SIP 40: Time lock on burning after minting Source

AuthorKain Warwick, Jackson Chan, Clinton Ennis, Garth Travers
Discussions-Tohttps://discordapp.com/invite/AEdUHzt
StatusImplemented
Created2020-02-27

Simple Summary

Proposal to lock the burnsynths function for a configurable period after minting to prevent “frontminting” a form of oracle fruntrunning.

Abstract

An SNX staker can mint sUSD continuously until reaching the C-Ratio target. Once reached burning will not be possible until the minimumStakeTime has passed. If a user needs to burn to claim a new function will be available to “burnToTarget” to allow undercollateralized accounts to burn to the taret C-Ratio to claim fees. If an SNX staker wants to burn all debt they must wait until the minimumStakeTime has elapsed.

Motivation

The exploit involves frontrunning a drop in the ETH price by staking SNX and minting sUSD. Once the sETH price does drop, and the Synthetix system’s total debt deflates, that staker’s debt has deflated too (but not their sUSD balance). The staker then burns enough sUSD to unstake their SNX, leaving them with a small sUSD profit.

A wallet has recently started executing this exploit since the launch of fee reclamation. If it goes unresolved, this issue could lead to further debt for SNX stakers. Closing this loophole protects SNX stakers.

Specification

  • New EternalStorage Contract for Issuer
    • Stores “LAST_ISSUE_EVENT” with timestamp of minters last mint event
  • Issuer Configuration
    • minimumStakeTime: Minimum time required to be staked. So after minting this period must pass before burning above target c-ration will be allowed. Default 24 Hours.
  • Issuer new function
    • burnSynthsToTarget(): Helper function so anyone can burn Synths to the target c-ratio to be able to claim fees and rewards.

Rationale

This solution has the fewest trade-offs of the available solutions, as it still allows stakers to burn to claim rewards.

Configurable Values (Via SCCP)

  1. minimumStakeTime is a configurable in seconds

Test Cases

Copyright and related rights waived via CC0.