Situation: There are 87 crDPI holders that collectively lost approx. $5MM as a result of the CREAM.Finance exploit on 27 Oct 2021. The underlying DPI was redeemed and sold, representing ~2.5% of total AUM for that product. The average USD loss per user was approximately $57,500 (calculations based on latest reporting, if an Owl is keen to sharpen the pencil on these numbers I’d be appreciative)
Proposal: Immediately airdrop 2.5% of the lost AUM (USD equivalent as INDEX) as a symbolic gesture to 86 crDPI holders in equal amounts, with an offer to OTC swap for USDC on an individual basis to prevent downward price pressure on the INDEX token. At current rates, this would be a total of $125,000 or $1,453 per affected holder; in INDEX terms at $25/INDEX this equates to 5,000 INDEX, or 58.12 INDEX per affected holder.
Motivation: I am directly affected and removing myself from the recommended course of action; however, I do feel I have standing to speak on behalf of the affected holders. While acknowledging that DeFi has inherent risks, IC products are marketed to users that are lower on the risk spectrum and the CREAM partnership is warm and ongoing.
I feel (acknowledging that my feelings here are outsized and still raw) that there’s an opportunity to:
- Connect with a subset of our product users, perhaps in some dialog;
- Express organizational empathy meaningfully;
- ‘Send a message’ that will likely be well received:
- We’re understanding that you’re going through something;
- We want you to have an increased voice and more meaningful say in this community and are giving it to you; and,
- You may have been a part of the IC community of token holders yesterday and not today; we’d like to change that back and here’s a start.
Implementation: Doable. Swift.
- Public announcement using Twitter & situational explainer page, muted empathetic tone, not marketing;
- Setup dedicated channel for those affected to provide feedback and request OTC if preferable (if these users want to be heard, we to listen);
- Direct drop using same method a Aug '21 reward distribution (given the stated goals here, I don’t feel a claim-style drop is appropriate);
- After-action report 2-months later on learnings and outcomes. KPI: affected user holdings of IC products following exploit - effectively measure if and how our users are continuing to engage with our products.
Considerations:
- There may be sell pressure as a result. To mitigate, get messaging out ahead of drop that we’ll OTC it - I doubt many will take up that offer, but it’s a different way to engage with our product users that are engaged and active in DeFi strategies - let’s make lemonade.
- Stepping-in may signal tacit responsibility. For sure, again messaging should mitigate.
- Precedent. Should we jump in and push equity out the door every time there’s a hack that touches our products? I personally don’t think so, but given the considerations here I think it would be net positive. To be clear, this proposal is for a one-off effort to extend a couple aspirin the day after getting knocked down, not an effort to make anyone whole. I don’t feel we’re setting dangerous precedent here; my hope is the gesture will be viewed as unexpected and well-intended in the face of outsized loss.
- Why not use something weighted opposed to even distro; more risk taken should yield more remuneration? This isn’t designed to remunerate, I’d recommend against framing it as such; this is designed to communicate and maybe bring a few of our more adventurous holders back into the fold. There’s no way to know how this hit each affected party, trying to make those distinctions is not the purpose of this proposal.
- What if CREAM returns the funds? Some of these depositors may have had insurance. Are we then rewarding risky behavior? Yes, this is a risk. There are currently no indications that the hacker or CREAM intend to return funds; if further insight is gained here it may inform the response, but as it stands the loss for our users on deposited DPI is total.
- DeFi is risky, these things happen. Agreed. IC is working daily to change this, empathize, and learn. I don’t know how loyalty is born, but sense it’s being tested, and it’s a conversation we should be engaging in even if it’s hard.
- How was the sizing determined? Symbolism and impact - we took a 2.5% hit and are sending a 2.5% equity stake - the per-user amount is enough to convey sentiment without the perception that some meaningless amount of dust has been dropped into the wallet.
The Ask:
I realize that IC took a $5MM AUM loss yesterday and I’m asking my community to consider reducing our treasure further as a result; it’s a massive ask. The pain being felt by our product users (or worse, now ex-users) is real. To my thinking, if users are doing the things we’d like them to and being harmed as a result we should respond. Of note the exploit is informing updates to IC’s own crisis response procedures, which should also have benefits for future users.
Acknowledging that I’ve got blind spots and big feelings right now - if this discussion simply serves the broader conversation about how we as a community empathize with our product users, awesome, but some swift action here might pay some pretty large dividends in terms of a hearts-and-minds campaign. On a personal note: Thank you for the immense outpouring of support; I love you all. That said, if a single one of you puts on a pair of kid gloves while typing a response here I’ll have missed the mark: Thumbs up, thumbs down, or improve on it - but don’t y’all dare pull punches below because I took on risk and got dinged. Much love, thanks all!
- I’d be supportive of an IIP with these parameters.
- I’m against this proposal.
- I’m undecided or have suggested improvements below.
0 voters