Acquisition of deciding share in Orange Finance

Overview

Orange's vision is to establish a new standard for AMM liquidity provision by addressing the capital efficiency problem.

They have built brand recognition and have been growing with good momentum with launches prepared for Sonic, Berachain, and Superseed with and Initial DEX Offering (IDO) planned for Berachain launch. Their IDO-spot has been reserved for roughly a month after Bera mainnet (Status being checked post-hack).

The recent private key leak and the resulted losses have paused the protocol for the last weeks.

The goal of this proposal is for PlutusDAO to resolve Orange Finance's immediate problems by repaying a vast majority of their debt to users in exchange for Orange becoming a Plutus Family -protocol.

Key information

Orange Finance monthly operating costs and financial runway

Treasury: $772,412 (before December payroll and hack related costs about to be deducted) Estimated treasury post remediative costs and due salaries: $543k

Category	Amount (monthly)
Employees (7)*	$34,000
Audit (Watchpug)	$5,000-10,000
Tool(Vercel, Notion, Alchemy, Gsuite, Turso)	$315
Office Rent	$685
Total operating costs	$40,000-45,000/month
* Sales & Alliance (Zen), Marketing (Kohaku), PdM (Sino), Backend Engineer (Alok & maguro), FE Engineer (utwang), Backtesting Python engineer (Daniel)

TVL and lost user assets

Total value locked (pre-hack 7/1/2025): $1.54M

Pool	Amount
Uniswap WETH-USDC	$248,432
Uniswap WBTC-USDC	$100,372
Uniswap ARB-USDC	$129,765
Uniswap BOOP-WETH	$56,415
PancakeSwap WETH-USDC	$486,783
PancakeSwap WBTC-USDC	$384,036
PancakeSwap ARB-USDC	$101,436
SushiSwap WETH-USDC	$29,209
SushiSwap WBTC-USDC	$5,044

Category	Amount
Total losses (incl. Plutus)	$845.9k
Total losses (excl. Plutus)	$503.5k
Unclaimed SYK rewards	$12.1k
Approvals	$48.6k
Deposits (incl. Plutus)	$785.2k
Deposits (excl. Plutus)	$442.9k
Google sheets: List of categorized losses

SYK/xSYK rewards (12 epochs)

Strategy	SYK/xSYK rewards (50/50)
WETH-USDC (StrykePancake)	164,886
WBTC-USDC (StrykePancake)	217,968
ARB-USDC (StrykePancake)	151,289
Total	534,143
Total xSYK	267,071

Distributing xSYK as plsSYK would mean 89k xSYK monthly - roughly 28% annualised growth of plsSYK TVL.

Monthly Active Users (Smart Contract interactions)

Month	Users
2024-01	19
2024-02	10
2024-03	196
2024-04	677
2024-05	154
2024-06	140
2024-07	257
2024-08	377
2024-09	270
2024-10	162
2024-11	129
2024-12	90
2025-01	19

Backtesting data for new strategies

Although the documents are sensitive in nature and cannot be shared publicly, yet, the results in different market conditions are impressive.

In the worst conditions, these new strategies perform twice as well, or only half as bad, and in good condition up to 5-10 times as well as the current strategy.

Considering the worst conditions mean net losses in any asset held (compared to spot, naked LP etc), half the losses and 5-10x gains should show impressive improvements in naked APR.

Adding Plutus' Gauge votes on top with SYK/xSYK incentives, attracting liquidity to Orange should not become a problem.

Some exemplary numbers in from 10d periods (naked yield):

Market conditions	Spot	New example	Previous
Downtrend	-9%	-7%	-12%
Crab	0%	53%	1%
Uptrend	5%	15%	4%

Orange Finance strategy

Security update

As the root cause boils down to a single point of failure with inadequately managed private keys with centralized power, i.e. operational and administrative rights in one, with complete access to execution without secondary signers, the solutions put in place are distributing the power of single keys, making sure that administrative functions and operational functions use separate keys and ensure only hardware wallets are used with robust devices as the intermediary interface.

The work has been conducted in collaboration with Seal 911, Stryke, and incident resolution related third parties.

Concrete action taken:

• Multisig upgraded from 1/2 to 3/5 and all signers use hardware wallets and secured.
• Development and administration are separated, broader development has no direct key access.
• Keys used in rebalancing, i.e. operational functions, are managed by a single entity and included in Vercel and other platforms in encrypted form. Key held in physical safes by two core team members.
• Keys used to administer are held by mutually known parties and minimized.
• Timelocks implemented with monitoring capability for mutative operations. Execution of ownership transfer or fund management require two-step for critical operations like ownership transfers or contract upgrades.
• On-chain monitoring services and emergency stop for triggering a lock of all operations on abnormal activity triggers like unscheduled ownership changes, state changes, or other critical operations.

Overall, it is safe to say that the old system was bad. Although not horrible, it was clearly sub-par and exposed several critical failure parameters. It is good that something happened now as opposed to 10-100x TVL in the future.

The new system is exemplary. The measures taken and implemented in collaboration with leading security experts are at a state where Plutus and any other protocol could and should strive to match the robustness of the setup - and Plutus will introduce some of the concepts although most are already in place.

Development Update

Orange have almost completed the Orange V2 UI development:

• Shifted to a vertical menu to accommodate a large amount of information.
• Accepted not only single assets but also pairs for depositing and withdrawing.
  • This allows users to avoid losses due to slippage with low-liquidity assets and enables us to list low-liquidity pairs like boop.
• Integrated Stryke Handler Version 3.
• Users can now skip the reserve step by limiting the utilization rate on Stryke.

Strategy Update

Orange v2 adopts the new liquidity provision strategy which uses implied volatility to set the optimal range during each rebalancing.

Furthermore, liquidity near the spot price will be used exclusively for AMMs, while liquidity farther from the current price will be allocated for option sales to maximize fee revenue.

Additionally, as you may know, the Stryke team plans to reduce protocol fees to attract more TVL and users.

Marketing Update

Orange have secured slot for the IDO launch and are in discussions with various Bera projects to increase their presence in the ecosystem.

• Kodiak (DEX & fair Launchpad)
  • Handful of on- and offline meetings to list our vault on their UI.
• Ramen Finance (IDO Launchpad)
  • Orange had secured the 16th slot, which is about one month after the Bera mainnet release. Currently being checked post-hack.
• Dirac (Derivative)
  • Had AMA on x on Dec 17th
• bera.buzz (fair Launchpad)
  • Had AMA on x on Dec 26th.
• The Honey Jar (Community)
  • Had AMA on July 6th.
• Beraland (Quest platform)
  • Ready to use
• Kingdomly (NFT Launchpad)
  • Orange have created NFT resource (1,500 image).

Terms

Plutus:

• Plutus temporarily forfeits the loss of $340k as debt to Orange Finance to repay with fees.
• Plutus distributes its remaining LP position of $326,521 to hacked victims for compensation in the form of time-locked positions* as debt to be repaid with fees.
• Plutus helps clean up Orange Discord and bring it to high standards

Orange:

• Repays remaining part (~$180k) of lost user funds as time-locked positions* after Plutus' positions have been distributed
• Sets a 10% performance fee on all vaults
• Repays positions to Plutus with 100% of fees until forfeited loss and distributed positions are repaid
  • Repayment of principal gets $20k monthly floor in Q3/2025, $30k monthly floor in Q4/2025 and $50k monthly floor starting Q1/2026
    • Repayment of principal can be deposited into Orange vaults instead of direct cash.
• 50:50 split of the $ORG team token allocation between Plutus and Orange (7% each)
• 50:50 split of the future revenue after the recoup of the investment from Plutus
• Pays 10% of salaries to Plutus' treasury in exchange of vesting $PLS at monthly average pricing.
• Provides read access to all Orange repositories for review and collaboration
• Shares strategies and SDK for backtesting strategies

* All positions follow these parameters: 25% locked until March 1st, 50% locked until June 1st, and 25% locked until September 1st

Next steps:

Contract created and reviewed by legal team after which signatures are collected from both parties (legal service cost cap $3k with aim for minimal). PlutusDAO represented by Gertrud and Adambuilds, Orange represented by all seven employees.

Once Stryke opens markets for withdrawal and Orange publish the user interface, Plutus recovers their assets.

Orange provides instructions on deposits for Plutus' assets for repayment for the 398 accounts in time-locked vaults.

Plutus deposits per instructions and Orange distributes positions to wallets.

Proposal

Repay Orange's debt to users in exchange for repayment of principal plus 50% future revenue and 50% team $ORG-token allocation.