Binance To Compensate Users After Euro Stablecoin AEUR’s Abrupt Price Spike
Cryptocurrency exchange Binance announced a compensation plan for traders affected by sudden volatility in its euro-pegged stablecoin AEUR.
The incident occurred early on December 6th, when AEUR experienced a 200% price surge. The sudden surge decoupled its price from the intended 1:1 backing with the euro.
- Binance suspended AEUR trading pairs within hours to stabilize markets, but some users incurred losses from the price fluctuations.
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To protect affected users, Binance is providing refunds to cover excess losses beyond AEUR’s $1.07999 peg price.
- The compensation applies to traders who bought AEUR between 1:41 and 2:31 am UTC on December 6th and were unable to sell before suspensions.
- Eligible users will receive USDT tokens before December 9th.
- It will be based on their average purchased price minus the $1.07999 peg at the start of the incident.
- Compensation will be redeemable for 30 days in users’ Binance reward centers.
Binance highlighted traders’ failure to realize AEUR is a stablecoin
In its announcement, Binance acknowledged the incident stemmed from an influx of traders who didn’t realize AEUR was intended to be a stablecoin. Demand rapidly exceeded supply, creating upward price pressures. Due to this, Binance felt compelled to swiftly halt trading and stabilize markets while protecting users from potentially serious losses through compensation.
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Maintaining stability relies on carefully calibrated supply and redemption mechanisms that come under strain in periods of mania or panic. The company has not revealed the number of users affected by the temporary AEUR price spike.
Binance discloses compensation calculation method
To determine the payout for each eligible user, Binance will first calculate the trader’s net AEUR purchase amount during the incident period. This is done by taking the total quantity of AEUR they bought and subtracting the amount they sold back during the same period.
Next, Binance will figure out the average price (in USDT equivalent) that the trader paid across their AEUR buys.
The compensation is then calculated as:
(User’s net AEUR purchased quantity) x (Their average AEUR price paid – $1.07999)
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So in simple terms, eligible traders will receive back the difference between the average price they actually paid for their net AEUR bought and the intended $1.07999 peg rate.
