Protocol hack profits distribution to SLPs

This is a vote to deal with a portion of the profits the protocol made during the Euler hack.

Context

After Euler’s repayment, a process to swap the received ETH was voted. 7,408.83 ETH were swapped to a total of 15,541,130 USDC, and half of these USDC were swapped into EUROC. The details of the swaps that were performed can be found here.

Overall, the protocol ended with a profit of 1,605,625.63 USDC compared to the pre-Euler hack situation. While this could be used to mitigate the loss that the protocol made during the USDC depeg (approx. 640k USDC) and the changes in the USD / EUR while the protocol was paused (approx. 350k USDC), the protocol also used to distribute a portion of the profits from its yield strategies to its SLPs.

Prior to the hack, the parameters for profits made by the USDC strategy were for instance the following: 30% for sanTokens (SLPs), 50% for veANGLE, 20% for the protocol surplus, ultimately benefiting agEUR collateralization.

Note as well that before the hack, there was also a setup which allowed the protocol to apply a loss to all SLPs. In case the protocol was badly collateralized, SLPs could face a slippage when they exited. The protocol's Core module looked into the global collateral ratio, meaning that if the funds from the hack had not been recovered, SLPs from all collateral assets would have likely made a loss.

While this discussion on profits is pending, SLPs are still paused in the protocol. It was voted here to make sure that SLPs remain independent of agEUR and that no yield strategies are in place for the moment. The protocol could relaunch in the future new yield strategies, fully dissociated from the stablecoin, so SLPs can keep earning interest.

Proposal

The proposal is to distribute 30% of the 1,605,625.63 USDC profits made in the hack to SLPs, and to spread this distribution between SLPs of all collateral assets proportionally to the $ value of their sanTokens as of the 24th of April 2023. We suggest in the vote two different options for the distribution:

• Option 1: distributing these 481,687.689 USDC to SLPs over a period of 30 days through the gauge contract corresponding to each collateral. In this option, the protocol could keep deposit paused, but keep withdrawals open. Logic for this option is that it would leave some time for the protocol to reopen new strategies for SLPs and prove that it can still provide valuable APRs to them. This solution would reward more accounts that are aligned with Angle’s long-term vision.
• Option 2: distributing these profits immediately to SLPs by increasing the sanRate (exchange rate between sanToken/collateral) for each collateral asset of the protocol

A future vote could decide if something can be done with this profit for veANGLE holders.

Implementation

The first option can be implemented by calling the deposit_reward_token function and deposit USDC for each SLP. The second option can be easily implemented following the recent PoolManager upgrade by calling the accumulateInterestOrSignalLoss function.

Voting Options

1. Option 1, distribute over 30 days
2. Option 2, distribute immediately
3. Against, do nothing