Reimbursement - Final Plan

Reimbursement - Final reimbursement steps

Summary: This vote is to determine the final stages in how we reimburse the Rari Capital users who lost funds during the hack of early May. The vote will help assess: payment denomination, payment intervals, multi-bond structure, and maturity dates. Each of these are bundled into various different options.

Background: https://forums.rari.capital/d/77-protocol-reimbursement-plans

Abstract: There are a few different things that need to be decided on:

1. Payment denomination: determining the goal distribution of the bonds (the lost amount of ETH or the lost amount of ETH denominated in Dai at the time of exploit or even the same for RGT)
2. Multi-bond structure: determining if we want to create multiple bonds to make it easy for the protocol to pay off the vast majority of people.
3. Maturity dates: determining when we’d want these bonds to expire/mature.
4. Payment intervals: determining when governance will convene to vote on the current treasury plans and how to allocate capital

Instead of creating an individual vote for each of these which would potentially result in a subpar solution, they are combined into various different packaged votes to promote harmony between the results.

Package A: Payment denomination: Dai (at time of exploit) Payment interval: Quarterly Multi-bond structure: No Maturity date: 4 years

Package B: Payment denomination: ETH Payment interval: Quarterly Multi-bond structure: No Maturity date: 4 years

Package C: Payment denomination: Dai (at time of exploit) Payment interval: Quarterly Multi-bond structure:

• Yes
• 1 small bond, reimburses small holders (defined as <5 ETH in balance at the time of the hack, total bond amount equal to >160 ETH, USD equivalent at time of exploit) in a 6 month bond
• 1 normal bond with everything else that’s already defined Maturity date: 4 years

Package D: Payment denomination: ETH Payment interval: Quarterly Multi-bond structure:

• Yes
• 1 small bond, reimburses small holders (defined as <5 ETH in balance at the time of the hack, total bond amount equal to >160 ETH, ETH equivalent at time of exploit) in a 9 month bond
• 1 normal bond with everything else that’s already defined Maturity date: 4 years

Package E: Payment denomination: RGT (based on Dai amount at time of exploit) Payment interval: Quarterly Multi-bond structure: No Maturity date: 4 years

Realistically, by the maturity date either:

1. The protocol will be very successful and can easily pay off the bonds
2. The protocol will be successful and can liquidate $RGT for the bonds
3. The protocol will not have enough $RGT or capital for the bonds and will default

Those options outlined above are less likely to happen if payment denomination is in ETH as we don’t know what the price of ETH will be. The protocol can explore #2 using the team allocation as maturity nears. Governance may also choose to reimburse the ETH amount down the line if the protocol is in a mature enough state and a proposal is created. Additionally as liquid markets appear for the bonds, the protocol can explore enabling borrowing against the bonds using Fuse.

Early repayment of the bonds is in the protocol's best interests. If the protocol has the firepower to do this, it should consider this during its payment meetings (defined as when the payment interval is). The same goes for the smaller bonds.

Motivation: To reimburse REPT holders who lost capital during the hack through the most effective route necessary.

Next Steps: Vote to determine the package that will be shipped to REPT holders.