[PRFC] Victim Relief Proposal (v2)

General Discussion
1

Prisma currently holds approximately $330,000 USD of ENA tokens (link) and roughly $2 million USD in the Fee Receiver (link), totaling around $2.33 million USD.

Below is brief summary of the proposal:

  • Immediate Partial Repayment: Proposing to reimburse each victim for up to 50 ETH to cover their losses in the security incident promptly.

  • Reasons for this plan:

• Restore Prisma’s Reputation: Making an immediate restitution plan in ETH to the victims using DAO’s Fee Receiver money delivers a powerful and positive signal that Prisma DAO takes care of its community and users.

• Mitigate Future Burden: ETH’s price increase will make repayment more challenging over time straining Prisma holders + the DAO, if ETH increases by 2x, so does the debt + user losses.

• Swift Restitution: Providing 50 ETH per victim ensures quick recovery for most users.

• Financial Buffer: Leaves around $400,000 USD in the treasury for ongoing operations.

  • Reasons to Avoid Tokenizing Debt:
    • Past Failures: Tokenized repayment plans in similar incidents (e.g., BZx, Harvest.finance, Beanstalk) have almost all fallen short.
    • Focus on Tangible Solutions: Utilize existing community assets for immediate resolution of community losses rather than speculative future revenue.

  • Exploring Other Alternative Strategies:
    • TommyGenesis’s Proposal:
    • Potential complexity in implementation, including development overhead, UI adjustments, and contract audits.
    • Questionable acceptability for debt tokens from victims.
    • Simpler Repayment Mechanisms:
    • Consider redirecting a % of fees to facilitate repayment.
    • Prioritize ETH repayment if stolen funds are recovered.

Expanding on the Above Points of View

Here is my reasoning for repaying each victim up to 50 ETH in losses promptly below:

  • Currently, Prisma’s suffering a post-incident hit in terms of its reputation. Making an immediate restitution in ETH to the victims using DAO’s Fee Receiver reserve that covers most victims delivers a powerful voice that Prisma DAO takes care of its users’ fund.
  • Another reason for this immediate repayment of a larger amount is due to the likelihood of long-term ETH price rising and this will make the repayment even more of a burden for Prisma token holders & Prisma DAO as time passes, rendering it exponentially more expensive for the Prisma DAO to make victims whole. Repaying with 50 ETH per victim immediately would leave the treasury with around 400k USD and make a majority of users whole quickly.
  • The Prisma DAO had raised funds prior to inception, I am assuming they are using those funds for runway from those rounds + to cover operations since there are no mention of salaries/expenses etc coming from fee receiver.

Reasons against Largely tokenizing the debt, pasted from previous comments:
It’s a STRONG & OBVIOUS 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 Bad Historical 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 their victims in nearly all historical cases. I strongly believe making a debt token sounds good in theory but works out far less than optimal in practice especially for victims.

Besides, there are other potential issues with tokenizing the repayment:
Not only his method did seem quite complex in terms of dev work/ new UI / new contracts to audit/ potentially complex to make a secondary market, but also it is questionable if there is any demand to purchase debt tokens from 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.

As for the remainder of the repayment apart from this immediate repay part to the victims, it is suitable to start the discussion to veer to TommyGenesis’s proposed tokenizing method.

It would be nice if the victims could be repaid in a simpler manner via a combination of directing fees.

Of course, ideally if the stolen funds are returned all the above + future repayment would be repaid in ETH if possible.

Immediate Repayment table by MaximumPain below:

Addresses Before After Change wStETH Conversion Rate Loss (in ETH) Repay up to 100 ETH Repay up to 50 ETH
0x56A201b872B50bBdEe0021ed4D1bb36359D291ED 1745.08 463.18 -1281.9 1.1648 -1,493.157 -100.00 -50.00
0xcbfdffd7a2819a47fcd07dfa8bcb8a5deacc9ea8 824.6 192.12 -632.48 1.1648 -736.713 -100.00 -50.00
0xc487370895f6e8f5b62d99bf1472c95a94073379 377.2 95.6 -281.6 1.1648 -328.008 -100.00 -50.00
0x9fceded3a0c838d1e73e88dde466f197df379f70 356.28 102.12 -254.16 1.1648 -296.046 -100.00 -50.00
0x1b72bac3772050fdcaf468cce7e20deb3cb02d89 166.41 47.49 -118.92 1.1648 -138.518 -100.00 -50.00
0x3b15cec2d922ab0ef74688bcc1056461049f89cb 107.18 18.89 -88.29 1.1648 -102.840 -100.00 -50.00
0x16f570e93fdbc3a4865b7740deb052ee94d87e15 113.6 32.4 -81.2 1.1648 -94.582 -94.58 -50.00
0x4a3fced7c536e39ca5292a024ee66c9b45b257ec 87.93 19.85 -68.08 1.1648 -79.300 -79.30 -50.00
0xf8d1c9ab49219f7acf7b1d84705e5aea3b8ce0aa 70.3 17.85 -52.45 1.1648 -61.094 -61.09 -50.00
0xf9ca66ef84c773fab422562ab41b1ee8d4397418 47.3 15.48 -31.82 1.1648 -37.064 -37.06 -37.06
0xc47fae56f3702737b69ed615950c01217ec5c7c8 40 11.69 -28.31 1.1648 -32.975 -32.98 -32.98
0x774bb9306df1cd921eb842b1388c78f75e6ef79f 172.18 149.36 -22.82 1.1648 -26.581 -26.58 -26.58
0x19562df3e7fd2ae7af4e6bd288b04c2c90405212 31.22 9.15 -22.07 1.1648 -25.707 -25.71 -25.71
0x1b004189e64d5b2f71d5be554470e6c49e10123b 21.74 5.98 -15.76 1.1648 -18.357 -18.36 -18.36
0x3b82ee6c15b212ed69d5795bcd957e136eaa4bff 13.02 3.45 -9.57 1.1648 -11.147 -11.15 -11.15
0x14b30b46ec4fa1a993806bd5dda4195c5a82353e 4.22 1.21 -3.01 1.1648 -3.506 -3.51 -3.51
0x409c6c5ec5c479673f4c09fb80d0f182fcff643e 3.8 0.93 -2.87 1.1648 -3.343 -3.34 -3.34
0x409c6c5ec5c479673f4c09fb80d0f182fcff643e 0.93 0.99 0.06 1.1648 0.000
0x3b82ee6c15b212ed69d5795bcd957e136eaa4bff 3.45 3.52 0.07 1.1648 0.000
0x409c6c5ec5c479673f4c09fb80d0f182fcff643e 0.99 1.06 0.07 1.1648 0.000
0x19562df3e7fd2ae7af4e6bd288b04c2c90405212 9.23 9.3 0.07 1.1648 0.000
0x3b15cec2d922ab0ef74688bcc1056461049f89cb 18.89 18.97 0.08 1.1648 0.000
0xf8d1c9ab49219f7acf7b1d84705e5aea3b8ce0aa 17.85 17.93 0.08 1.1648 0.000
0x19562df3e7fd2ae7af4e6bd288b04c2c90405212 9.15 9.23 0.08 1.1648 0.000
0xc47fae56f3702737b69ed615950c01217ec5c7c8 11.69 11.78 0.09 1.1648 0.000
Total in ETH -3,488.937 -993.66 -608.68
Total in USD -10,815,705 -3,080,333 -1,886,910

Exploring Other Alternative Strategies

TommyGenesis’s Proposal - Issues & Implementation Complexities:

Implementing TommyGenesis’s proposal could encounter various complexities:

  • Development: Additional dev power + overhead needed to implement.
  • UI Adjustments: Enhancements to user interfaces for better accessibility.
  • Contract Audits: Necessary security reviews to ensure compliance and minimize risks.
  • Secondary Market Creation: Creating a secondary market that needs maintenance of liquidity pools and might have little demand for buyers to step in

Acceptability of Proposed Debt Tokens:

There may be skepticism about using debt tokens as compensation, especially from victims, due to concerns over their stability and liquidity.

Simpler Repayment Mechanisms:

Redirecting Fees:

A simpler mechanism might involve using transaction or service fees to fund repayments, providing a predictable revenue stream.

Prioritizing ETH Repayment:

If stolen funds are recovered, prioritizing repayment in ETH could simplify the process and ensure value retention, especially if the original loss was in Ethereum.

5 Likes
2

For the record,

image
image1337×940 64.2 KB

Repaying up to 50ETH would nearly completely empty the treasury of all stables. I’d like to leave a larger buffer - maybe 6 - 12 months of running costs?

Would the team be able to give us an idea of what the monthly burn is?

3

I proposed leaving 400k in stables in the proposal for runway but its not clear if DAO is using fee receiver for runway or funds from previous raises

If monthly burn is 15-20k then that’s almost 2 years runway for example

1 Like
4

Currently monthly spend rate for mkUSD is approx 320k, which is 80k each week awarded to vePrisma lockers.

So, a 400k runway is only good for 5 weeks right now.

5

I think if it is decided that tradeable debt tokens don’t work, then we shouldn’t rely on debt tokens for the remaining half of users that make up the bulk of the debt.

Below is a table based on 100 ETH payments each month, with a common max payout per wallet (similar to what is suggested by bt8, but instead of one-time, every payment would be made this way).

After 12 months, all but 4 wallets would be made whole. Each time a user is paid in full, the max claim for other users increases. (25 ETH each when 4 wallets remain, 50 ETH each when 2 wallets remain, etc)

Month: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Max Per Wallet: 6.21 6.79 7.28 8.02 9.62 11.11 11.11 12.38 13.32 15.21 19.64 20.55 25 25 25 25 25 25 31.73 47.49 50 50 50 50 50 50 50 83.75 100 100 100 100 100 100 88.94
0x56A201b872B50bBdEe0021ed4D1bb36359D291ED -1493.157 -1486.95 -1480.16 -1472.88 -1464.85 -1455.23 -1444.12 -1433.01 -1420.63 -1407.31 -1392.1 -1372.46 -1351.91 -1326.91 -1301.91 -1276.91 -1251.91 -1226.91 -1201.91 -1170.18 -1122.69 -1072.69 -1022.69 -972.69 -922.69 -872.69 -822.69 -772.69 -688.94 -588.94 -488.94 -388.94 -288.94 -188.94 -88.94 0
0xcbfdffd7a2819a47fcd07dfa8bcb8a5deacc9ea8 -736.713 -730.5 -723.71 -716.43 -708.41 -698.79 -687.68 -676.57 -664.18 -650.87 -635.66 -616.01 -595.47 -570.47 -545.47 -520.47 -495.47 -470.47 -445.47 -413.73 -366.25 -316.25 -266.25 -216.25 -166.25 -116.25 -66.25 -16.25 0 0 0 0 0 0 0 0
0xc487370895f6e8f5b62d99bf1472c95a94073379 -328.008 -321.8 -315.01 -307.73 -299.7 -290.08 -278.97 -267.86 -255.48 -242.16 -226.95 -207.31 -186.76 -161.76 -136.76 -111.76 -86.76 -61.76 -36.76 -5.03 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0x9fceded3a0c838d1e73e88dde466f197df379f70 -296.046 -289.84 -283.05 -275.77 -267.74 -258.12 -247.01 -235.9 -223.52 -210.2 -194.99 -175.35 -154.8 -129.8 -104.8 -79.8 -54.8 -29.8 -4.8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0x1b72bac3772050fdcaf468cce7e20deb3cb02d89 -138.518 -132.31 -125.52 -118.24 -110.21 -100.59 -89.48 -78.37 -65.99 -52.67 -37.46 -17.82 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0x3b15cec2d922ab0ef74688bcc1056461049f89cb -102.84 -96.63 -89.84 -82.56 -74.53 -64.92 -53.8 -42.69 -30.31 -16.99 -1.78 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0x16f570e93fdbc3a4865b7740deb052ee94d87e15 -94.582 -88.37 -81.58 -74.3 -66.28 -56.66 -45.55 -34.44 -22.05 -8.74 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0x4a3fced7c536e39ca5292a024ee66c9b45b257ec -79.3 -73.09 -66.3 -59.02 -50.99 -41.38 -30.26 -19.15 -6.77 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0xf8d1c9ab49219f7acf7b1d84705e5aea3b8ce0aa -61.094 -54.88 -48.09 -40.81 -32.79 -23.17 -12.06 -0.95 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0xf9ca66ef84c773fab422562ab41b1ee8d4397418 -37.064 -30.85 -24.06 -16.78 -8.76 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0xc47fae56f3702737b69ed615950c01217ec5c7c8 -32.975 -26.76 -19.97 -12.69 -4.67 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0x774bb9306df1cd921eb842b1388c78f75e6ef79f -26.581 -20.37 -13.58 -6.3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0x19562df3e7fd2ae7af4e6bd288b04c2c90405212 -25.707 -19.5 -12.71 -5.43 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0x1b004189e64d5b2f71d5be554470e6c49e10123b -18.357 -12.15 -5.36 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0x3b82ee6c15b212ed69d5795bcd957e136eaa4bff -11.147 -4.94 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0x14b30b46ec4fa1a993806bd5dda4195c5a82353e -3.506 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0x409c6c5ec5c479673f4c09fb80d0f182fcff643e -3.343 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Affected Wallets Remaining 17 15 14 13 11 9 9 9 8 7 6 5 4 4 4 4 4 4 4 3 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 0
1 Like
6

Made the change to PRFC since we haven’t moved to snapshot voting yet

2 Likes
7

Agree but maybe decrease 50 Eth to something lower, maybe 30 Eth

1 Like
8

I agree with your ideas Tommy,

Would you find it reasonable to implement your plan but also provide an immediate relief of up to 25 eth per user and the remainder at a 100 eth/month at your proposed pace?

I only mention 25 eth per user immediately as it is nearly equal to the bounty which was offered to the hacker at current prices ~1.1m

1 Like
9

Generally agree. General preference toward a larger upfront amount (so long as the treasury has enough runway for 6-12 months), and a lower monthly drag.

2 Likes
10

This might be more easy to implement. As others have suggested maybe a higher upfront amount would be better

Apart from the fee receiver (0xfdCE0267803C6a0D209D3721d2f01Fd618e9CBF8), are there any other addresses controlled by the DAO containing cryptoassets? It would help determine the optimal amount that can be allocated

Finally, what are the odds of reopening negotiations with the hacker? As a potential deal could still be better for victims and DAO overall

1 Like
11

Victim here. Higher upfront such as up to 50ETH/victim is preferred. Higher upfront means lower monthly after all so that more revenue stream from the protocol can be saved to be paid to the veLockers. Otherwise it will be a stress to the revenue stream.

And it’s not only better for victims but also better for the restoration of protocol’s reputation and market confidence. Imagine when potential users researching about PRISMA about the follow-on of this unfortunate incident, 50ETH per/victim upfront paid is like 70%(12 out of 17) of all the victims covered by more than/at least half of their losses. This recomp plan, if thoughtfully designed and executed, could be a turning point for the protocol’s future growth from the hit of this incident.

4 Likes
12

I support Hans plan of 50 eth upfront and the remainder to be repaid via Tommy’s, 100 eth per month to victims as possible.

This is the simplest way to most victims whole barring a return of the funds from the hacker.

2 Likes
13

After thinking more, I think pro rata is the fairest way. We are all victims and it is really difficult to say this affects one person less just by looking at onchain balances as there could be more than one person involved for the larger balances. The remainder paid off with future revenue split at 50/50 would be nice too.

Hopefully if mkusd /ultra minted returns or exceeds the levels before the hack, the amount should be quite easy to pay off. Ideally, I hope there is a breakthrough with the hacker situation too via negotiations.

Edited for pro rata

1 Like
14

Thanks for the original post bt8. It’s well thought out.

+1 to Han’s plan as well. The 50/50 split of revenue to pay off the remainder is a good idea as well, it keeps incentives in the protocol while still refunding the remaining users. This is what I would vote for.

It seems like there is general agreement that there should be a lump sum payment to make as many users whole as possible (while still maintaining enough runway) and a repayment plan going forward for the rest. If there is debate about the exact amount for the one-time refund, we can put up poll if that’s helpful. Seems like the sweet spot is likely in the 30-60 ETH range given the distribution of losses per user.

Edit: Just for reference, the median value is −49.079 ETH, so 50 ETH reimbursement seems reasonable.

15

Currently, there are 14,844,477 mkusd (@10% interest rate) and 1,320,783 ultra (@15% interest rate) minted. This implies the weekly revenue for the protocol is $32,268.

With 80k being the amount required weekly for the fee receiver, the true weekly burn rate is $47,732 assuming minted mkusd and ultra levels stay the same.

Prisma DAO currently holds approximately $312,000 USD of crypto assets (majority is ENA) in (link) and roughly $2.08 million USD in the Fee Receiver (link), totalling around $2.39 million USD

I propose that $1.5m is spent immediately to recompensate the victims. This would leave around 0.82m and a runway of around 18 weeks (890,000 / 47,732 ~ 18) which is around 4.5 months. This assumes minted mkusd and ultra does not increase at all and that amount to the fee receiver does not decrease.

At the current eth price ($2980) the proposed amount the be redistributed is 503.3557 eth

Below is a table illustrating potential payout distributions. First is pro rata where everything is split proportionally and after is an adjusted pro rata where the bottom 7 victims are repaid fully then the remainder is split pro rata.

Victim loss in eth Initial % of debt Pure pro rata payout Alt pro rata % of debt Alt pro rata payout
0x56A201b872B50bBdEe0021ed4D1bb36359D291ED -1493.157 42.797% 215.421 44.836% 154.539
0xcbfdffd7a2819a47fcd07dfa8bcb8a5deacc9ea8 -736.713 21.116% 106.287 22.122% 76.248
0xc487370895f6e8f5b62d99bf1472c95a94073379 -328.008 9.401% 47.322 9.849% 33.948
0x9fceded3a0c838d1e73e88dde466f197df379f70 -296.046 8.485% 42.711 8.890% 30.640
0x1b72bac3772050fdcaf468cce7e20deb3cb02d89 -138.518 3.970% 19.984 4.159% 14.336
0x3b15cec2d922ab0ef74688bcc1056461049f89cb -102.84 2.948% 14.837 3.088% 10.644
0x16f570e93fdbc3a4865b7740deb052ee94d87e15 -94.582 2.711% 13.646 2.840% 9.789
0x4a3fced7c536e39ca5292a024ee66c9b45b257ec -79.3 2.273% 11.441 2.381% 8.207
0xf8d1c9ab49219f7acf7b1d84705e5aea3b8ce0aa -61.094 1.751% 8.814 1.835% 6.323
0xf9ca66ef84c773fab422562ab41b1ee8d4397418 -37.064 1.062% 5.347 37.064
0xc47fae56f3702737b69ed615950c01217ec5c7c8 -32.975 0.945% 4.757 32.975
0x774bb9306df1cd921eb842b1388c78f75e6ef79f -26.581 0.762% 3.835 26.581
0x19562df3e7fd2ae7af4e6bd288b04c2c90405212 -25.707 0.737% 3.709 25.707
0x1b004189e64d5b2f71d5be554470e6c49e10123b -18.357 0.526% 2.648 18.357
0x3b82ee6c15b212ed69d5795bcd957e136eaa4bff -11.147 0.319% 1.608 11.147
0x14b30b46ec4fa1a993806bd5dda4195c5a82353e -3.506 0.100% 0.506 3.506
0x409c6c5ec5c479673f4c09fb80d0f182fcff643e -3.343 0.096% 0.482 3.343

Feel free to discuss other potential payout distributions, I’ve presented some which I think could be acceptable for all the parties involved. If following the “equal amount method” suggested above, everyone with debt above 38.297eth, will get 38.297eth.

With regards to the future repayment for the remaining 2985.5823 eth, the victims may forgo their share of revenue split until the end of the 4 months in favour of receiving the larger % upfront. Upon the end of the 4 months, everyone involved can reconvene and decide on future revenue split %s. However, if the protocol flourishes and manages to maintain over $42m minted mkusd and ultra then discussions can begin over revenue split to repay debt. ~$42m is the minted amount required at current interest rates to achieve $80,000 per week in protocol revenue. This is also up for discussion, I’m just posting thoughts I’ve had so far.

2 Likes
16

Hi,

Another victim here.

I support the idea of the 50ETH upfront and lower monthly fee thereafter.

Is there an idea of when a snapshot vote can take place?

BR

1 Like
17

So the idea presented here is an initial payout and then after 4.5 months - when the balance in the fee receiver could possibly be 0 - reconvene to check and decide what to do next?

18

Just highlighting @TommyGenesis’s post here again which is a bit different. Rather than a large upfront payout it is spread out at roughly 25eth/week paid out.

1 Like
19

This proposal of 100ETH per month is intriguing and repays victims fairly quickly, but how would the DAO fund this? We don’t have 2995 ETH to repay everyone, not even close.

According to previous messages the DAO pays out about 80k/week and according to Defi Llama in the last week collected about 46k in fees. At this rate the DAO is burning reserves without even starting to repay victims. Source

What if we paid out a cap of 25 ETH to all victims first and then 50% of the weekly revenue? At current rates, a cap of 25 ETH is about 350 ETH, or about 1M USD. That’s less than half the treasury. 6 wallets would be made whole and 2 more would be pretty close to being whole.

From that moment on recovering the capital would be completely dependent on the success of the protocol. It’s a less guarantee future for the remaining wallets, but it’s a more likely scenario that the DAO and the project survive and when better times come bigger payments can also follow

1 Like
20

I think we should keep in mind

  • chances of eth rising in price making repayment even longer (it is relatively cheap/flat now to repay upfront) how much more taxing will it be on the DAO once eth is 6000$ per eth or 10000$ per eth?

  • $311,000 USD of ENA tokens that could be used towards this upfront eth amount (link)

Would really like to see it settled closer to 35-38 eth as Victim pointed out above upfront

And lowering the weekly payout amount afterwards