qip: QIP-2
title: Flash loan function initial vote
author: David Lei
* discussions-to: Is that necessary for QIAN to support FLASH LOANS?
status: WIP
created: 12/2/2020
* updated: 12/2/2020
* requires: No
* resolution: Snapshot Voting
Brief Summary
Initial the vote for Flash loan function development and activate.
Abstract
In the whitepaper of QIAN, Flash Loan is one of the income source to QIAN project, this improvement proposal will analysis the good and bad affection by Flash Loan of QIAN project. The whole community will make the decision on whether to import Flash Loan service ability to the project or not.
Motivation
Flash Loan is a proven tool to boost the income of DeFi protocol such as AAVE and Uniswap, before QIAN project's official launch, the whitepaper of QIAN protocol has already listed Flash Loan as a source of profit. After one month running of the QUSD protocol, over 8 million backed assets are now locking in the protocol of QUSD, these assets can bring profit by Flash Loan, once the TVL of QIAN protocol grows, the Flash Loan service ability and following income will also grow. All the income of Flash Loan will be used to buy KUN token in the market and reserve them in the Vault smart contract as emergency fund, with the continue running of Flash Loan, KUN token price will get strong support in the future.
Specification
What is Flash Loan
We can read the introduction on Flash Loan and its magic here: Flashloans, The Crazy New Invention of Magic Internet Money
Recently, AAVE announced their income constitution in their November monthly report, which shows Flash Loan plays a very important role (17%) in their income and profit, meanwhile, the cumulative volume of Flash Loan on AAVE reaches 1 billion USD.
Is there any risks with Flash Loan
Currently, if you are running a DEX on Ethereum, Flash Loan attack is what you should pay attention to; if you are running a lending protocol which only uses price source from DEX, you are almost certainly be attacked by flash loan someday, however, as a flash loan service provider, this magic tool now has nearly no risk to you.
However, we don't know if Flash Loan has any potential risk that is still not be revealed, all we know now is that Flash Loan was introduced by Marble in the middle of the year 2018, two years passed since it was born and no attack on Flash Loan itself happened, since its a development tool and many developers use it every day, if there are any flaws of Flash Loan, it will certainly be used in attacking the Flash Loan service providers.
That is what we are facing now, Flash Loan is a powerful tool to generate profit in QIAN protocol, however it may bring some unknow risk to the whole project, especially the potential risk may lead to total loss of the locked assets in QIAN protocol, if this tragedy happens in the future one day, all community members who agrees to import Flash Loan into QIAN protocol will certainly take the responsibility, not to blame any single one, such as David or the community developers.
Solution to the potential risks bring by Flash Loan
In order to protect the community developers and David himself, we need to hold an important community voting on whether to introduce Flash Loan or not, if the proposal is approved by community voting, that means the whole community of QIAN protocol agrees and willing to take any loss bring by Flash Loan some day in the future (we hope not, we hope the Flash Loan is always safe to QIAN protocol), and, most important, the community developers and David Lei should not be blamed or need to take the responsibility of paying any loss in the future if Flash Loan has any flaws that leading to potential hacker attack.
If the whole community understand what does this vote mean, and all agree the consequences bring by this vote, David will initial the governance vote within 48 hours.
Vote
Vote will be online both Ethereum and BSC network in the Snapshot voting system, vote will last for 48 hours to give the whole community enough time to evaluate and cast the sacred vote.
Test Cases
Once the vote is closed and if the result is agree on activating Flash Loan service, the community developer will begin on code development of Flash Loan, which will take less than one week, then the new smart contract will be deployed on Rinkeby testnet and BSC testnet, a one week community public test activity will be held to test the Flash Loan function, a bug bounty program will also be held to incentive the bug hunting of this new and important function.
Meanwhile the test is running, David will require a code audit firm to check the Flash Loan code's security, the audit fee will be paid by David first, then David will submit the expense to Governance community for refund.
After the test is success, community developers will upgrade the smart contract of QIAN and officially launch the Flash Loan function.
Copyright Waiver
Abandon all copyright and related rights through CC0