Gearbox DAO

Dear GEAR DAO Members,

My username is star4441 in Discord and I am a new user to Gearbox and heard about the protocol on Twitter. I decided to invest around 220k in the newly released sUSDE-PT strategy looping with 10x leverage on the Plasma Chain. Within just a few hours, I had been liquidated for 70% of my portfolio due to the extremely high 7% liquidation premium.

Summary of what happened:

Withdrew funds to purchase more sUSDE-PT ( Left 7 days margin in the credit position). Liquidity was very thin on Pendle so as I purchased more, it pushed down the price. Of the 220k principal:

66k (30%) was returned 140k (63.6%) was obtained by the liquidation bot (0xbd796DdE46DEB00B1840e7be311eF469c375c940) owned by the GEAR DAO 14000 (6.3%) was burned from slippage during the forced liquidation

This was a catastrophic and devastating moment as I realized 70% of my funds had been lost. At such a high liquidation premium, I stand almost no chance of ever recovering the original amount I had. (To be honest, I completely broke down after realizing this… )

Furthermore, (possibly due to this incident), the rules have been changed for the sUSDE-PT curated by Invariant Group:

• 3.5% liquidation premium: Paid out to incentivize liquidators and protect lenders. • 3.5% liquidation fee: Reserved during liquidation, but can be returned to the user by invariant if no bad debt occurs and the liquidation completes successfully.

In total, a 7% fee will be applied at liquidation, but any unused portion beyond the fixed 3.5% can be refunded for this market by the curator. This ensures lenders and liquidators stay protected while preventing unnecessary losses for borrowers in case of bad liquidation.

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Seeing as the new rule change was put in place recently to be able to return 3.5% (half) of the premium and there is no bad debt in my case, I would greatly appreciate if the GEAR DAO would vote in favor to partially return funds. I understand that the liquidation was my fault but am asking for a reasonable liquidation premium to be applied such that I would not lose 70% of my portfolio in just a few hours!

Since this is technically a request for clawback, I am willing to give up an additional 10% of funds to the DAO and kindly request that just 40% of the $140k obtained by the liqudation bot ($56,000) could be returned to my wallet. This would do a lot to help me move on from such a catastrophic and destructive event.

(I am honestly still in shock at what happened. Thank you to many members of the Gearbox Team & Invariant Group for the kind words and sympathy.)

Lastly, thank you GEAR holders for your consideration!

Star