It’s complicated to quantify losses in this way as it’s not a normal LP positions rather it’s a leverage position where each user have different risk ratio. The similar kind of risk applies where if user holds ETH or goes leverage on ETH.
If user held 1 ETH when pool was launched (price around ~$4000 or deposited 1 ETH in smart collateral with no borrowings then current user’s position will be:
Losses in holding 1 ETH vs depositing 1 ETH on launch of pool:
- Holding 1 ETH (from $4000 to current $2600). Loss in terms of $ value:1 - 2600/4000 = 35%.
- On launch, 1 supply share = 2 USDC. Now it’s 1.26 USDC. If user deposited 1 ETH = 4000 USDC, now they would have 4000 * 1.26 / 2 = 2520 USDC. Loss equals to 37% (2% more than holding ETH)
Now there comes leverage, if users would have leveraged long ETH by 2x when price was at $4000 they would have been liquidated as ETH bottomed to $1400. In order to save the position users would have needed to deposit more ETH or payback debt in order to avoid liquidation. Similar risks comes with a leveraged LP position where debt is also being used as LP liquidity. These risks are decided by the user on how much leverage they should take and yes, as smart debt is a new concept so it can be confusing and ETH volatility has also been the worst since last 2-3 years.
So if users just had smart collateral the losses would have been minimal (near to no loss w.r.t ETH), with leverage it has exponentially increased.
Similarly, if you say a user leveraged long ETH 2x at $4000 and now price is at $2600 (considering user didn’t got liquidated) so user’s position would have been:
Initial position:
- Collateral: 2 ETH * $4000 = $8000
- Debt: $4000
Current position:
- Collateral: 2 ETH & $2600 = $5200
- Debt: $4000
Loss of about $2800 which is about 2800 / 4000 = 70% in losses from $4000 to now $1200.
Overall the losses of $19M are not true & cannot be quantified in this way as there are many nuances which are ignored in that.