The purpose of this proposal is to vote on a fair redistribution of recuperated GHST funds to users affected by the 0VIX exploit.

Motivation:

Following the exploit of the 0VIX Protocol on the 28th of April, the team has been working tirelessly to help recapitalize markets in the fairest way possible. Redistribution of recuperated funds is a crucial stepping stone on the road to restarting the protocol. The exploit drained $4.33M worth of assets from the protocol. In light of this, a number of markets lack liquidity levels sufficient enough to allow users to withdraw their supplied assets. The 0VIX Protocol aims to allocate the recuperated liquidity in a manner that promotes fairness, accessibility, and the long-term sustainability of the affected markets. This redistribution will be the cornerstone on which the reopening of future protocol operations will rest.

In response to the community's feedback on the draft proposal, the DAO has simplified the proposal to a vote on whether to pursue a single option for redistribution. There was no significant support for the other options in the draft and the community found the draft proposal overly complicated. It seems apparent that the proposed option is the fairest and most logical option, however, if you disagree feel free to vote on needs further discussion. If a quorum isn't reached or further discussion is needed then other options can be discussed again. The stakeholders' input has been of tremendous importance, which everyone is grateful for.

Details:

The goal is to vote on a redemption process that minimizes losses, maintains trust, and fosters long-term relationships.

In what follows, all terms presented in italic are to be interpreted according to the Definitions section presented below. Given that it is still unclear in what form the GHST will be returned to the protocol, there is high uncertainty as to what their ultimate value will also be. As such, the proposal will focus on how much liquidity (in percentage terms) will be used to recapitalize each market. The absolute amounts of each market's recapitalization proceeds will ultimately be determined by the value of GHST at time of distribution.

Definitions:

• Net liquidity drained - net liquidity extracted by the exploit from each market

• recuperated liquidity - USD$ value of recuperated GHST assets

• directly affected market - markets explicitly referenced by the exploit contracts (wstETH, vGHST, stMATIC, MaticX, USDT, DAI, USDC, ETH, BTC, MATIC)

Proposal:

Distribute funds to directly affected markets proportionally to their net liquidity drained

The recovered funds are distributed proportionally to the net liquidity drained from each market. Markets that suffered more significant losses due to the exploit will receive a larger share of the recuperated funds. This distribution methodology aims to allocate the recovered funds in a manner that reflects the direct impact of the exploit on each market. This option benefits those directly affected markets which were being utilized less as they suffered the largest relative impact from the exploit.

Example Setup:

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USDC Market Summary:

Drained market liquidity = $7.000

BTC Market Summary:

Drained market liquidity = $5.000

MAI Market Summary:

Drained market liquidity = $0

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Total Drained Liquidity = $7.000 + $5.000 + $0 = $12.000

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PROPOSAL: Share of recuperated funds proportional to liquidity drained from markets:
Method: Asset Share = Drained market liquidity / Total Drained Liquidity

• USDC: $7.000 / $12.000 = ~58%

• BTC: $5.000 / $12.000 = ~42%

• MAI: $0 / $12.000 = ~ 0%

Percentage Summary:

Calculations require access to on-chain data which has already been shared with the community. In the interest of transparency this proposal will also share a python script that can be used to reproduce the numbers shown in the table below. What's crucial to note is that these numbers fluctuate with the underlying asset prices thus the final numbers might deviate slightly from the values presented here. when one of the options is deployed might differ from the ones presented below.

Liquidity Distribution

Quorum Standards:

150,000 preVIX

Voting period:

48 hours

Vote options:

• Accept the proposal
• Needs more discussion