It’s a nice start! Maybe a bit too premature to have it as a PIP that could be executed, given negotiations may still be ongoing.
I would like to see a larger initial amount converted into ETH and distributed to the victims. Also, I’m not sure on the benefits of using weekly emissions as a form of repayment? How much does the constant sell pressure it would create on the prisma token concern you?
However, I think what we want from the repayment plan depends a lot on how much (if any) can be recovered from the hacker.
I previously shared my thoughts briefly in discord.
It’s a strong case that no tokenized recompensation plans were effective past the LEO/bitfinex centralised one, especially this is the case for DeFi protocols. BZx also tokenized losses & people determined that it would be unlikely that those losses would be repaid in any reasonable amount of time and they ended up facing a class action lawsuit.
DeFi examples:
BZx with p125 token -
Harvest.finance with grain token
Beanstalk and their token
This model has empirically shown to never amount to even coming close to repaying the victims, I strongly believe making a debt token sounds good in theory but works out less than optimally in practice especially for victims.
We should focus on doing whats possible and dispersing currently existing assets rather than anticipated future assets and revenue in the form of debt.
The top 5-6 whales excluded the sum of total losses in ETH are ~3 Million USD.
There are a total of 25 users affected, there is a case to be made to pay back each user up to 100k USD of funds and do a debt token for the remainder, this would make MOST users affected whole immediately, these amounts could be edited but the treasury should be able to handle it.
Barring the exception of the funds being returned by the hacker maybe we could discuss the above in either this thread or a new one if you prefer I make a new proposal.
I like the idea. Prefer this proposal over original.
Downside is that it discourages whales from getting involved in future. If only my first $X is “protected” I’m heavily disincentized from putting more in.
I understand, I believe this incident to be an isolated scenario so I just wanted to propose something that made most users whole with what is possible.
the risks of defi are numerous and one does not invest and assume a +100% APY is anywhere close to risk free.
i do not support crippling the protocol to make everyone whole if that means the protocol dies a slow death. I lost $$$ on a hack in the past (xtoken) and no big surprise the repayment plan didn’t work there either and the project is dead.
the underlying questions for me are- if we vote to enact this proposal, does more or less capital find its way to the protocol? will the additional debt overhang significantly hinder growth of the protocol to the point where the victims are happy but the protocol can no longer compete in the market?
The DeFi risks are indeed numerous, although in our case there was no +100% APY, it turns out users who overcollaterized (tried to play their positions safer) were among the most affected, and users with less collateral backing lost less in this hack.
I do not wish to see the protocol crippled either, it is in no ones interest to have that! I believe a plan that goes along the lines of my proposal would require a breakdown of what could render most users whole meanwhile allowing the team to have enough treasury left to cover ample runway. Only they would be able to tell us an approximate figure of what that would be and what they need.
I think from there a proposal can begin to form that tries to rely less on future debt.
TLDR - debt token to help the victims, pros it can repay without significantly affecting the protocol, cons it is a gamble and historically hasn’t worked for similarly affected hacked communities. 25 wallets in total effected, estimated 20 of these wallets were a sum of 3 million loss. Alternative idea that is being embraced is to make the smaller wallets disproportionately affected whole, suggested amount cap of $15k for first epoch payment per affected wallet from converting mkUSD into Eth equivalent (not a bad idea with Eth price down right now 1 Eth = 1 Eth from a hack perspective). This would make approx 40-50% of the hacked victims (might be under estimated) whole, leaving the remaining victims/debt to be addressed with the above recommended debt token.
I personally have 3 wstEth lost in the hack, and this constitutes half of my entire (small) portfolio at the moment. 50% loss of portfolio disporrtionately affects me vs a $20 million wallet that lost $1 million is the idea behind this argument. My vote is for the cap payment idea of $15k max per affected wallet for first round, make the small wallets whole, get the rest in the debt token.
Here’s a table of actually losses and immediate repayment thresholds.
Given Prisma Fee receiver holds 1.7mm mkUSD, we can repay somewhere between 25-50 ETH without touching the prisma.
I suggest somewhere in the 25 ETH range, which would, make 4 people whole, another few accounts with minimal losses, and leave 600k mkUSD and all the existing prisma left for treasury.
Just a note: If you take that much mkUSD and dump it for ETH, doesn’t it significantly drain the liquidity and hurt the peg? It’s something to consider.
We need to be really careful about that. Sure, you can say that you are going to do that in batches, but then the liquidity may run out, or we will have a lot of redemissions.
This needs to be considered. I like the plan with fixed reimbursement more, but we need to be careful with the numbers.
Should be easily resolvable by heavily bribing mkusd/ETH or mkusd/USDC pools for a few weeks. Probably USDC better because it attracts more TVL per unit emission and USDC/ETH trades with minimal slippage.
We easily got 1mm in mkusd/usdc TVL with 4.4% of voting power this epoch. Get it to 15-20% and we’ll easily have enough to swap with minimal slippage (perhaps even positive slippage if people without mkusd start trying to farm it with USDC)
We heavily incentivize mkUSD-USDC for a week or two to build TVL.
We swap 1.1mm mkUSD to ETH, and distribute up to 25ETH per affected account. This repays smaller accounts (6 out of 17 accounts are almost fully repaid) and gets leaves 600k mkUSD in treasury and all the Prisma.
The remainder lost gets the debt token airdropped according to Tommy’s instructions.
This is not material too the plan, but IT IS material to the calculations. Hopefully the Prisma team does not rely exclusively on a forum post because some of the numbers aren’t accurate. No offense to the person who took the effort of creating the table, but here are a couple of corrections that the team should make (or even better do the math from on-chain).
Wallet 0x409c6c5ec5c479673f4c09fb80d0f182fcff643e is listed 3 times (I’m guessing hackers moved tokens more than once), but the actual difference should be in the rance of 2.81 ETH (3.8 before hack, 0.99 after).
Same for wallet 0x3b82ee6c15b212ed69d5795bcd957e136eaa4bff, who lost 9.5 ETH (from 13.02 to 3.52).
Wallet 0xf8d1c9ab49219f7acf7b1d84705e5aea3b8ce0aa lost about 52.37 ETH (from 70.3 to 17.93).
Team do your part and review both the estimated losses and what needs to returned.
Nothing to apologize and thank you for doing the work in the first place.
I checked 3 wallets that were in more than 1 hack, but not all the numbers for everyone.
Does someone have the exact numbers for each hack (past the two decimals) and we can do a more precise calculation? I’m happy to “run the numbers” if someone can provide the raw information
Just a small note to add to your table your calculations seem correct although they should be denominated in WSTETH and not ETH, so technically the ETH value lost is higher.
