Here at the Oikos team, we strive to maintain a healthy economy and work non-stop to achieve this goal. In recent times, while monitoring the system, we noticed anomalies and malicious patterns of usage in our platform. Upon digging further, we found out that several players were exploiting the system for profit.
Front-running & debt increase
Front-running in Oikos consisted of timing the rates update mechanism used by our system while buying specific assets during a sharp price increase. Attackers simply kept alert for such circumstances and purchased the asset for cheap, just to sell it once the rates synchronized and cashing in a nice profit. This caused an excess of synthetic dollars (sUSD) in the system, which in turn put a lot of strain on its dollar peg and led to a disequilibrium. The profits generated by front-runners also inflated the active stakers debt and induced a very low network collateralization ratio.
Oikos Swap & dollar peg
Oikos Swap is our trustless decentralized exchange which serves multiple functions that are central to our platform's well-being. Amongst other things, it works as a trampoline for traders that want to enter the system or that are willing to cash out their profits. It also serves stakers looking to pay their debt and re-balance their accounts, consequently, the available liquidity is a very important factor. A large number of synthetic dollars under the control of speculators created excessive selling pressure and dented the liquidity while crashing the dollar peg, which should ideally be close to one American dollar.
In order to stop the attack, we have greatly increased the frequency of updates for the rates in our system and proceeded to audit all the accounts involved in suspicious activities. The audit revealed that a few individuals held the majority of sUSD and not enough collateral to back their value up. After recovering their assets, the owners contacted us and admitted being involved in front-running activities. The operation netted around 240,000 sUSD which went back to Oikos control. We also recovered an amount of OKS collateral in the process.
Liquidations, debt Jubilee & Network c-ratio
As part of the maneuver, we also conducted an audit of our active stakers and noticed that several accounts had large debt and a collateralization ratio under 100%. This led us to introduce a liquidation mechanism that we can summarize as follows:
1) Any collateral belonging to the delinquent account is sold on public markets via exchanges or auctions.
2) The proceeds are used to pay the debt generated and the account is barred from minting.
In addition, we selected the accounts in reasonable good-standing and airdropped synthetic dollars over their debt balance. This helped the network c-ratio to increase and reach a pretty healthy ceiling, thus freeing collateral that can now be staked again.
Synth, liquidity & LP Rewards
As a measure to reduce fragmentation of the liquidity and increase its depth, we will be removing all synths from Oikos Swap, except for sUSD. We invite everyone to withdraw all the liquidity from the following pools:
The pools will be available for one additional week (7 days) on the user interface and they will be removed afterward. Please note that you will have to manually remove the liquidity from the contract if you miss the deadline. Currently, all LP reward programs available on Oikos Minter are stopped and we will announce new plans imminently.
Making use of our new GraphQL infrastructure, we are now able to offer several features that will help our users to keep track of the system's health.
We are proud to announce our official statistics website, available at https://stats.oikos.cash. It provides, with a simple interface, all the key parameters necessary for the user to evaluate network health, the profitability of staking, and so on. For more savvy users, we also released an open-source tool and library that leverages directly our subgraphs. Available on our Github.
The future is bright for Oikos, with the considerable progress attained and upcoming sUSD listing on public exchanges. We are confident that our efforts are in-line with the interests of our stakeholders and will continue working hard toward creating value for times to come. Audit results by Cybercrime Shield are also imminent and will be detailed in a future post. Stay tuned!