Proposal to Utilize Frontier DOLA Reserve to Pay Down Bad Debt

Forum post: https://forum.inverse.finance/t/use-frontier-dola-reserve-to-pay-down-bad-debt/526

Summary

Utilize the Frontier DOLA reserve to reduce the bad debt on the account from the Inverse Finance Frontier price manipulation incident of April 2nd 2022, 0xeA0c959BBb7476DDD6cD4204bDee82b790AA1562.

Background

Frontier, Inverse Finance’s now-deprecated variable-rate lending market, accumulated reserves by taking a 20% fee on the interest paid by borrowers back when it was active. These reserves were/are in the form of DOLA, ETH, WBTC, YFI and xSUSHI. Shortly after the April 2nd 2022 exploit, the interest rate on ETH, WBTC and YFI was set to 0% to stop borrow (and supply) balances from accumulating further, so no further reserves accrued in these assets. Given the vast majority of current DOLA borrows on Frontier are bad debt, in April 2023 the reserve ratio set to 100% in order to direct 100% of borrowers interest to the reserves, this was to stop bad debt from artificially inflating on-chain fed revenue.

Current funds in the Frontier DOLA reserve are at ~$151K. This proposal seeks to use funds from the reserve to repay some of Frontier's bad debt.

On-Chain Actions

• Reduce reserves on anDOLA by 151,000
• repayBorrowBehalf the DOLA borrow balance of 0xeA0c959BBb7476DDD6cD4204bDee82b790AA1562 by 151k