State On May 1st
yvAjnaDAI had two strategies lending DAI to st-ycrv
Capital at risk:
399kDAI +300kDAI
Both strategies were lending at
0.34051per st-ycrv and market value was0.6787Based on market price, lending at a ~50% LTV
Originally, lending started at 20% LTV
Pool borrowing was at 29.25% increasing 10% every 12hs
Two of the biggest borrowers 0x0059efca9d24bf579ee0314e7bc2569674aa42e2, 0x286ee152779ca230a30337d3f96df7963e41a307 levered up.
There was 667k CRV in the curve ycrv/crv pool
Lowest health rate borrower had
861_239.55st-ycrv as collateral and258_117.99DAI debtBond to kick borrower
2_565.99DAI
Concerns
If liquidation happens it might
Wipe the ycrv/crv pool
It would sell around 1.3M CRV for DAI
It might tank the price of ycrv, causing other positions to go under
No market participation in the liquidation auction
No mev bots participating in the auction because of no direct pool liquidity for st-ycrv
Options Explored Without Success
Tried contacting the borrower
Kept increasing the borrowing rate to force repayment
Simulated how long it would take for the user position to go below 1 on health ratio. It would have happened on GMT: Thursday, May 30, 2024 3:09:49 PM.
Decision Made
On May 2nd, we started a war room to liquidate the position.
Treasury allocated
500kDAI to baseline the auctionTreasury would participate in the auction with 100k collateral chunks and will start bidding when auction reaches below market price
st-ycrv strategy reward trading was halted to allow OTC with treasury
Bond price would be paid by vault liquidity
LOG
LenderKick Action
You can see in this transaction how capital was added to the strategy to pay for the lenderKick bond:
https://etherscan.io/tx/0x6c6127da0f97d925c19b6d68b92996f7719986b36d82773de460759148edb908
Another Borrower Repaid Their Debt
After the liquidation started, another borrower repaid their loan:
https://etherscan.io/tx/0xec8e91ddc860744da95020457f7368951fe63d6a79b32c7c48a52bf5f92f66c1
Takes
Take is the process of taking collateral and giving the pool quote token. In this case is taking st-ycrv and sending DAI.
Take #1: Not yearn
https://etherscan.io/tx/0x49265d13f3eab77d4031f632f87bed9f64368b45a3165934c6e7e70fa6e55054
Take #2: Yearn took 2nd
https://etherscan.io/tx/0xd007d04560fc42df93da0fd25ac3942f89f7f5458eb492872b3d87be91d7a571
Take #3: Not yearn
https://etherscan.io/tx/0x58d1793708e2846b0bdf9eeff5fe386bc46dec80ae2f3463817dd53b84da3203
Take #4: Yearn took 4th
https://etherscan.io/tx/0x579056f777c1f05a18e566dd329ea85f5c747fd6e7246411b5e016c8bebe8742
Take #5: Not yearn
https://etherscan.io/tx/0x171472cfe3285d8d6c011a61ee0d74bb1da299bb839ac23af7f40e26f03a8647
Take #6: Yearn took 6th
https://etherscan.io/tx/0x83cb858d746d4ed3c6b39a56386b2b63476300bb211eeba451b921d7e2eb9381
Take #7: Not Yearn
https://etherscan.io/tx/0x87850cabdf9b0817db89ecb6b848b33bada213466d9ea53e4cc0f16ede733115
Take #8: Yearn took 8th
https://etherscan.io/tx/0x94e1a85fa25e433976962449588e522ce0f2a81ae3d4b67ae199e458dfce4e39
Strategy Withdraw
https://etherscan.io/tx/0x4d14880ede8cefa9421f938e69f93b7a728f339c03a237922ce23978007e9000
Strategy withdrew all funds and reported a 2_781.66 profit. This number is, profit from the interest generated minus the bond price.
st-ycrv OTC with treasury
You can check the sender address for more details but important part is:
https://etherscan.io/tx/0xcb000dd2b623f9924fe0234831800950a3269b2d412ce9eeabb0ec65cd737059
Keeper harvested seconds afterwards in
https://etherscan.io/tx/0xf79a1e3adf8dc6e6e6bb62ad00d910271e576286f33effc313195828aecc1419
Conclusion
Liquidated party ended up with 348k st-ycrv.
Yearn strategy withdrew from the ajna pool with profit.
Yearn treasury ended up using 141_086.76 DAI from the 500k allocated.
275_627.5 st-ycrv were bought and OTC with the st-ycrv strategy.
