Discussion on the LYF situation on Fantom and handling of bad debt

Community Discussion & Proposal
1

Background:

Multichain Bridge is no longer operational. (Ref: https://twitter.com/MultichainOrg/status/1679768407628185600) Majority of the assets on Fantom are bridged via MultiChain and their recoverability is uncertain. This, in turn, causes prices of many MultiChain-bridged assets on Fantom to deviate from their actual market price. People sell bridged assets at a discount into FTM to be able to take their money off the chain. No arbitrageur willing to step-in.

The liquidity in AMM pools are also getting thinner, causing swaps to have price impact.

Situation:

Due to the situation above, some LYF positions incurred bad debt - a total of ~2,033 FTM (~$540 USD). The details of bad debt positions can be found here: Fantom BadDebt - Google Sheets

To prevent additional bad debts, we are in the process of sunsetting and closing all LYF positions on Fantom. All the farms and positions on Fantom will be closed this week.

Action:

The team view is that we cover the bad debt without going through the vote, given the amount is relatively small. We will proceed with this approach unless the community sees to the contrary.

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2

Given there is no comment against what was proposed, we will proceed with repaying the bad debt.

3

Bad debt has been settled on Fantom: Fantom Transaction Hash (Txhash) Details | FtmScan

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4

There appears to still be close to half a million Alpaca tokens on FTM, what will happen to these tokens?

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5

I’m in favour of an AIP to burn them

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@cryptoeater @Gianni These amount are effectively burnt.

  • The ALPACA tokens on Fantom is backed 1:1 by ALPACA on BSC.
  • The backed ALPACA is locked in the Multichain Bridge contract (this happens when a user bridged their ALPACA from BSC to Fantom in the first place.)
  • With the Bridge down, there is now no way for anyone to unlock the ALPACA in the Bridge contract from BSC side.

We have no control over the token and the only scenario these tokens can be bridged back is that somehow the Multichain bridge starts operating again.

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7

Damn I learn the bad news about Multichain too late… WHY did the Alpaca team leave the multichain bridge tutorial on their site > Bridge ALPACA tokens between BNB Chain and Fantom - Alpaca Finance

Is there a way to recover my alpacas on Fantom that I just sent to multichain??? :sob:

1 Like