BIP 80: Parameter FeedBack - Seed Funds For Restitution Program of Non-Recoverable Assets

Overview

The following is intended for community feedback to set the initial parameters for the restitution program to pay back non-recoverable funds lost in Dec 2nd, 2021 BadgerDAO Exploit.

Original : “The top 3 choices from each category will be used as the 3 choices presented once this proposal moves to snapshot. If a category receives > 80% approval for one choice that choice will go to snapshot alone with yes or no approval.”

After receiving feedback from the community the above may block badger holders from voting as they intend in an official snapshot.

Edit: “The presentation of categories and choices will receive community feedback based on the forum voting and a full range of options will be presented in a snapshot with ranked choice voting”

Category: Restitution

Status: Pending

Scope: This will earmark the minimum amount of funds to consider in a restitution program to pay back non-recoverable funds lost in Dec 2nd, 2021 BadgerDAO Exploit.

TL;DR:

BIP 81 is now active : “Accumulate BTC under $57k per token using $10m stablecoins from BadgerDAO treasury holdings.” This proposal would use some amount of the BTC purchased from BIP 81 as the seed funds for a restitution program to pay back non-recoverable funds lost in Dec 2nd, 2021 BadgerDAO Exploit.

In addition to the wBTC purchased, this proposal would use some amount of uncirculating BADGER in the BadgerDAO treasury as additional seed funds for a restitution program.

Following this BIP will be another BIP to define the specifics of the restitution program and any other BIPs needed to define future supplemental programs.

Definition of Seed Funds

Please choose the amount of wBTC acquired from BIP 81 that should be used in a restitution program for victims that lost non-recoverable assets in the BadgerDAO Dec 2nd, 2021 exploit (choose 3)?
  • 0% (this would mean victims receive no initial restitution)
  • 25%
  • 50%
  • 75%
  • 100% (BadgerDAO’s treasury could afford to donate these funds to victims without compromising operations. This would leave approximately 2 years of runway if the team does not expand in size. )

0 voters

Please choose the amount of un-circulating BADGER held in BadgerDAO treasury that should be used in a restitution program for victims that lost non-recoverable assets in the BadgerDAO Dec 2nd, 2021 exploit?
  • 0 (give no additional badger to victims, this could mean no restitution)
  • 250k
  • 500k
  • 750k ( ~600k badger is scheduled for next years emissions)
  • 1m ( 1.8x standard yearly emissions)
  • 1.5m (more than 2x current 1 year standard emissions)
  • 2m ( more than 3x current 1 year standard emissions)

0 voters

Should additional funds be used in restitution in addition to the two sums selected above? Note that this would cut into the estimated BadgerDAO operational expenses used to pay the team, operational costs such as gas and paid services, emissions, and partners. Any choices above $0 here are expected to impact the operating health of the DAO. ?
  • $0 (additional funds )
  • $1m (cutting into $7m of stable coins expected for 1-1.5 years of operations, and outside strains would likely result in the DAO shutting down after 6months-1 year.)
  • $2m (would leave 0 room for error, any outside strains would likely result in the DAO shutting down after 6-8 months.)
  • $5m (team has $2m for operational costs + pay, would likely result in DAO shutting down)
  • $7m (team must sell BTC or Badger to fund ETH fees, operation costs and team, would likely result in DAO shutting down)
  • $10m (must sell BTC and Badger to fund ETH fees, operational costs and team costs, would likely result in DAO shutting down)

0 voters

My vote of 1 million badger is based on the idea that it should be paid out over 2 years in a way that encourages HODLing strongly. If the payout time is to be shorter, the amount of badger should be less.

I would hope this would be more clear in the final snapshot.

4 Likes

My assumption here is that none of this excludes a BADGER collateralized loan and subsequent Yield Farming

2 Likes

Totally agree. I would hope this would be more clear in the final snapshot.

1 Like

yeah, the number alone isnt that helpful.

We probably all agree that 1 million badger emitted over 6 months is a worse choice than 2 million emitted over 18 months. The number alone doesnt help much, but the other parameters are going to be chosen in subsequent BIPs anyways.

1 Like

Yes, i believe that’s still on the table (nobody said otherwise); this BIP is just a first step before many more BIPs which go into details (vesting, remBTC/emptyBTC vaults, etc) or other mechanics like the Badger collateralized Yield Farming strategy.

1 Like

I agree. None of this would exclude that

1 Like

The top 3 choices from each category will be used as the 3 choices presented once this proposal moves to snapshot. If a category receives > 80% approval for one choice that choice will go to snapshot alone with yes or no approval.

I strongly prefer the governance process where no options are banned, and we rather use the ranked choice vote to decide the winner. This way all Badger holders would be able to vote according to their preference without the need of polarization based on forum voting, which is meant for signaling purposes only.

Please choose the amount of un-circulating BADGER held in BadgerDAO treasury that should be used in a restitution program for victims that lost non-recoverable assets in the BadgerDAO Dec 2nd, 2021 exploit?

I also think that the sequence of voting for Badger compensation should be different - and depend on how this Badger would be distributed. So we need to vote on the model first, and then we would be able to make an educated decision on the allocation.

For example, a Badger holder could have a preference of 250k Badger if Badger is distributed pro-rata to and emptyBTC token, or 750k if it’s distributed via Badger Boost. Or 1 M if it’s remBadger + the Boost distribution.

Please choose the amount of un-circulating BADGER

As for the specific sizes, here’s a quick projection of how different Badger distribution options would look compared to the projection of the current schedule:

So, the 2M voting option would mean that affected users would be receiving about 2.44x of what would go to the ibBTC Sett in a way that’s not defined.

3 Likes

As for the seed funds option, I wouldn’t cap them at 10 $M that’s allocated to BIP 81, and provide other snapshot voting options.

In my opinion, in general, distributing a larger % of Badger supply would have the potential to do more damage to the DAO compared to distributing a larger % of the Stablecoin runway.

The way these funds are distributed is not insignificant either.

My view on the more sustainable option for compensation is where:
a) the initial seed funds are used to buy 50% BTC / 50% Badger (or another proportion), bringing all affected users close to 100% Stake Ratio on the funds that they receive
b) all the emissions allocated to the affected users’ Sett (be it emptyBTC or another model), are distributed as 100% Boosted.

So the affected users would have all of their funds liquid on day one, and the amount of Badger they receive during the period the program runs would depend on what they choose to do with the tokens they receive.

1 Like

If I were to structure the snapshots, I’d do it in the following order:

  1. Define the way the split that the non-native runway would be distributed to the affected users, ranging from 50% Badger + 50% BTC to 100% BTC, ranked choice

  2. Define the seeding allocation, used from non-native treasury, ranging from 0 M to 15 M, ranked choice

  3. Define the way additional Badger would be distributed to the affected users.
    It seems that the preferred choice of the affected users is the emptyBTC model.
    Then when it comes to Badger it can either be 100% Boosted, or have a part of emissions flat (independent of stake ratio).
    And if the governance wants some % of flat distributions, those could take the shape of remBadger or not.

  4. Vote on the % of Badger supply that would go towards the program and the period.

2 Likes

I absolutely agree with this, also the ranked choice voting is important.

I also think that the sequence of voting for Badger compensation should be different - and depend on how this Badger would be distributed. So we need to vote on the model first, and then we would be able to make an educated decision on the allocation.

This is very important too, imho. The numbers dont mean much if we know nothing about the framework/model in which they are going to be used. Why not decide on that first?
All the discussions on discord focussed on that part as well, and it just makes sense to decide on that first, before going with actual numbers.

And one last thing that is big and dear to me:
Yes, you added more options (now in question 3), but worded this in a way that no sane person could vote for them, unless they were involved in the previous discussions. Just adding them for the sake of “look, we’re really decentralized governance” while setting this up this way completely biased and stacks the vote in favor of whoever worded these options. Yes, there will be tradeoffs in different choices, but just adding “but then the DAO will die” to any choice? That is not what is a trade-off description!

It’s completely unclear to me what these “but then we die in X months” is based on. Zero income and zero optimizations of the treasury is my guess?
There’s a >$50m non-badger treasury and about 7.5 million unallocated badgers. $10m restitution sounds fine, but $10m + $2m will kill the DAO within 8 months? Seriously? With these numbers? Other thing: TCL (treasury controlled liquidity) was meant to move to UniV3 with different ranges, which would free up a lot of capital as well; that was already planned pre-hack. That’s not considered in the numbers either yet, is my guess. But I cant know because it’s just asserted without explanation.

I’m fine with good explanations why you believe it to be this way, include your prior assumptions you base your numbers on. Just adding “cant be done, then we die” is not the way.

‘I’m fine with good explanations why you believe it to be this way, include your prior assumptions you base your numbers on. Just adding “cant be done, then we die” is not the way.’

You are being hyperbolic. It says that $10 + $2m + an outside strain on the DAO would likely result in DAO shutting down after 6mo - 1 year. This means if there was outside strain (aka bear market) then the DAO would only have 6-1 year of runway money to pay for BadgerDAO operational expenses used to pay the team, operational costs such as gas and paid services, emissions, and partners. As it clearly states in the question above the answers.

Hard to vote on this parameters without the rest of the assumptions. My vote does not mean anything really, plus since I cannot vote on snapshots, it really doesn’t mean anything.

1 Like

This :point_up_2: - reason why I voted none for the moment. I could not signal responsibly for any other option unless there is a clear understanding on how this Badger would be distributed.