Call to Action for Terra LPers
Plan forward for Terra and call for Liquidity Providers to remove all Liquidity before it is too late.
Summary
The time to exit the LUNA and UST pools is before us. If you have LUNA or UST in a pool, you’ll have time to withdraw from the pool and still be eligible for Terra’s May 27 (GMT+8) Airdrop Snapshot (read the Terra Ecosystem Revival Plan 2 document, and TheCryptoBasic article for details).
Background
Currently, all Terra trading is halted within the network due to the network’s auto-halt feature. The events which lead up to this situation were the Terra chain itself becoming unstable, resulting in nodes being unable to retain synchronisation. Due to the THORChain network’s security mechanisms, the chain auto-halted. This was not a centralised decision; the auto-halt feature is a part of the existing security feature set of THORChain (refer to section “Granular Halting Controls via Node Mimir”).
The Present
Soon, the Terra chain will be re-activated to allow withdrawals under strict rules, based on the same way Liquidity Providers entered the pool initially. No additions or swaps will be allowed when this occurs.
It appears the Terra chain will fork on 2022–05–27 at 03:59:51 UTC+0800 (2022–05–26 at 19:59:51 UTC). Action needs to be taken by Liquidity Providers before then. See “Call To Action” below for further details.
The internal THORChain deadline has not been set but will be before this date.
Plan Forward
Version 1.89 has been released which will allow withdrawals, nodes are yet to fully adopt this version. This includes pauseAsymmLP which combined with pauseTrading will ensure fair withdrawals for all Liquidity Providers (see below). Arbs (trading) will be suspended until Liquidity Providers have had a chance to withdraw preventing external arbs. Note that RUNE asym withdrawals (read below) will still change the pool ratio, but they account for 6% of LPers so the change will be minimal.
Here is the situation for Liquidity Providers:
1.) Symmetrical Addition (DUAL-SIDED)
Your RUNE portion will be returned to you when you do a Symmetrical withdrawal. Asymmetrical withdrawals will be disabled.
2.) Asymmetrical Addition RUNE (RUNE-SIDED)
You will only be able to withdraw Asymmetrically.
3.) Asymmetrical Addition ASSET (ASSET-SIDED)
A THOR address is not registered so RUNE cannot be returned. A pull request is being worked on which would allow Liquidity Providers to register a THOR address, thus permitting Symmetrical withdrawal. This would be implemented via a MEMO and controlled by a new Mimir variable named EnableUpdateMemoTERRA will control this functionality. This change is not without risks and requires a 2/3 majority Node Operators’ vote to be deployed in v1.90. Node Operators will be given a 48-hour window to vote.
If successful, v1.90 will be deployed and the feature is enabled. If unsuccessful, there will be no way to withdraw the RUNE portion of liquidity separately and your LP position will be withdrawn entirely in UST/ Luna asset.
Impermanent Loss Protection
Regardless of the withdrawal type, there will be Impermanent Loss Protection (ILP). As the LUNA and UST pools are less than 100 days old, full protection cannot be offered. How much protection is granted to the Liquidity Provider will depend on the ILP timer. (e.g. if in the pool for 30 days, you will receive 30% ILP).
As the future of the Terra chain is unknown post the fork, there is a real risk the Terra chain will not be operating after 100 days to allow full protection. If this is the case NO funds will be recoverable.
Future of Terra on THORChain
- Once LPers have had an opportunity to withdraw, arbing of the pool will be allowed, which will reduce any remaining RUNE to a minimum quantity.
- The LUNA and UST pools will be Ragnaröked; any remaining funds will be sent back to their providers. The future of the Terra chain is unknown.
- The LUNA and UST pools will be removed.
- The Terra chain will be removed from the network.
Milestones
1.) THORNodes Sync to the Tip ✅
2.) Enable Terra Signing ✅
- Allows pending transactions and refunds processed.
3.) Node Update 1.89 Released ✅
- 24 hours for Node Operators to vote and adopt. Voting has started.
4.) Enable Withdrawals ✅
- Enable TerraLP Mimir. No additions or Swaps. All symmetrical (DUAL-SIDED) and RUNE-SIDED can withdraw. ASSET-SIDED cannot.
5.) Node Update 1.90 Release (if Nodes agree) ❌ (did not pass)
- ASSET-SIDED register the THOR Address.
- ASSET-SIDED can withdraw.
Call to Action
This must be completed BEFORE the Terra Chain fork on 2022–05–27 at 03:59:51 UTC+0800 (2022–05–26 at 19:59:51 UTC). Liquidity Providers need to withdraw as instructed, in time for the Terra snapshot, and before THORChain purges Terra from the network. If you are late, you will not qualify for the snapshot AND your funds maybe lost forever.
Ask interface providers or LPU for specific details.
Case of Liquidity Provider Inaction
If a Liquidity Provider takes no action, the remainder of their LUNA or UST will be refunded to the associated wallet (subject to market price the moment the pool is removed from THORChain). This includes rewards, earnings, and/or ILP (if applicable). However, it is extremely likely that in this situation, the value of the Providers’ RUNE will be at or near-zero due to aggressive arbitrage in the market.
For more detailed information you can read the #terra-status channel and related sub treads in the Dev Discord.
Technical Details
Network Update
New Mimir vote: EnableUpdateMemoTERRA
A new Mimir value is being proposed that needs to be voted on by the Node Operators: EnableUpdateMemoTERRA
A vote of 1 will signify the desire for the protocol to add the ability for Asymmetric LPers on the Terra chain to send a transaction that allows them to specify a THORChain address to update their LP record. This will allow them to symmetrically withdraw, receiving their RUNE share of their LP positions.
A vote of 0 (the default), will leave the code as-is, meaning LPers will all exit the same way they entered.
Note: While the dev team will do everything possible to make this feature as secure as possible, it is not risk free, and opens up possible new attack surface area.
Please read the full details here:
https://discord.com/channels/838986635756044328/974789106699755650/976307194385551393
THORNODE Update 1.89.0
1) Ensure network doesn’t slash more than vault has PR: https://gitlab.com/thorchain/thornode/-/merge_requests/2285
2) [refactor] Decom pool funcs PR: https://gitlab.com/thorchain/thornode/-/merge_requests/2284
3) [feature] pause asym withdrawals PR: https://gitlab.com/thorchain/thornode/-/merge_requests/2283
4) [feature] txn specific dynamic rescheduling PR: https://gitlab.com/thorchain/thornode/-/merge_requests/2280
THORChain Community
To keep up to date with the project, please monitor community channels, particularly Telegram, Discord and Twitter:
- Twitter: https://twitter.com/thorchain_org
- Telegram Community: https://t.me/thorchain_org
- Telegram Announcements: https://t.me/thorchain
- Discord: https://discord.gg/7RRmc35UEG
- Reddit: https://reddit.com/r/thorchain
- Github: https://github.com/thorchain
- Medium: https://medium.com/thorchain
