Proposal

​​The core objective of 0IP-20 is for the community to vote on the preferred voting mechanism regarding the redistribution of recuperated funds among the protocol’s markets. If Option B passes, the alternative voting mechanism will only be employed once (for the redistribution of recuperated funds). All subsequent votes will default to the current preVIX structure.

This proposal comprises of the following options:

Option 1: Continue with the currently used preVIX voting structure. Option 2: Explore alternative voting mechanism options as an exceptional one-off vote for the redistribution of funds (all subsequent votes shall be held with the currently employed preVIX voting mechanism)

Motivation

It has been argued that voting on the redistribution of recuperated funds should be exceptionally granted an alternative voting mechanism reflective of the money lost by users on the protocol as a result of the exploit. The current mechanism, employing preVIX tokens initially adopted by the 0VIX Association to decentralize decision-making and safeguard against sybil attacks may lead to a misalignment of incentives if used to vote on the redistribution of user funds.

For one, some issues of misrepresentation remain, particularly amongst recently onboarded 0VIX users who, while having lost tokens as a result of the exploit, currently hold small amounts of preVIX tokens. Secondly, while the current distribution of preVIX suggests no significant concentration of voting power (see a breakdown in the Details section of the proposal), holders may be unevenly impacted by the distribution decisions. As such, the community will hold a vote to decide on the best voting mechanism for redistributing the recovered funds proportionally to users’ capital on the protocol at the time of contract pausing (Block: 42059581) on an exceptional basis. If passed, this alternative voting mechanism will only be viable for one vote. All subsequent votes shall continue using preVIX amounts as already implemented by the protocol. Through this proposal, preVIX holders are effectively voting to potentially delegate their votes by an alternative mechanism other than using the preVIX balance.

Details:

From day one, the 0VIX Protocol ensured that decisions pertaining to the community were already submitted for voting to the community, such as new asset listing, changes in pre-mined VIX rewards etc.

Prior to the exploit, voting was done on https://community.0vix.com/. This voting mechanism had no built-in direct protection from sybil attacks but made sure that new users of the protocol were granted a say in protocol’s decisions. In this way, the aspects to be delegated to a decentralized governance according to the statutes of the Association were from the outset decided on in a decentralized manner by the initial community. The final decentralized governance system is to be deployed upon launch of a VIX token.

Since the launch of the VIX token pre-mining incentives in September 2022, protocol users have pre-mined around 1.9 million preVIX tokens, where, currently, over 3400 users hold more than 1 preVIX token.

0IP-19 was the first proposal with a new voting mechanism based on preVIX balances and received a total of 246 votes, which shows a ~10x higher participation rates than past votes.

An analysis between top preVIX balances and top net Portfolios that got affected during the exploit has been prepared prior to for this inaugural vote. It is shared below in order to provide the community with a transparent overview:

User ranking by Net Portfolio Size vs Voting Power

Top 250 wallets:

preVIX power: 39% Net Portfolio power: 91%

Top 500 wallets:

preVIX power: 42% Net Portfolio power: 97%

Top 750 wallets:

preVIX power: 43% Net Portfolio power: 98%

Top 1000 wallets:

preVIX power: 48% Net Portfolio power: 99%

This shows that users owning 99% of the funds held on 0VIX at the time of contract pausing collectively hold 48% of preVIX voting power. This may (not) be deemed insufficient to command a fair majority on decisions involving the redistribution of recuperated funds. Furthermore, users collectively holding no funds on the protocol, collectively hold 40% preVIX voting power.

Changing the voting mechanism would require a broader discussion with all stakeholders within the community that could take a number of days or even weeks and will likely lead to the recovery process taking longer and delay the next vote on the use of recovered funds until there is consensus on the alternative voting mechanism.

Voting:

Since this proposal involves deciding on a future voting mechanism, the voting mechanism for this particular proposal is unweighted to avoid potential bias. Meaning that anyone holding at least 1 preVIX is able to vote on this proposal equally.

There are currently 3,400 addresses with 1 or more preVIX tokens.

Quorum

150 votes

Voting Period:

2 days

Vote Options:

• Option 1: Keep the current preVIX voting system unchanged for future votes
• Option 2: Explore different voting options as an exceptional one-off vote for the redistribution of funds