Bug Bounty Vault Proposal by Hats Finance

Summary This is a proposal for Spiral DAO to collaborate with Hats.finance to create an on-chain, free, non-custodial, scalable and permissionless incentives pool for hackers/auditors to protect the Spiral DAO smart contracts. The goal of the vault is to incentivize responsible vulnerability disclosure for Spiral DAO. Liquidity can be added (with $SPR and/or yield-bearing tokens) permissionless and LPs will be rewarded with $HAT tokens once the liquidity mining program is launched.

Background & Motivation Hats.finance is a on-chain decentralized bug bounty platform specifically designed to prevent crypto-hack incidents by offering the right incentives. Additionally, Hats.finance allows anyone to add liquidity to a smart bug bounty. Hackers can disclose vulnerabilities responsibly without KYC & be rewarded with scalable prizes & NFTs for their work.

Smart bug bounty programs are a win-win for everyone. They can be created easily with a few on-chain transactions (it takes less than 1 hour to set up a vault on Hats), and are free of charge. Hats will only charge a fee once an incident has been successfully mitigated.

On-chain submission: With the values of Ethereum, which are lighting our way, we decided to take a different approach to bug bounty compared to the traditional and centralized bug bounty platforms.

The submitter writes a detailed vulnerability description on Hats dApp. The submission is encrypted with the project PGP key. The user hashes the encrypted description (Automatically) and sends a transaction on-chain with that Hash (only the Hash of the encrypted report is going on-chain), While sending the encrypted message to the routing bot.

The key advantage of Hats solution compared to traditional, centralized bug bounty services: Bug bounty vaults are loaded with the native or yield bearing token of each project. Reducing the free floating supply while giving the token additional utility.

Scalable bounty network — vault TVL increases with success / token appreciation of the project.

Open & Permissionless — Anyone can participate in the protection of an asset they are a stakeholder of and any hacker, anywhere in the world, can participate anonymously when disclosing exploits (no KYC needed)

In the future when providing liquidity(taking risk) every depositor could earn $HAT tokens.

Continuous — As long as tokens are locked in the vault, hackers are incentivized to disclose vulnerabilities through Hats, instead of exploiting the project.

Additional advantages of deployment of the existing Spiral DAO bug bounty program on Hats Protocol: Spiral DAO can reach out to many more security researchers (aka white hat hackers) with a bounty on Hats protocol and each scrutiny will make Spiral DAO safer. Spiral DAO can fund the bug bounty vault on Hats with its own native token ($SPR or yield bearing token) The bounty reward for the submitter is not paid at once to reduce the price pressure on the project token. Since Spiral DAO will be farming $HAT tokens with its bounty, it's a cost negative opportunity for Spiral DAO.

Specification In case that the proposal gets accepted, Spiral DAO is expected to: 1- Choose and set up a committee 2- Send 30k $SPR tokens to the committee multisig, which will manage the funds at the bug bounty vault and initiate a payout in case of successful vulnerability reports

Onboarding action items: Choosing a committee: The committee is preferably the public multisig contract of Spiral DAO or a multisig specifically set up to manage the bounty program. The Committees responsibility: Triage incoming vulnerability reports/claims from auditors/hackers (get back to the reporter within 12 hours). Approve claims within a reasonable time frame (Max. of 6 days) Set up repositories and contracts under review. (A list of all contracts covered by the bounty program separated by severity)