Abracadabra Calls On Sushi For Emergency Assistance As Faulty Oracle Places $10M At Risk
renBTC Cauldron Could Accrue Bad Debt If Open Positions Are Not Closed
By: Samuel Haig •DeFi News
The community of Abracadabra, a crypto lending protocol and issuer of the MIM stablecoin, has called on SushiSwap to make changes to two of its Bento vaults holding $10M worth of Abacadbra users’ assets that could be at risk.
On Nov. 26, Abracadabra published an “Emergency Proposal” to Sushi’s governance forum asking the Sushi team to increase interest rates for two Bento vault ‘cauldrons’ holding $10M worth of cvxRenCrv and yvcrvstETH tokens.
“It has come to our attention that two collateral positions that reside on Sushi’s Bentobox infrastructure are at risk,” the post said. “For the yvcrvstETH cauldrons, a faulty oracle poses a threat to users who have open positions. For cvxRenCrv, the recent developments on the deprecation of Ren Bridge v1 make us uncertain on what the best path forward is with this kind of collateral.”
Abracadabra’s lending infrastructure is built on top of Sushi’s Bentobox protocol, meaning that interest rate changes must be approved by the multi-signature contract that controls Bentobox.
“The Abracadabra design does not have the power to forcefully close an open position for any reason,” the post said. “What we can do, however, is increase the interest rate to incentivize users to do so, which means that these users will pay the protocol for the risk exposure their position is creating.”
SushiSwap heeded the call the following day, with head chef Jared Grey stating that Sushi will go ahead with the interest rate changes on the project’s Discord. xSushi tokenholders will receive 35% of the fees generated by the two cauldrons.
Abracadabra said that both tokens are not used in any way on SushiSwap, with cvxRenCrv comprising a token wrapper specifically made for Abracadabra, while yvcrvstETH is an interest-bearing token issued by yield aggregator Yearn Finance.
The news comes as Ren, a cross-chain asset wrapping protocol, is preparing to shut down its v1 network and launch its v2 iteration.
On Nov. 19, Ren announced it is expediting the launch of an open-source and community-run version of its protocol after the collapse of Alameda Research, the insolvent sister trading firm of the bankruptcy exchange FTX, which acquired Ren in early 2021.
Without Alameda, Ren said it only has the funding to sustain its current operations until the end of the year and is currently looking to raise funds.
To facilitate the transition to Ren 2.0, the protocol has disabled token minting functionality and will shut down the v1 network in 30 days. Ren also urges holders and liquidity providers for its tokens to bridge assets back to their native chains as soon as possible.
Ren has processed more than $13B worth of cross-chain volume.