I hope you’re all doing ok considering the circumstances and you’re not isolating yourselves in grief. Being a victim of fraud is never a beautiful experience, but somehow always inflicts enough damage for a permanent lesson to be learned. Being a victim is not always a result of your own mistakes, and encountering loss is not always in your power. I am here to speak as a victim of this attack but also as person who has taken part in both successful and mediocre projects in the past.
The BZX protocol has the following damage inflicted upon itself:
- A reputation of repeated security breaches
- A big percentage of the userbase having no intention of continuing to use it
- Potential legal class actions from victims who lost their savings
- A treasury who may or may not survive compensation waves
If the protocol has any plans of continuing business all 4 of the above issues must be dealt with very responsibly. This is PR nightmare for any company, but I saw their announcement about accepting responsibility and admitting the fault, which indicates good ethics.
The following moves have to happen for BZX to avoid stigma and maintain a healthy evolution through the cryptoworld:
Rebranding is important because the name brings up the worst google searches already. But building a constant rebranding strategy looks bad to everyone. The name and history have to be separated from the new brand. What needs to be maintained is the reputation of an ever-evolving protocol, that offered thousands of people opportunities to create wealth, and even in the worst episodes of its history, it took care of the community and learned from their mistakes. Not repeating the same mistake a second time is IMPERATIVE. If that happens, it indicates a professional ceiling being reached and the end of growth.
The userbase must part ways with this incident with a smile. There is no other way to put it. In any industry when you wrong your customer, you make up for it. Either it is crypto, or brewing coffee, when a customer suffers because of an employee’s mistake, an apology is due first and foremost. Second step is to make sure that the customer does not leave the door with the intention of badmouthing you. And third step is to use this “opportunity” to showcase your unique customer care and ethics. Compensating the funds? Reinstating the positions? Promising stellar security in the future? It’s all irrelevant when a customer is afraid of using your protocol anymore.
All of the victims lost their capital (compensation is the solution), all of the victims lost their sleep (there will never be a solution), and all of the victims are losing their capital in the most key moment of the bull market (reinstating positions could be the solution). Reparation of damage is not always possible, but when you can’t fix a mistake you make up for it.
The amount of users who are willing to fight for their hard earned capital legally would not be low, and that needs to be paid with treasury funds. I am not a legal expert (and if you are please throw your two cents), but in this situation there would not be much to argue about, and any company would hate to fight their own userbase legally, because it’s both bad pr, and also projects outwards the idea that the company would rather part their userbase than their treasury. Avoiding legal action in general would be the best outcome for the protocol and I believe I speak for all of us when I say for us too. Getting compensated a fracture of the damage is going to inevitable lead us to that surely.
Whether the treasure is or not capable of compensating for the incident’s damage is irrelevant. The problem is that funding will be needed regardless in a period of time that investing in BZX seems like a bad idea. The protocol needs to find big investors who will believe that amends can be made and that the protocol is not only capable of constant growth, but also carries a good head start in the DEFI world that would cost tenfold or hundredfold in a decade. Maintaining the lead as a dApp and as crew funding wise and user wise can be translated to profits. So in a sense it would cost more to lose the userbase rather than the treasury. Investors will know that this is a time of need for the protocol and can chase the opportunity to buy in cheaper (because of the scarcity of big funds willing to do business, and the variety of better options).
I do not know you, but I feel like I know your struggles. The dev team needs to repair the ship and the passengers are afraid of drowning. Repairing the ship is in everyone’s interest and panic never saved anyone, but taking our sweet time inflicts damage too. Thank you for reading this all they way through. Personally, I even feel ashamed to tell my own people of what happened. I urge you to find relief in sharing the story with your close friends, and find company with the rest of us. Refreshing the twitter page every 10 minutes is not doing good to any of us.
Dev team, I can only imagine the amount of panic you might feel right now. Constant updates (even with little to no news) will ease the mind of the people who get stressed over this.
Take care everyone,