BIP 79: Restore Governance Tokens

Category: Recovery Phase

Scope: Use treasury BADGER to restore governance tokens to those affected by the exploit. This will require ~192,713 BADGER.

Status: Pending

Objective:

Obtain approval to use treasury BADGER to restore governance tokens to those affected by the exploit

Overview:

The DAO holds enough BADGER to restore governance tokens to those affected by the December 2nd exploit (more info). This BIP would rectify governance tokens separately from other losses, such as BTC relates tokens. This would enable affected users to regain their vote weight to use in upcoming proposals.

Community Discussion rff: Badger

Specifics:

BIP 76, BIP 77 and BIP 78 have been or will be voted on using current holdings. Users that lost BADGER in the exploit have not been able to vote with the same vote weight they held pre-exploit. Immediately restoring BADGER to those that lost it will allow the governance process to move forward as usual including exploit victims.

4 tokens specifically can participate in governance decisions

  • BADGER
  • bBADGER (deposited BADGER)
  • BADGER/WBTC Sushiswap LP token
  • BADGER/WBTC Uniswap LP token

Only the BADGER portion of the Sushiswap or Uniswap LP tokens hold vote weight and will be restored, the other side of the LP will be handled in the “other” token restitution efforts outlined in future BIPs.

The below table outlines how many of the four governance assets were stolen in this exploit, along with their $$ value as of December 2nd and total number of users for each.

symbol amount of tokens underlying BADGER amount of victims USD value of BADGER
BADGER 4014.34275471 4014.34275471 1 $89,704
bBADGER 130028.20049196 160569.44397117 9 $3,585,516
bSlpBadgerWbtc 0.00119849 28071.55892335 1 $1,384,212
ulpWbtcBadger 0.00044879 57.97074749 1 $121,321
Total 192713.31639672 12 $5,180,753

A full breakdown on a per victim address basis can be found in the technical post mortem spreadsheet (under “governance per victim”): assets_stolen_recoverable

Implementation:

There are 12 governance asset holders affected in this exploit that would want to participate in voting along with the rest of the community on remediation efforts since they are part of the group most affected.

This proposal is to restore governance assets to those previous holders who were affected by using a total of 192.7k Badger from the treasury, in order to enable them to participate in governance decisions as part of the overall remediation efforts.

Rectifying BADGER and bBADGER assets would require 0.78% of the total BADGER supply. Rectifying the underlying BADGER in the LP tokens, based on their composition at the time of the exploit, would require an additional 0.13%, totaling to 0.91% of total supply. This is ~2.5% of the BADGER currently held by the treasury (including uncirculating, not including BADGER already earmarked for future use).

Vote:

Use 192,713 BADGER from the treasury to immediately return BADGER lost in the exploit to affected users.
  • Yes
  • No

0 voters

1 Like

Its a good step forward for those affected.

Badgers will keep building!

4 Likes

So this proposal comes down to: if you were lucky enough to have only Badger stolen from you, you will get preferential treatment and be made whole 100%, at the cost of everyone else affected.

Seems not to be fair for the other victims, imho.

Also, if less than 1% of governance voting rights were affected, this also doesnt have a meaningful impact on the outcome of any proposals.

It could be acceptable instead to base hack-related governance on a pre-hack snapshot, and all others as usual. That should solve the problem of governance rights of both those who bought badger after the hack and those affected by the hack.

Edit to clarify: I’m pro refunds. Just refund the victims equally, ideally via the same BIP.

1 Like

Personally being affected by this has been difficult, the support this community has show to help us recover our funds has been amazing. Thanks in advance to every person who has a heart and gives a YES vote on this. Much love

4 Likes

Returning these funds sets a reference point for the other victims that have not received any compensation.

2 Likes

If you’re saying that this is a precedence we can point to that the others should be made 100% whole as well, fine with me.

1 Like

and this won’t get their hopes up unreasonably high?

This doesn’t do anything that voting from a pre-hack block already accomplishes

You are failing to see the complete picture. The mark of a good leader is how they respond during challenging times. Would you ever put your money into a protocol if you knew the community and the leaders responded during a time of duress by not caring about the individuals that were affected? I know I surely wouldn’t. How the Badger community responds to support its community here will determine the success of the entire protocol moving forward. Get it wrong and your Badger token may hold even less (or no) value in the future.

Lucky enough to have Badger stolen? Keep in mind all the people that were pairing Badger and WBTC. WBTC was the bulk of stolen funds.

Please think outside of yourself for a moment.

3 Likes

I’m not saying “dont refund”. I’m firmly in the do refund as much as possible camp.

I say “refund equally”: it shouldnt matter if badger or wbtc or digg was stolen. It’s gone and wont come back. Refund all stolen funds the same way. Ideally in the same BIP.

4 Likes

As a BADGER holder who did not lose any funds, I would like to see everyone who did lose funds compensated as much as reasonably possible. Although I agree that refunding those who lost BADGER differently from those that lost other assets creates a precedent of preferential treatment, I also believe that it is in the best interest of our community to do so, considering that it is the governance token of the protocol.

However, I am against this proposal in particular because I believe that this decision should be made at the same time as the decision on how compensation will be handled for the other victims, ideally via the same BIP, and not separately.

As far as making sure that the those who lost voting power are not penalized in double, I would suggest that this should only matter if the votes for the future BIP on the compensation plan is within that specific difference where their votes could possibly result in a different outcome, in which case I would suggest a second vote of the same BIP based on a pre-hack snapshot.

4 Likes

I think this is a very fair option

1 Like

@ZKProf suggested offering restored tokens as remBADGER as suggested for other restituion.

This remBADGER could be notated 1/1 for BADGER lost, count as 1 badger per vote, start with a price per share of 0 (no underlying badger) and badger could be fed into it until it had a PPFS of 1.

I think this would be a good additional snapshot option.

4 Likes

Has the (potential) outcome of BIP 78 been taken into account? If the recoverable tokens are returned to their original owners then there will be less Bader tokens that need to be distributed from the treasury.

Will there be some type of a clause where these wallets after recovering funds just don’t sell and exit causing further price crash?

Those were already substracted, otherwise it would be >200k badger needed for full refund.

See breakdown here: assets_stolen_recoverable - Google Sheets

2 Likes