30-50% compensation proposal

Taking into account the difficult situation in which users now find themselves and taking into account all the previous discussions in telegram and on the forum. Currently we have the following:

  1. No one knows how long the initiated investigation will take. Unfortunately it can take years and years.

  2. Users have lost large sums, many are on the verge of bankruptcy (Mortgaged houses, property and even life)

  3. We all understand that there must be some kind of compensation. Since the hacking happened through the phishing attack on the developer. And in fact, the funds were withdrawn by a bzx smart contract.

I would like to suggest the following reimbursement scheme. The approximate amount of the Treasury is 59,7 mln $.Theoretically bzx/DAO can reimburse (without much difficulty) at least 30 to 50% of the lost funds right away (in 1:1 ratio at the day and time of the hack), so that users won’t miss the opportunity to recover funds on their own during this bull run.

Benefits of such solution to the problem:

  1. The image of the bzx project will not suffer, but on the contrary, people will see their commitment and responsibility to users.

  2. There will not be a strong fall in the bzx token price, perhaps there will be a growth from such positive news.

  3. The pressure on the team from users will decrease, and the risk of litigation will decrease

Over time, if the investigation is successfully completed and the funds are returned, the project can reimburse the rest to itself and users.

Once again, I want to draw the attention of the users, DAO and the bzx team. Waiting for the completion of the investigation will be a very big mistake. Image of the project will suffer and most importantly financial, moral, psychological state of users get worse.

I hope for your understanding and support. We will get through this situation together!

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The the debt token will have the same result as this, holders will be able to immediatly liquidate for a discount.
But has the advantage for users who wait and market buy to get whole again after the time it takes and earn rewards while waiting.

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i think the emphasis is on providing instant liquidity, regardless of debt token or treasury selling bzrx

Debt token could be used for the second part of the compensation. Right now we need some liquid assets to minimize losses by ourselves. Only 2 months left until the end of the bull market.

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I like this idea - giving something out soon, as well as a promise for something in the future feels the best way to respond to ALL of the victims (not just “group 1” who votes for group 1).

I hope we’ve moved beyond the BAD BAD idea of grouping victims based upon childish us/them ways of thinking.

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Also, paying out something now might gives all the victims the ability to vote, if they wish to, and this could help achieve a more fair solution on the rest of the compensation. Most users, victims, members, etc… are out of liquidity and so it’s mostly the hacker who has the ability to vote, with a few ETH whales.

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I don’t understand where you get the figure of $59 million for the treasury?

The treasury has approx 43m liquid BZRX that can be sold now ($16.5 million at current prices), and about 350m vBZRX which is a highly illiquid vesting token, which has no listings or liquidity and for all practical purposes cannot be sold - but 7m liquid BZRX vests into the treasury from it each month.

Now, although the 43m BZRX is worth $16.5m, it’s not really. There’s no way you can sell that much without completely tanking the price and making BZRX worthless, which is not what anyone wants, because if BZRX is worthless, it can’t be sold to pay compensation. You’d have to sell slowly over a period of time, and since the protocol still needs to function you can’t empty the treasury to do it (and there are other issues).

The point is that there is no realistic way for the protocol to immediately raise $20-30 million in USDC or ETH, but if you have any suggestions for how it can be done we’d love to hear it (as well as a break down of how you think it should be divided between different kinds of losses).

Keep in mind that the idea of giving BZRX directly from the treasury to people who lost BZRX (aka Group 1) is not to screw over the other groups, it’s because it’s the simplest and easiest way of compensating a large group of people who have been the biggest supporters of the protocol for years, and through previous hacks etc, and importantly, giving BZRX to them directly from the treasury means it doesn’t have to be sold, which causes ZERO slippage, zero price impact, and pays back people who are the most likely to hold the BZRX and not dump it immediately.

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Oh and the other point to keep in mind is that there is no perfect solution. No one is going to get everything they want because the hacker did what he did - what we have to do now is a balancing act between the interests of the protocol and its future, the losses from the hacker (spread between different groups) and the BZRX tokenholders etc - a compromise needs to be reached between all those interests.

What about ‘paying out’ but locked in until further compensation is reached? I mean, the fear of the people who have had their life savings siphoned from their wallets (group 3) is that the people who have had just a few coins staked in the protocol (group 1) will just walk away, not be engaged, interest, or involved in any further compensated since they’ve been covered. And this group is the DAO, voters and major governers. So there is a concern that once these people are compensated, what other responsibility is there for them to really help out everyone else? other than ‘name and sake of protocol going forward’.

Possible solution:
Could they be given back their tokens, BUT, as you’ve mentioned, locked into the protocol until enough funds have been raised to achieve total compensation?

2 Likes

Yes, this could be done easily. If Group 1 is given vBZRX (instead of liquid BZRX tokens that can be sold), then it is basically the same as what you are talking about - then it is effectively locked until July 2024 (it has linear vesting each block, and about 2% of the supply vests into BZRX).

So if you’re given 100 vBZRX, then you can claim 2 BZRX each month from the token contract until July 2024 (you can also sell the vBZRX but it’s extremely illiquid and very difficult).

The above calculation is an oversimplification - since the vBZRX vesting began in July 2020 and 1/3 of the vesting is complete, there will need to be some adjustment to the calculation to account for that, but I think it gives you the idea of what I mean.

Basically - what you are suggesting is easily possible from a technical perspective.

However, I will say that I think you have the worry completely backwards. The BZRX holders are firstly users too - they have also lost a lot of ETH and USDT etc, so the groups are not separate. People are in more than one group.

Second, the BZRX holders are the longest term supporters and users of the protocol and the most loyal to it. They’re the ones who bought an ICO in 2018, held a non-tradeable token for 2 years, held it through 3 previous hacks, and are now holding through a 4th exploit. They’re the last people who will abandon the protocol.

It’s the other groups - the people who were casual lenders on Fulcrum (or those who weren’t even current lenders but had briefly used it and left their wallet permissions active) who are FAR more likely to lose faith in the protocol and dump any compensation and leave.

Yes makes sense - but let’s not let speculation get the best of us. A consideration of all possible outcomes is warranted however.

If groupd 2-3 will be issued debt token. 1 debt token should be something like stable coin with value of 1.25usdt. With vesting period not more than 1 year. Every 14 days you should be able to convert 1 debt token to 1.25usdt. In this case we will be compensated more or less fairly.