Author: REPT-B holders. In consultation with Jai and 5 large RGT token holders
The next actionable step following i) the May 8 2021 exploit, ii) the DAO’s commitment to repay victims in DAI over four years, and iii) recent protocol growth, is to initiate quarterly payments to a dedicated DAO wallet. The DAI amount is negotiable each quarter to allow for protocol growth, and will be converted to ETH so that victims regain price exposure.
On May 8th 2021, there was an exploit of the Rari Ethereum Pool, a yield aggregator denominated in ETH that directed capital to seek the best returns. In response to the attack, the team transferred their allocation (2M $RGT) to the DAO with instructions to “use it to help make anyone who lost money whole again.” This RGT was never actually minted.
There have been three votes in support of making victims whole:
The DAO voted to reimburse hack victims 100% for their loss. Equivalent to 11.6M DAI at the time.
The DAO voted on a reimbursement strategy and subsequently airdropped 11.6M REPT-B tokens proportionally to all victims.
Finally, the DAO voted to pay off the asset quarterly.
The DAO did not establish a start date for quarterly repayment in deference to growing the protocol so that it could generate suitable revenue.
The next actionable step given recent protocol growth is to initiate DAI payments on specific dates. We propose a quarterly schedule that is coincident with standard calendar year quarters:
Q1: March 31
Q2: June 30
Q3: September 30
Q4: December 31
According to this schedule, the first payment should have been Sept 30 2021. Rather than wait until the end of Q4, we propose a modest payment amount on 18 Nov 2021, and subsequent payments according to the dates above. The final payment will be Jun 30 2025, or when payments sum to 11,692,355 DAI, whichever comes first.
The DAI amount to transfer to a dedicated DAO wallet will be negotiated each quarter. Although estimated yearly fees are currently ~$5M (https://metrics.rari.capital/d/44n5PTlGk/fuse-fees-reserves?orgId=1&refresh=5m), we seek an initial quarterly payment of only 250K DAI. This amount was determined in consultation with Jai to avoid sacrificing protocol growth. Subsequent DAI amounts will be negotiated each quarter depending on protocol assets and growth. If the DAO chooses to pay in RGT or ETH, then the payment is calculated in DAI equivalent and fixed (i.e., not subject to RGT or ETH price changes).
All DAI payments will be used to purchase ETH at the time of transfer. This a minor change to the previous vote to distribute DAI that allows REPT-B holders to regain ETH price exposure. REPT-B holders accept the associated downside risk, and the DAO will not count any increases in the value of ETH toward repayment. The DAO will pay the gas fees that are associated with ETH buys (500 USD assuming 30 USD in gas per transfer and 16 quarterly payments over 4 years) and the final distribution to REPT-B holders (22,600 USD assuming 30 USD in gas per transfer and 753 wallets).
Repayment is necessary for the DAO to get out from under this debt and avoid default.
Repayment honors the DAO's promise to make hack victims whole, and accountability to REPT-B holders. This therefore provides credibility to and confirms the integrity of the DAO voting process.
Repayment is another “win” for Rari, and demonstrates the DAO’s commitment to past, current, and future Rari users.
Honor the DAO’s commitment to hack victims by initiating repayment with 250K DAI. Repayment is good for the protocol and/or members of the Rari community (many of whom were early adopters), and is being done in a way that does not jeopardize protocol growth.
Do not initiate repayment on principal, or so that revenue can continue to grow.
FOR: Initiate variable DAI payments
AGAIN: Do not initiate variable DAI payments at this time