SIP-54: Protocol operations and treasury management

Summary

Ensure the continued safety of user funds by winding down the protocol by pausing all pools and dissolving the community multisig. Additionally, airdrop protocol-owned $ARB tokens to $SDL, veSDL, and Saddle NFT holders and liquidate the remaining DAO treasury tokens to $ARB to be included in the airdrop. For those using contract wallets such as Gnosis Safe, the $ARB will be converted to ETH and then bridged to Ethereum Mainnet using Across Protocol and distributed accordingly. All other holders will receive $ARB on the Arbitrum network.

The eligible SDL supply is ~500M and veSDL supply is ~43M, which implies an airdrop amount of ~$0.0026 in ARB per SDL and ~$0.01 in ARB per veSDL.

Background

This SIP seeks to ensure the continued safety of user funds by winding down the protocol by pausing all liquidity pools and disbanding the community multisig. Additionally, reward $SDL and veSDL holders by distributing the protocol’s treasury to token holders. The distribution will account for the amount of $SDL tokens a wallet has and how long veSDL has been locked for. If passed, liquidity providers are advised to withdraw their funds.**

Motivation

The north star for Saddle has always been to be a community run and self sustaining protocol. The core contributors with the help of the wider community have completed the necessary groundwork to realize this vision - Saddle is the premier open-source, MIT licensed StableSwap and the 9th most forked protocol by TVL! In light of this, many core contributors intend to step away from being actively involved by 9/30/23.

The community can decide to either:

• Continue operating the protocol
• Wind down the protocol to ensure the continued safety of user funds

If the community decides to continue operating the protocol, it will be necessary to support the community multisig and the Delos HQ multisig on various operational tasks. However, we believe this will be hard to coordinate and manage over the long term.

On the other hand, the recent Vyper zero-day/Curve hack has shown that protocols are always at risk of exploits due to latent bugs. Additionally, the market value of the protocol’s treasury has recently exceeded the protocol’s circulating market cap. Many community members have proposed distributing the DAO’s $ARB airdrop to token holders (past discussion), and after preliminary discussions with the community and core contributors we believe this is the best path forward to ensure the continued safety of user funds and recognize token holder value.

Specification

The final multisig transaction will airdrop 1,545,242 $ARB tokens from the DAO treasury to holders, in addition to funds liquidated from other Saddle protocol-owned wallets and admin fees which will be converted to ARB. To calculate how many $ARB tokens holders receive is as follows:

• $SDL held in user’s wallets, LP tokens, staked LP tokens, or held in vote escrow will receive a 1x multiplier
• veSDL will receive a 4x multiplier
• The 9 Saddle Creator NFTs will be counted as holding 350,000 SDL
• The 1,080 Badges for Bandits NFTs will be counted as holding 7,500 SDL

Using these parameters a wallet's share of $ARB is then dictated by this formula:

wallet's % of airdrop = (wallet_sdl + 4 * wallet_vesdl) / (sdl_supply + 4 * vesdl_supply)

From this formula, we can derive the appropriate value of one SDL and veSDL:

arb_dollar_value = $1.15 * 1_545_242 = $1_777_028
total_sdl = 502_000_000
total_vesdl = 43_000_000

sdl_dollar_value = 1 * arb_dollar_value / (total_sdl + 4 * total_vesdl)
= 1_777_028 / (502_000_000 + 4 * 43_000_000)
= $0.0026
vesdl_dollar_value = 4 * sdl_dollar_value = $0.0104

Wallets which belong to Saddle or cannot be attributed to specific users (such as CEX’s or bridges) will be excluded from the airdrop. The “RetroVesting” contract used to initially airdrop vesting SDL is also excluded. The Ethereum snapshot block used for all these calculations will be block #17820592 (1 week ago), and the block with the closest timestamp for other chains. The full methodology can be found here (any fixes/corrections would be much appreciated) and a list of excluded addresses is below:

Excluded wallets

Name	Network	Address
Saddle Treasury	mainnet	0x5DFbCeea7A5F6556356C7A66d2A43332755D68A5
Saddle Multisig	mainnet	0x7A1c42297c00823736FD91E3d0F2Cc7ca848e98e
Saddle Grants Multisig	mainnet	0x87f194b4175d415e399e5a77fcfdfa66040199b6
Saddle Operations Multisig	mainnet	0x4802CedbDF865382dbaED8D5e41a65C8AB840676
Saddle Operations Multisig	fantom	0x4802CedbDF865382dbaED8D5e41a65C8AB840676
Saddle Operations Multisig	arbitrum	0x6d9b26C25993358dCa0ABE9BF6A26Ddb18583200
Saddle RetroVesting	mainnet	0x5DCA270671935cf3dF78bd8373C22BE250198a03
Multisig	mainnet	0x4ba5B41c4378966f08E3E4F7dd80840191D54C69
Delos Multisig	mainnet	0x03D319a9921474B9cdE1fff1DBaFba778f9eFEb0
MEXC	mainnet	0x75e89d5979E4f6Fba9F97c104c2F0AFB3F1dcB88
Kucoin	mainnet	0xf16E9B0D03470827A95CDfd0Cb8a8A3b46969B91
Optimism Gateway	mainnet	0x99C9fc46f92E8a1c0deC1b1747d010903E884bE1
Arbitrum Gateway	mainnet	0xa3A7B6F88361F48403514059F1F16C8E78d60EeC
Euler	mainnet	0x27182842E098f60e3D576794A5bFFb0777E025d3

For: Airdrop protocol-owned $ARB tokens to $SDL and veSDL holders and ensure the safety of user funds by winding down the protocol by pausing all pools and dissolving the community multisig.

Against: Do nothing (continue operation).