[GIP-27] Bound LUSD oracle price by $1.1
AI summary
This proposal suggests implementing a new price oracle for LUSD, a stablecoin, that will cap its reported price at $1.1. The motivation is to prevent price manipulation attacks, especially as the protocol plans to increase credit account limits. Currently, LUSD has low buy liquidity, meaning a relatively small amount of buying pressure can significantly inflate its price, potentially leading to profitable exploits.
If this proposal passes, the Gearbox protocol will use a new oracle that prevents LUSD's price from being reported above $1.1. This change aims to protect the protocol from potential price manipulation and allows for safer increases in credit account caps in the future. It primarily benefits the protocol's security and its users by reducing risk.
Voting results
🐳 Whale votes
0 votes > 5% VPFull proposal
Summary
Deploy a new price oracle for LUSD that bounds LUSD price by $1.1.
Motivation
At the time of writing, buying $6m of LUSD in the market would temporarily (*) pump its price by over 20%, and $10m buy pressure would effectively drain the entire LUSD buy liquidity. This could give rise to a price manipulation attacks (aka "profitable trades") once the credit account caps are lifted (with the current limit an attack would not be profitable).
LUSD is notoriously traded above $1 (currently traded at $1.03). It has an healthy amount of sell liquidity, which allows liquidators to easil…