1IP-62: Termination of Relationship with Hardware Wallet

Simple Summary

This proposal seeks to terminate 1inch DAO’s contract with Mr. Alexey Devyatkin and Hardware Wallet Team, and receive the compensation of the 2 million USD funding (the “Funding”) provided to Mr. Devyatkin under the [1IP-30] 1inch Hardware Wallet production completion (the “Proposal”) in full. Mr. Devyatkin has repeatedly breached the commitments made in the Proposal, has failed to deliver any significant results, and has mismanaged the funds.

Additionally, this proposal demands the immediate transfer of all deliverables to the 1inch DAO’s control, cessation of all use of the 1inch brand by Mr. Devyatkin and the HW Team, and a comprehensive report on the current development status. These demands will be enforced through a designated Representative.

We believe it is in the best interests of the 1inch DAO and Community to pursue these actions and continue the development of the 1inch Hardware Wallet independently.

This is a summary version of the full proposal. Please refer to [link to forum] for more details.

Abstract

Under the Proposal, Mr. Devyatkin and the Hardware Wallet Team (“HW Team”) received 2 million USD to complete the product trade version (PTV) of the 1inch Hardware Wallet. This Proposal, approved by the 1inch DAO on June 12, 2023, was based on the Community's trust in Mr. Devyatkin’s ability to deliver.

However, none of the commitments made by Mr. Devyatkin have been fulfilled. He pledged to: (1) complete the Hardware Wallet by achieving 7 Milestones, (2) making it available for sale by Q4 2023, (3) prudently use the funds to ensure high-quality output, and provide regular progress updates.

Mr. Devyatkin has failed to meet these commitments, violating the trust of the 1inch Community and breaching the binding agreement with the DAO. We recommend the 1inch DAO vote to recover the 2 million USD in funding and enforce the additional demands listed below.

Motivation

This proposal aims to:

• Recover the Funding and transfer Deliverables to the DAO’s control to continue the 1inch Hardware Wallet development with a new team.

• Protect the 1inch brand’s reputation by ensuring it is associated with high-quality products made by dedicated contributors, maximizing community benefits.

Conclusion of Breaches

Detailed specification of Breaches can be found in the Forum discussion [link to the forum post]

Mr. Devyatkin's mismanagement of the project constitutes a material breach of the Proposal, severely impacting the benefits the DAO was entitled to receive. His failures significantly undermine the Proposal’s expected outcomes, justifying termination and recovery of the full Funding amount. Key breaches include:

• Failure to Meet Milestones: Not a single one of the seven promised milestones has been fully completed. Originally set for delivery by the fourth quarter of 2023, the project has been repeatedly delayed, with the current timeline pushed to the first quarter of 2025. This extensive delay fundamentally undermines the project's goals and the DAO’s expectations.

• Lack of Transparency: Mr. Devyatkin failed to provide timely and adequate progress reports to the community. Reports were only issued months after the expected completion date, without proper consultation or explanation. This lack of transparency violates the commitments made in the Proposal and erodes trust.

• Mismanagement of Resources: Mr. Devyatkin has failed to provide transparency regarding the use of funds, leaving the Community in the dark about the budget and its allocation. Despite receiving significant resources, no milestones have been completed, and the project is severely delayed, raising concerns about his project management capabilities.

Given these breaches, the DAO is justified in terminating the Proposal and seeking full compensation for damages caused by Mr. Devyatkin’s mismanagement.

Suggested Course of Action

1. Representation

1inch DAO should engage an external legal counsel or request 1inch Foundation or other contributors to represent 1inch DAO in any further communications with Mr. Devyatkin (“Representative”). The Representative shall present Mr. Devyatkin with the demands, voted for by 1inch DAO and further communicate with Mr. Devyatkin regarding the resolution of this issue. Should negotiations fail, the Representative shall take further legal action. The Representative shall regularly report to the 1inch DAO on the status of negotiations and the proposed resolution.

2. Demands

To remedy the breach of the Agreement, Mr. Devyatkin and HW Team shall comply with the following demands.

1. Compensation of the Funding. Mr. Devyatkin and HW Team shall return the full amount of the Funding constituting the equivalent of 2 million USD to 1inch DAO Treasury within 10 (ten) calendar days from the ending of the Snapshot vote for the proposal (if passed). In case Mr. Devyatkin and HW Team fail to return the full amount of the Funding as set forth herein, the Representative shall take necessary enforcement actions.

1inch DAO Treasury Wallet Address: 0x7951c7ef839e26F63DA87a42C9a87986507f1c07.

2. Transfer of the deliverables. Within 15 (fifteen) calendar days from the ending of the Snapshot vote for the proposal (if passed), Mr. Devyatkin and HW Team shall transfer any and all deliverables produced by them under the Proposal and pertaining to 1inch Hardware Wallet to the 1inch Github Repository https://github.com/1inch/community, (“Repository”), including:

• All the software developed by Mr. Devyatkin and the HW Team under the Proposal, any source code and documentation related thereto;

• Test application for the protocol for IOS and Android operating systems, including the source code thereof, that Mr. Devyatkin and HW Team were provided access to;

• All other Deliverables referred to above and any other software,that Mr. Devyatkin and HW Team were provided access to;

• All technical, assembling, engineering, certification, instructional and any other documentation and materials that directly or indirectly concern the operation and/or production of the Hardware Wallet, or that have been named by Mr. Devyatkin in the reports published in March 2024 and July 2024, that Mr. Devyatkin and HW Team have access to.

By transferring the deliverables, Mr. Devyatkin and HW Team transfer any right, title an interest in such deliverables, and shall only have the possibility to further use the deliverables if 1inch DAO provides them with the permission in line with the general procedure described below in Section (c).

3. License as Source-Available Project. As per the Proposal, Mr. Devyatkin has committed to open-source the hardware wallet project ‘to the extent that it does not harm 1inch DAO, the 1inch product, or the security of the hardware or software components’. Considering the incompleteness of the project, we believe it is in the best interests of the DAO to demand the publishing of the deliverables under the BUSL-1.1 source-available license. The Change License shall be GPLv3. The Change Date shall be in 15 years. The license shall include a clause for exceptions to the BUSL License, subject to the vote of the 1inch DAO. Such choice of the license ensures best commercial interests of the 1inch DAO, while publishing the code for the Community, providing ample opportunities for contribution with 1inch DAO’s consent.

4. Cease and Desist from using 1inch Brand. In the interests of integrity of the 1inch brand, Mr. Devyatkin and the HW Team shall immediately cease and desist from using 1inch brand, its elements and trademarks (“1inch Brand”), including:

• Do not use 1inch Brand in any form of public communication, including but not limited to marketing materials, advertisements, social media posts, and any other promotional content.

• Terminate any direct or indirect mentions of any cooperation, partnership or affiliation whatsoever with the 1inch Brand in any public communications.

• Terminate the use of the 1inch Brand in any social media handles, accounts, corporate or private email address and other equivalent mediums.

• Terminate the use of 1inch Brand in the production, design, and development of the Hardware Wallet or any other products.

5. Report. Within 15 (fifteen) calendar days from the ending of the Snapshot vote for the proposal (if passed), Mr. Devyatkin and the HW Team shall prepare a technically precise and extensive report that would explicitly describe: the purpose of each source code file, documentation, material, instruction or other item uploaded to the Repository, with respective links to the materials in the Repository. The report should also include the current stage of development and testing of each item. The report shall be posted in the Repository and/or on the forum of the 1inch DAO. The Report shall be sufficient to enable any person with required skill and knowledge to understand how the Hardware Wallet and its components can be produced, assembled and integrated.

Final Words

The facts outlined above clearly show the urgent need for 1inch DAO to take decisive action against Mr. Devyatkin. His consistent failure to meet milestones, lack of transparency, and mismanagement of resources have severely compromised the project's success and the DAO’s interests.