

The protocol is paying Stknbnb hack 280k in total. So nobody in their mind will approve this.

7

It was Ankr’s liquid staking token that was hacked in December, aBNBc to be precise. There was collateral damage to other BNB-related pools/tokens that were paired with aBNBc, though. stkBNB was one of the affected tokens that suffered a temporary depeg. It seems we were affected somehow by (incomplete?) liquididations of LYF positions based on stkBNB-BNB pairs, resulting in bad debt for our BNB lenders. Alpaca governance stakers voted to cover the bad debt via Insurance Plan. We still have some way to go to pay back the debt.