TIP-121: Proposal for the future of the Tribe DAO

Below is a suggestion for how to proceed with the completion of the consolidation step in the proposal and the next steps, the Fuse Hack Payment and Final Redemption.

The main part of the consolidation step has executed on-chain and the ETH and LUSD sales have already started and will complete at roughly 6pm PT, Tuesday Aug 30. In addition, a Tribal Council action to claw back Rari Team tokens to the DAO timelock has been queued. It is slated to execute Tuesday Aug 30 as well.

The “Explore OTC for gov tokens” has begun and any communities looking to buy one of the LQTY, FOX, INDEX, veBAL, veAURA, or veANGLE should post a quote here on this forum or in another forum post.

On Wednesday at 4pm PT, the best offers for each would be snapshotted along with a second option. For liquid tokens the second option would be “distribute pro rata”, for veTokens, the second option would be “give contract ownership to respective DAO” i.e. veAURA to the Aura DAO etc. The reasoning for this would be that these ve-token contracts can only have a single owner and would not otherwise have a distribution mechanism.

For the Fuse Hack Payment, the next step would be a snapshot vote with 4 options, approval style:

  1. Distribute the value of ~57M TRIBE to the hack victims
  2. Distribute the value of ~82M TRIBE and ~4.5M stables to the hack victims (combining all Rari-related assets described above across a number of comments/suggestions)
  3. Issue a full hack payment to all victims
  4. No hack payment

If 1, 2, or 3 wins, an on-chain vote would be posted at some point between Sept 12 and the end of September, with an exact date pending the complete security audit of the distribution contract.

Given the timeline above, we suggest a snapshot date for the Fuse Hack Payment on Tuesday, Sept 6. This week, a complete accounting of protocol assets can be provided along with a methodology for computing Intrinsic Value to have a fully informed vote. This gives time for after the completion of the majority of consolidation, OTCs, and clawbacks.

The asset distribution portions of the Final Redemption step should be ready to post on-chain within 1-2 weeks of the Fuse Hack Payment.

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In “all victims” of point 3 are included the holders of TRIBE who suffered the attack during the genesis? Does this mean that it will be possible to get back the ETH invested during the genesis? What will the requirements be?

We have heard very little from team members and investors about how they approached the failure of their project from a financial standpoint. Winding down a project, admitting failure, and sharing this with team members and investors must have been a heavy and challenging burden for Fei Labs founders. I can only imagine that the silence from team members and investors means that difficult discussions took place internally and that everyone is aligned around the direction this shutdown should take place.

Yesterday, @DCFGOD shared a list of addresses that have been identified as linked to the team or investors, and for which Fei Labs has given very little guidance about their claim rights to the treasury.

I believe that the team and investors will take the right decision and protect their reputation by renouncing collecting the remaining assets for personal enrichment. Effectively, using unvested and unaccounted FEI and TRIBE tokens to redeem remaining DAO-controlled assets could be considered abusive and greedy behavior, especially when taking into account the difficult history of the project.

In the traditional startup world, failure of a project means limited to no return for investors and employees who have unvested equity. We can only assume that Fei Labs will take hand in hand with their investors the right decision, a decision that demonstrates good faith in the unwinding of the DAO and set a precedent that will be followed by other failing projects that return assets to their holders.

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gm fellas how u doing

Here is a suggested process for the upcoming snapshot for Rari hack repayment using 4 voting options described above. Each voting option corresponds to a different amount of funds being used to compensate hack victims. This post gives a general accounting method which could be used for each option.

The numbers in this post are subject to change due to market conditions, pending OTC trades, and community feedback. For these reasons the numbers in this post should NOT be taken as the final numbers.

The four options are:

  1. Repayment using the USD equivalent of 57.3M TRIBE, distributed evenly across victim’s addresses (“Initial proposal”)
  2. Repayment using the USD equivalent of 82.3M TRIBE and $4.6M USD of stablecoins, distributed evenly across victim’s addresses (“All Rari related assets”)
  3. Full repayment to all victims’ addresses
  4. No repayment

All payouts would be distributed as stablecoins. The reasons why these particular numbers are suggested can be found earlier in the discussions above.

Voting Procedure

The snapshot vote would begin on Tuesday at 4pm PT.

The snapshot would be structured as an Approval style vote, where each voter can choose multiple options. Whichever option has the highest aggregate approval would be considered the winner, with a 10M TRIBE quorum.

If the winning option is 1, 2, or 3, it can then advance to an on-chain DAO vote. The DAO vote would come after security audits (which began this week on frozen code) and final integration and UI testing, and be announced with at least 72 hour notice.

Protocol Accounting

In options 1 and 2, the USD equivalent value of TRIBE is computed using its Intrinsic Value (IV), described above:

  • Protocol Equity = (Total PCV) - (User Circulating FEI)
  • TRIBE IV = (Protocol Equity) / (Circulating TRIBE)

The final numbers for the variables of “Total PCV”, “User Circulating FEI”, and “Circulating TRIBE” are still dependent on a number of fluctuating variables including pending OTC details, market movements, and community feedback. The variables are described below to the best of our knowledge, and the Tribe DAO would need to vote to confirm any final numbers.

Any assets and addresses not listed below are considered “user owned” for purposes of Fuse Hack Payment and Final Redemption. This accounting can be audited against historical governance proposals executed by the Tribe DAO & Fei Protocol.

Total PCV

Total PCV is nearly completely accounted for by the Fei Collateralization oracle contract deployed at address 0xff6f59333cfd8f4ebc14ad0a0e181a83e655d257 and visualized on https://fei-tools.com/#/CollateralizationOracle.

The additional variables not included in the Collateralization Oracle for PCV include:

User Circulating FEI

The user circulating FEI is also reported by the Fei Collateralization oracle contract deployed at address 0xff6f59333cfd8f4ebc14ad0a0e181a83e655d257 and visualized on https://fei-tools.com/#/CollateralizationOracle.

This number is mostly accurate except for 1M FEI should be subtracted, as this is the amount in the pending clawback from La Tribu LinearTokenTimelock | Address 0xdb02630ed4f4994414122894B5082dc6D88a4ED4 | Etherscan

Protocol equity

Protocol equity is the difference between the total value of PCV and user circulating FEI. A 7-day average of this value ending at the timestamp 24 hours before a DAO vote can be used for final calculations. Any on-chain DAO vote would be announced with at least 72 hour notice.

Circulating TRIBE

This is the circulating TRIBE calculated as 1 billion total minus all DAO owned TRIBE. The complete accounting of DAO owned TRIBE is:

This puts the base circulating TRIBE at 458,964,339.24, after subtracting the above from the 1bn total.

Fuse Hack Payment Calculations

Bad Fuse debt is defined as the amount stolen by the hacker and is used to account hack victim damages. Bad Fuse debt can be computed using an average over the same 7-day range as used for protocol equity.

Here is an example calculation using the current numbers. These example numbers use a time range from 2022-08-24 to 2022-08-31. The final numbers that would be used on chain are subject to changes due to market conditions, pending OTC trades, and community feedback.

  • Protocol Equity 7-day average = $148,817,118.73
  • Circulating TRIBE = 458,964,339.24 TRIBE
  • Pre-payment TRIBE IV is the protocol equity divided by the sum of circulating TRIBE and TRIBE used for repayment
  • Bad Fuse debt 7-day average = $40,550,490.80

The above and below numbers are example calculations which would need to be recomputed before the DAO vote. Any of the factors described in this post could change these numbers, such as the fluctuations in market price. There could be other factors as well, despite best efforts to account for them all here. Users should do their own calculations.

Hack Victim Accounting

For each option, victims are paid as a function of how much bad debt they hold as of a snapshot block 24 hours before the DAO vote. Bad debt of each cToken is defined as the amount of the corresponding asset stolen by the hacker. Bad debt of each victim is computed using the amount of cTokens held in the victim’s address.

Hack victim accounting for options 3 and 4 is straightforward: victims are either fully repaid or not paid at all, respectively.

For options 1 and 2, payouts are evenly split across victim addresses, capped by the amount of damages for each victim. This results in a single max payout threshold, where victims falling below this threshold are fully repaid. Example computations based on current market data is provided in a spreadsheet below.

Since the initial proposal of this plan, some addresses have attempted to exploit this dynamic by splitting their cTokens across multiple addresses. These splits should not be respected, and they can be treated as if they never occurred. Additionally, there are some victim addresses that have already received hack compensation from Nexus Mutual totaling more than $5,000,000 [1] [2] [3]. These addresses would not receive additional compensation from the Tribe DAO under any of the four voting options.

Pending governance approval, any smart contract addresses which are Gnosis safes will have funds sent directly to the safes. Known DAO’s can coordinate with the Tribe DAO to come up with a suitable address for funds to be sent to.

These numbers are subject to change due to market conditions, pending OTC trades, and community feedback.

Here is a spreadsheet of the current bad debt held by each victim address, as well as repayment thresholds.

Since the initial proposal of this plan, some addresses have attempted to exploit this dynamic by splitting their cTokens across multiple addresses. These splits should not be respected, and they can be treated as if they never occurred. Additionally, there are some victim addresses that have already received hack compensation from Nexus Mutual totaling more than $5,000,000 [1] [2] [3] . These addresses would not receive additional compensation from the Tribe DAO under any of the four voting options.

I would report this address: DeBank | Your DeFi wallet ,
who used to be the largest USDC victims in this hack, but he split all his USDC ctoken into different address, for example:
0xf181F937Fd4Fa54B33657AA39EFc38ad852FfC1E 0xda80939bfC4270416cf90258809e93A2Ebf2E493

This is 100% unfair for other victims, plz did do a research.

While Fei is winding down, the Gyroscope community welcomes any Fei community members that are looking to apply their expertise & lessons learned to another decentralised stablecoin.

Refer to this brief introduction or jump straight into the Discord.

Here is a proposed process for the Fuse Hack Payment now that the snapshot has completed: TIP-121b: Fuse Hack Payment Process

Now that Fuse Hack Payment has passed on-chain, it is a good time to discuss the Final Redemption stage of TIP-121.

As explained above, Final Redemption involves backing FEI 1:1 with DAI with zero fees, and allowing TRIBE holders to claim a pro-rata share of the remaining PCV.

The Final Redemption vote has one main blocker from Consolidation, namely the OTC of veBAL for 1M DAI with the Aave Companies. There is no estimated execution time for this, because Aave wants to due diligence the escrow contract.

This presents an option for the DAO to consider:

  1. Wait an unknown number of weeks for the veBAL OTC before Final Redemption
  2. Give TRIBE holders the option to claim pro rata early, excluding the 1M DAI from veBAL OTC

To give more color to option 2, this would be an improvement over 1 in the sense that no TRIBE holder is required to claim as the redemption window would be open indefinitely. A holder who wanted part of the DAI associated with veBAL OTC can wait for the 1M DAI in order to have a full pro-rata claim. Those who prefer claiming early would forego the claim on the last 1M DAI in exchange for early redemption against the remaining PCV. Option 2 can likely be proposed on-chain this week (with early redemptions live as soon as executed), versus option 1 which has an indeterminate timeline.

A snapshot vote will be posted tomorrow, Sept 20 at noon PT to determine which of these options has consensus. After that, the winning option would be proposed in an on chain vote including additional last steps of TIP-121 such as transitioning FEI to a 1:1 DAI wrapper.

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Snapshot is live: Snapshot

remaining PCV includes over 21M DAI, 50k stETH along with remaining liquid gov tokens.

Why there is only 21M DAI left? According to the oracle it should be like 30M DAI.

TIP: 121c was a great turnout and a clear signal that the community is ready to move forward with the proposed next steps.

Let us work together to enable all FEI and TRIBE holders to make a clean and simple process of redemption, and the entire community to look for new and exciting developments in DeFi.

The on-chain vote will be submitted soon, and if successful, redemptions will begin shortly after.

Thank you to everyone who has participated in this governance process with understanding and thoughtfulness.

TIP-121c has executed

FEI is now fully redeemable 1:1 with DAI. You can use the redeem page on Fei Protocol

TRIBE is now redeemable for PCV. You can use the redeem page on Tribe DAO

Note that redeeming now foregoes the last amount of PCV to be added after the OTC of veBAL for 1M DAI with the Aave Companies. This means for every 10,000 TRIBE redeemed before this OTC completes, it would miss out on ~21.8 DAI. The Aave Companies have not provided an estimated completion time, optimistically it would complete within 1-4 weeks. The amount of underlying assets (including DAI, stETH, FOX, and LQTY) for redemption will not change otherwise, so waiting for redeeming in confirmation of the completion of the OTC will provide the maximum amount of underlying assets. Updates will be provided here Aave Companies OTC Proposal for Tribe DAO’s veBAL - #4 by Eswak and in Discord announcements.