In November, the Indexed DAO passed Proposal 16 to drain the assets remaining in DEFI5, CC10, FFF and their respective market pairs. After the October hack, these pools were no longer functioning and were losing value. Proposal 16 was intended to prevent further losses by transferring the assets underlying the affected pools to the DAO, where they would be used to fund a compensation plan.
The gist of this compensation plan was that these assets would be sold into DAI, which would subsequently be moved into a pot which would be split by everyone that lost funds in the hack.
A couple of weeks ago, Dillon and I put forward a proposal to use some of those assets for a different but related purpose, namely to fund the proposed class action lawsuit we’ve filed, which we viewed as the best opportunity to return the most value to all affected tokenholders.
While the Snapshot proposal for this plan was unanimously in favour, we have now reconsidered and no longer wish to pursue that course of action, as we don’t believe this approach is fair to all tokenholders. After the Snapshot vote was announced, one significant holder of both DEFI5 and NDX tokens contacted us through legal counsel to object to this plan to use assets from Proposal 16 to fund a lawsuit that they do not wish to participate in. Further, the user has requested that the DAO return the assets from Proposal 16 rather than use them to fund the compensation plan.
Some affected users chose to burn their tokens back into their underlying assets prior to Proposal 16. As a result, assets retrieved from that proposal were taken from those that did not do so. As such, going through with the compensation plan would effectively result in taking value away from users who recovered nothing in the aftermath and transferring it to users who recovered something (by burning their tokens).
In the time since November, some users have had a chance to reflect on their decision not to burn their tokens. Some users who were less active or less sophisticated may not have been aware of Proposal 16 or may not have understood its significance (and may still not understand them). These users may have acted differently if they understood the consequences.
As a result, we have taken no further action relating to the assets from Proposal 16, and propose unwinding Proposal 16 to the extent of returning the drained assets to the tokenholders affected by the drain.
This would be done as follows:
- Setting up a Merkle distributor dictating the assets that affected users would have been able to burn their tokens (or LPs) for had they done so prior to the execution of Proposal 16,
- Moving all drained assets from the DAO Treasury via a Governor Alpha vote to a separate - industry-standardised - smart contract with no expiry time on claims,
- Creating a web interface for the affected to claim their assets (e.g. UNI, CRV, SUSHI),
- Advertising the existence of said interface via Discord, Twitter, Telegram and the Indexed site itself.
We believe that the execution of this proposal will allow the DAO to draw a line underneath the ownership of affected assets, and grant the affected a degree of immediate relief in terms of assets available to them. We ask the rest of the Indexed DAO to join us in supporting its passing, both in the off-chain consensus gathering phase and when its implementation is put forward for on-chain execution via Governor Alpha.