Tesla has announced that they will be doing a 3-for-1 stock split and the trading with the new stock-split adjusted price will begin on August 25th. The stock split adjusted price will be significantly lower than the pre-adjusted price and will have a direct impact on any user who holds the zTSLA zAsset on Horizon Protocol.
Users who hold zTSLA through the stock split will be at risk of having the value of their zTSLA holdings to be significantly devalued, which could limit their abilities to manage their c-ratios since the value of their zAsset holdings will be reduced.
Given that there are currently no zTSLA holders in the global debt pool, the Horizon Protocol team will suspend the trading of zTSLA until after the stock split on August 25th as outlined in HIP-3. This action will eliminate the risk for users to be exposed to the stock split price change and also eliminate the need to take any further actions to protect against any potential impact to the global debt pool.
As stock splits will continue to happen, the Horizon Protocol team is exploring ways to mitigate this risk. If a stock split happened to a zAsset that had a significant share of the global debt pool, a predetermined price-change mitigation protocol would have to be in place which would be formally proposed in a future HIP.
In this event, the Horizon Protocol team proposes to purge each wallet containing the affected zAsset tokens back to zUSD at a market rate prior to the split to preserve the value of those holdings. After the split, trading will resume as normal with the split-adjusted prices and users can buy back their positions without losing any value.
We welcome community feedback to determine if this is the best course of action that should be taken in such an event. This is an open discussion.
As for now, by suspending the trading of zTSLA while there are currently 0 holders, it will mitigate the need to conduct any purge operations mentioned above.
If you have any questions or concerns, please do not hesitate to reach out.