Fellow Binancians,
We are aware of user feedback surrounding the redemption of CYBER Simple Earn Flexible Products, and we apologize for the situation. Binance has been taking this very seriously and working proactively to address users’ concerns, in line with its user-first mentality and the principle to hold up the highest standards of transparency with the community. Details are provided below:
What Happened
On 2023-08-31, there was a big price discrepancy of CYBER between Upbit and other exchanges. This can be attributed to Upbit only supporting CYBER (ERC20), and that a cross-chain bridge for CYBER (ERC20) and CYBER (BEP20) was not available at that time. This resulted in a liquidity crunch on CYBER (ERC20) on Binance and other exchanges.
With the price of CYBER soaring, arbitrage users started to borrow CYBER for their trading strategies. This led to a surge of loan requests for CYBER that triggered the risk management protocol on Binance, where new loan requests were halted and loan interest rates were increased by a large extent. As Crypto Loans and Margin products on Binance grant loans based on actual subscribed assets on Simple Earn, the exceedingly large volume of redemption requests could not be fulfilled immediately despite maintaining a maximum borrowing limit as buffer for redemptions.
Other than Proof-of-Stake (PoS) based products, a large part of crypto flexible financial products generate income by lending out subscribed assets to other users via Margin or collateralized loans. Under extreme conditions, borrowers may not be able to repay their loans in time, or the redemptions of subscribed assets may experience some delays. This was the case on 2023-08-31, which arose due to the simultaneous surge in demand to borrow CYBER and redemption requests. CYBER Simple Earn Flexible Products redemptions could not be executed immediately as it would under normal circumstances.
Moving Forward
Binance will adjust the loan interest rates dynamically and strengthen its risk management measures. Specifically, Binance will take the following actions to foster a better user experience:
Substantially increase Crypto Loans and Margin interest rates, and Simple Earn APR for applicable asset(s) during periods of high volatility;
Stricter risk management and review framework on tokens with comparatively smaller market caps. Tokens with lower liquidity may be delisted from Simple Earn, Crypto Loans and Margin, where applicable.
Applicable risk warnings to be displayed for the above mentioned tokens, and regular reviews of borrowing limits to be conducted.
A second confirmation highlighting applicable risks will be required before completing a subscription. More details will be displayed for users’ reference, including redemption availability, token utilization levels, etc.
Impacted Users to Share 800,000 USDT Whilst the Remaining Users to Share 200,000 USDT
887 impacted users who failed to redeem their CYBER Simple Earn Flexible Products positions between 2023-08-29 at 00:00 (UTC) and 2023-09-05 00:00 (UTC) will receive a share of USDT tokens from a total pool of 800,000 USDT and an additional 871 CYBER. The 871 CYBER is the total profits obtained by Simple Earn since CYBER products launched on the platform. The distribution will be based on these users’ daily average CYBER Simple Earn Flexible Products position in proportion to the total size of positions held by all eligible users. These will be distributed within seven working days of publishing this announcement. Users may confirm the receipt of the tokens via Wallet > Transaction History > Distribution.
All other users who held CYBER Simple Earn Flexible Products positions at any point during the above mentioned period will also receive an equal share from a total pool of 200,000 USDT worth of CYBER Locked Trial Fund vouchers, which are sponsored by CyberConnect Foundation. These will be distributed within two weeks of publishing this announcement. Users may confirm the receipt of the vouchers via Profile > Rewards Hub.
The crypto industry is still at its infancy stage with much room for improvement. Your feedback and suggestions are highly valued as we continue to build the industry together. We look forward to building a much better platform for all of our users. Thank you for your continuous support!
Note: Where any discrepancy arises between the translated versions and the original English version, the English version shall prevail.
Thanks for your support!
