Venus LUNA Incident Update 3: Resuming the Protocol

Dear Venus Community,

Thank you for your patience and your support as we work through safely resuming Venus Protocol. The protocol was previously paused by multisig transaction on the PauseGuardian contract to protect our users from further impact caused by the LUNA Chainlink Price Feed suspension.

We have crafted a plan to resume Venus Protocol and ensure that all affected users can repay their debts & exit their over-leveraged positions rather than experience liquidation due to any differences in market conditions since the pause.

In order to prevent instantaneous liquidations upon unpausing Venus, we have turned off all price feeds to the protocol. This only allows asset supply and repayments to occur, and prevents borrowing and liquidations.

Please note: withdrawals are still possible if your asset is not enabled as collateral. Vault withdrawals are also currently active.

We have also launched VIP-61. This VIP will adjust the Collateral Factor on LUNA and UST markets to zero, the first step in offboarding these assets from Venus Protocol.

The specific commands for VIP-61 are as follows:

• setCollateralFactor(LUNA, 0)
• setCollateralFactor(UST, 0)
• LUNA.setPendingAdmin(multisig)
• UST.setPendingAdmin(multisig)

A repayment window of 12 hours (instead of the 24 hours stated in VIP-61) will follow the resumption of Venus Protocol, after which point price feeds will be restored to re-enable support for liquidations.

After the launch of VIP-61 for voting, the rest of the plan steps are outlined below:

1. Set zero feeds on all markets — partially executed today — Sunday 8:00 AM UTC
2. Unpause Venus Protocol (VIP-60) — Sunday 10:39 AM UTC
3. User repayment window in effect for 12 Hours — Sunday 11:00 AM UTC to 11:00 PM UTC
4. Reset all price feeds EXCEPT LUNA & UST to live feed values — Sunday 11:00 PM UTC
5. VIP-61 Activated (LUNA & UST collateral factors set to zero) — Monday 9:30 PM UTC
6. Reset LUNA & UST price feeds to live feed values — Monday 10:00 PM UTC
   [May 17, 12:33 AM UTC] Edit: The relaunch of UST & LUNA price feeds has been slightly delayed due to ongoing risk analysis. Our main priority is the security of our users’ funds. Please stay tuned for further announcements regarding the UST/LUNA market exit opportunity.
7. LUNA & UST market exit opportunity for Protocol users — Monday 10:00 PM UTC to Friday 4:30 PM UTC
   LUNA and UST remaining in the protocol after this period of time will be inaccessible.
8. VIP-62 Vote to delist LUNA & UST — Wednesday 10:30 AM UTC
   LUNA and UST deprecation will occur upon activation of the VIP (see the end time in step 7).

Immediate remediation & next steps

The following steps are being taken in order to prevent a similar situation from occurring, as well as to improve the efficiency of how Venus Protocol will handle similar situations in the future in case they do arise.

1. Add a stale price feed check in the Venus price oracle contract to prevent market interactions when a price feed is determined to be inactive.
2. Implement rigorous and continuous monitoring to ensure that price feeds are active and running (via timestamp). This will prevent paused or discontinued price feeds to impact activity on Venus and will notify the team of any issues before they can affect protocol users.
3. Enable pause/resume on individual markets via multisig. This will allow the protocol to pause specific markets while maintaining functionality across all other markets.
4. Create a script to validate market prices against CEXs in order to prevent any single points of failure due to stale or discontinued pricing oracle feeds.
5. Update the resume function to be controlled via multisig wallet rather than the current VIP process (which is effective, but inefficient when time is of the essence) in order to expedite resumption in the case of any future market pauses.

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