April 2023 Exploit Response Vote

Summary

The following special vote is being carried out in order to establish a consensus among mveHND token-holders on the question of whether or not to sunset Hundred Finance’s lending services and adopt a policy of using all resources, as they become available, to compensate users impacted by the April 2023 exploit of protocol. By extension, mveHND holders would then receive a claim on any subsequently recovered assets once victims of the hack are made whole.

Background

It has now been over 100 days since Hundred Finance experienced an exploit in which a hacker drained the protocol of almost $7m USD of user funds. Since the attack, efforts have been ongoing to identify those responsible and bring about a recovery of funds. Despite the continuing energies expended by the parties involved in this task, parties including users assisting in the investigation, members of the team, outside security contractors and law enforcement agencies of several jurisdictions; imminent return of the stolen assets does not appear to be forthcoming. In light of this, and as well as in consideration of the damage done to the ability to effectively perpetuate the protocol, this proposal seeks to cease operation of Hundred Finance as a lending protocol and minimize victim’s losses by establishing an ongoing strategy for returning value to those who have had it stolen from them by the hacker.

Proposal

The project treasury holds various assets of differing types and differing levels of liquidity with a current value less than the outstanding losses suffered by victims of the attack. As a result, the intention of this proposal is, with the agreement of the DAO, to distribute the available assets held within the treasury directly to victims and seek to enable further distributions wherever possible. Where assets are held as fungible tokens this would be done on a pro-rata basis, while a project-held NFT would be publicly auctioned so that a pro-rata distribution can subsequently occur using the proceeds. In cases in which the ability to distribute a project-held asset is dependent on the passage of an external governance proposal, this proposal would need to be made and passed prior to its distribution. In light of this, this proposal advocates for a policy of processing distributions on an ongoing basis as and when they become possible, until an amount equal to the calculated dollar value lost in the hack is met. Where non-USD pegged assets are distributed, their USD value at the time of the transfer will be used for accounting purposes. Should the outstanding amount of losses be fully met, then mveHND holders would receive any distributions that follow.

The assets relevant to this proposal, their amounts, and any conditions that impact them outside of DAO approval are as follows:

• Approximately 1,117,218 USDC (liquid and available for immediate distribution)
• 391,811 ARB (liquid and available for immediate distribution)
• Approximately 191,449 OP (the distribution of these OP tokens would be dependent on a governance vote authorizing this use being passed by the OP token-holders.
• Velodrome veNFT (this would need to be auctioned and the proceeds subsequently distributed)
• Tokens of negligible value or currently immovable (small quantities of dust across chains and immovable SAFE tokens)
• Subsequently recovered assets acquired from the custody of the hacker

This first vote would immediately authorize the distribution of the USDC and ARB, with a proposal planned that would request the release of the OP tokens and an auction that would make liquid the value held in the veNFT.

Hundred Finance Sunsetting

It is regrettable that this proposal to sunset the lending operations of the protocol is here being made. Despite this course of action, users will continue to be able to withdraw their assets while the contracts are managed and efforts continue through legal channels to recover funds. The community will be kept up-to-date with progress to the extent that it is possible, while the project multisigs (pre-distribution) will remain the destination for those assets that are recovered.

Vote

• The quorum required for the vote to pass has been set at 50% of the total veHND holders at the time of the snapshot.
• In order for either “Yes” or “No” to win the vote, they must obtain an absolute majority (>50% of the total votes cast).
• The vote will commence at 0:00 am UTC on Thursday, July 27th, 2023 and last for one full week.

Should Hundred Finance sunset the protocol and adopt the above-outlined policy on the distribution of treasury-held assets?

• Yes
• No
• Abstain