Refund losses via creation of an incentivized debt token

bZx Improvement Proposals
#1

First: I deeply disagree with the idea of deviding victims of the recent “event” to 3 groups and let group 1 vote about if group 1 gets refunded first and 1:1. This is abuse of power in it’s purest.

My idea how to refund:

We create a debt token which is free to trade on the market and is given out at 1 token for 1 USD loss - prices locked at the moment of the hack.

The token will be free to trade on the market and DAO will market buy this token with profits and whenever the DAO decides to sell ooki token. Rules should be discussed.
Whatever funds will recovered by the team will be used to market buy the debt token.

We create incentives to hold this token like rewards in ooki - you support the project by holding and buying the debt token, you get a reward by ooki yield.
Other incentives for holding the tokens could be fee discount for trading on ooki up to 100%.
By giving out a high yield in ooki token we create a real usecase and force the DAO to buy back everything as quickly as possible.

I would suggest to allocate a large amount of ooki for the reward program.

In the end the DAO will be forced to buy back the token at 1$. Who hold it long enough will receive 1:1 and the rewards.
Who wants to get out, will be able to get out anytime.

15 Likes
#2

Good idea, but if Bzx bgov and pgov tokens could be compensated right away from the treasury, why wait then?

#3

There is no 3 groups of victims, we are in this together.

11 Likes
#4

Although this has been discussed from time to time, I have a suggestion for a name:

cOOKI

imho, segretating will cause problems so an adjustment to that would be good, such as this proposal. However I would also like to point out that this proposal should be written explicitly: Should there be a case where funds are not recovered and arrest attempt failed.

I’m sure that is what the author intended to deliver that message in this post on such a scenario

1 Like
#5

This makes sense, especially the issue that everyone is in it together, however I still see a big loss for people who had tokens like BTC and ETH exploited by the protocol. Instead of it being a 1:1$ or some stable pay out, there needs to be debt tokens that correspond to the missing assets. A BTC debt token for those who lossed their BTC would be needed. If someone had 1 BTC taken, and then is compensated with USDT or USDC at the moment of the hack, they may could be getting reimbursed a mere 0.2 BTC based upon price movement, and thus wouldn’t be even close to a full compensation.

1 Like
#6

I strongly disagree with you because when you buy BZX BGOV or PGOV you are investing & taking a risk. You knew the risk
but
Out of the blue when a company-owned contract drains your wallet, you are a victim of sophisticated theft/hacking.

1 Like
#7

Thanks for the replies.

There was not a lot liquidity in those assets, to create 10 different assets is complicated. You might end up winning also, if bear market arrives, that is the game with the volatile assets.

We should assume that most of the funds are gone, and whatever comes back shall be entirely taken for market buy the debt token,

Addition:
Whatever is bought back by the DAO get burned.
That means, over time, as more and more funds are burned, the reward yield increase for the remaining tokens.

There shall be a debt managing panel on ooki. A realtime yield counter, as on other yield farming programs), buy and sell pools and statistics on buyback and burns included there.

Maybe the buybacks will be made regularly and announced in advance.

1 Like
#8

Okay, but this proposal will recover you too as everybody affected and not just the bzrx token holders.

#9

This is true. Smart contract risk was advertised, investment risk is advertised. Everyone knows when they lock up their funds in a smart contract that there is risk involved. The people who trusted bZx with their stake agreed to tie their fate (and funds) with the organization. Users who merely adopted and used the services once or twice over the course of years were tricked into leaving permanent permissions with the protocol. Even on BSC the permission tab is new and in beta - coming way later than the users who have been leaving ‘unlimited’ permissions within the protocol - permissions which were not made clear to anyone. These people are the victims of bZx; victims of security neglect and of permissions deception. The others are mere losing investors.

It is quite useless to divide the groups though, and it won’t get anyone anywhere. Sorting out compensation based upon token rather than protocol relationship is more meaningful. Debt tokens can respond to these - a debt token pointing to that which was lost - pinning it to a stablecoin however won’t work. It needs to be nuanced - ones for stable and ones for others like BTC and ETH.

Again, being robbed 1 BTC in November, calculating that worth in USDC, and then being given out the value of 1 BTC in USDC a time later could amount to something way off of the loss. I have always calculated my crypto earnings and gains in BTC. USDT/USDC/BUSD/DAI are meaningless.

2 Likes
#10

I like to see some more opinions, this proposal seems to be a very good proposal.

#11

Yes, absolutly right. There should be more information regarding that. But noone does in the space, everyone takes limitless and doesn’t warn about the risks.

I understand that totally, in the long term BTC value go up only. But also is it true that you cannot denominate the debt in BTC given the volatility.

#13

Another pro of this concept is, that in case one asset gets recovered (for example the frozen USDT) it will be a fair distribution to all the victims, and not to few lucky ones who happen to have that asset.

2 Likes
#14

Leaving the keys in ignition does not remove the blame from the thieve, but definitely attributes the owner to the not smart folk category. IRL such actions would void any insurance a car owner might have. Don’t see why those who can be reimbursed should wait for those who neglected to read the manual for the technology they use.

1 Like
#15

I really don’t have the context for that? Do you mean the dev losing wallet.txt on desktop?
Or the users who lost thru the unlimited permission?

#16

Let that be a mistery :slight_smile:
BTW my guess that it was not a wallet.txt, as devs could not be that stupid, but a deploy script like
const HDWalletProvider = require("@truffle/hdwallet-provider");
const Web3 = require(“web3”);
const mnemonicPhrase = “mountains supernatural bird…”; // 12 word mnemonic
let provider = new HDWalletProvider({
mnemonic: {
phrase: mnemonicPhrase
},
providerOrUrl: “http://localhost:8545”
});

1 Like
#17

I think that is the fairest proposal up to now.

First of all, all affected people will have the same treatment. Splitting people that lost money due to the hack to groups will only worsen things.

Furthermore, having a debt token will help manage better the reimbursement and the sharing of potential recovered funds.

2 Likes
#18

maybe we can combine a piece of audax his proposal and this one:

stakers/lenders who had ibzrx can easily 1:1 funded trough the treasury, since there where only be stolen 22m bzrx, excluding the developers bzrx. all others who suffered can have a depth token what jokerbra was proposing, if they are agree on that (details need to be made, buts a good start)

2 Likes
#19

If some frozen funds are returned, stolen users should be compensated equally.
If only the hacker could return the funds, she should be able to keep 25%, and help DeFi.

Treasury could sell liquid assets to refund partially stolen users now. Then sell illiquid asset over time.

We should also distribute DAO tokens to all stolen users based on lost value at time of the hack. It could be a new token if treasury is not big enough. Future profits will pay back the loss.

Can the team clarify how much was stolen, and how much is current treasury.

#20

I completely agree that there should be no division between the affected users. This proposal seems a lot more reasonable then the other one, however I’m not sure that a lot of the affected users will be interested in holding these tokens.

Having your funds stolen (especially if it is a large amount) is incredibly stressful. Since everyone is still investigating there is no solid info of the progress done and at the time of writing this post there is absolutely no info if everyone will be compensated 100% and when that will happen (making the situation even more stressful). Once there is a way out of this, I’m sure that the vast majorty of users will take their money and run. This has nothing to do with the integrity of the project, the capability of the team or anyithing like that. People will just want to have a peace of mind and end this nightmare.

#21

However does not want to hold this token might sell it on the market for market price and is liquid again. Because of the incentives added there will be buyers of that debt - it will be a whole dollar in the end + the incentive rewards earned during this time.

Exactly what is the plan

Exactly, as you wish, you can leave your debt for a discount or wait to be whole again + reward.

2 Likes