Submitted by 0xpiken, also found by Byteblockers
Guild holders might have the opportunity to protect themselves from being slashed by reducing their weight on an offboarded gauge; thereby, transferring the loss to other passive holders and all credit token holders.
The mechanism utilized by the ECG protocol to address loan losses is as follows:
A term can be offboarded if it is unsafe. Once offboarded, the redemption function of corresponding SimplePSM will be paused:
No credit token holders can redeem credit tokens for peg tokens at the moment. The redemption function could be unpaused by calling LendingTermOffboarding#cleanup() once all loans on term are closed:
From above we can see, the loss may or may not happen to the offboarded term, but once it happen, the loss will be marked down to all credit token holders. No one can exit in advance and pass potential loss to others.
However, guild holders could have chance to reduce their weight on the offboarded term, transferring the potential loss to other passive holders and all credit token holders.
Copy below codes to LendingTermOffboarding.t.sol and run forge test --match-test testOffboardTermAndDecrementGauge:
Check if all loans have been closed in GuildToken#_decrementGaugeWeight():
Context
eswak (Ethereum Credit Guild) commented:
OneTrueKirk (Ethereum Credit Guild) commented:
eswak (Ethereum Credit Guild) confirmed
