[Proposal] Second Phase of wUSDM Liquidity Restoration on Venus ZKsync

Summary

This proposal recommends the transfer and injection of 147,630 wUSDM from the Venus Treasury on ZKSync to the Venus market via the WUSDMLiquidator contract. The goal is to fully restore liquidity and allow all current wUSDM suppliers to withdraw their assets, following the partial recovery implemented in the initial VIP-502.

Context

On February 27, 2024, the Venus ZKsync deployment suffered a $902K loss due to a manipulation of Mountain Protocol’s wUSDM exchange rate oracle. Since then:

• $185K was recovered
• ~$400K in wUSDM was injected via VIP-502
• ~$352K in WETH, USDT, and USDC.e debt was liquidated
• A remaining ~$400K in debt is still held by the WUSDMLiquidator contract

Despite the partial intervention, users holding wUSDM are still unable to exit their positions, as liquidity remains insufficient.

Current Status

The following wallets currently supply wUSDM on Venus ZKsync:

Address	Balance (wUSDM)
0x7386...f85	69,213.88
0x5ac6...8b3	33,513.72
0x1e9c...380	22,653.99
0xb2e9...599	7,680.99
0xffcf...192	2,359.52
0xe4f6...7bf	1,617.15
0xccd7...487	940.18
Total	137,979.43 wUSDM (~$149,151.35)

Without further liquidity injection, these users remain locked and unable to redeem their assets.

Proposal Details

This proposal suggests:

• Withdrawing 147,630 wUSDM from the Venus Treasury on ZKSync: 0xB2e9174e23382f7744CebF7e0Be54cA001D95599 These funds were accrued from the protocol due to the high wUSDM supply rate after the exploit.
• Supplying the funds via the existing WUSDMLiquidator contract: 0x0192ffefb1dddb9d30afcccb12f60ceaad490807 This account was used in VIP-502 and already manages the recovery operation. Injecting liquidity through this account will improve its health factor and ensure transparent accounting for the remaining bad debt.
• Allowing current wUSDM suppliers to withdraw their full balances and restoring the market to operational health.

Rationale

This injection:

• Fulfills the restoration promise to users still impacted by the oracle manipulation
• Avoids unnecessary prolonged lock-up of legitimate user assets
• Uses existing treasury funds earned by the protocol itself
• Helps improve the health factor of the WUSDMLiquidator, enabling better long-term debt management and reducing risk of additional protocol bad debt

Next Steps

If the community supports this approach, we propose:

1. Publishing a Snapshot vote to gauge sentiment on this second-phase liquidity injection
2. Proceeding with a new VIP on ZKSync to execute the transfer and supply

Considerations

• This action does not fully close out the $400K debt held by the WUSDMLiquidator. Future planning and discussion will be required to manage this liability.
• No new risk is introduced, as all execution is handled through a known and restricted contract with parameters and accounts hardcoded.