STG Reissue

Tldr; Stargate should re-issue a new STG and airdrop it to all STG holders Background

Stargate faces a significant threat to its POL and to the security of token holders due to potential security issues within Alameda Research (Alameda). To ensure the safekeeping of Launch Auction Stargate tokens, the StargateDAO proposes to re-issue all Stargate tokens (STG). By re-issuing STG, StargateDAO would eliminate the risk of illegitimate STG transfers from compromised Alamada wallets and would protect the interest of all token holders.

As background, on March 17, 2022 Alameda purchased 10% of the total STG supply from the Stargate Community sale. Alameda subsequently publicly committed to lockup all these tokens until March 2025 (https://twitter.com/AlamedaTrabucco/status/1506306854825119748). Recent on-chain transfers from known Alameda wallets reveal that Alameda does not have full control of its wallets and that a malicious actor or hacker is misappropriating Alameda’s funds (https://cointelegraph.com/news/alameda-wallets-funnel-over-1-7m-via-crypto-mixers-overnight, https://twitter.com/ArkhamIntel/status/1608204990581202946, https://twitter.com/WuBlockchain/status/1608087397107142658).

The consequence of a bad actor controlling Alameda’s wallets and the potential harm to token holders and Stargate cannot be understated. Without a token re-issuance a malicious actor with access to Alameda’s private keys could claim the Stargate tokens from the contract as they vest and misappropriate them as they seem to have with other funds. If such an actor were to claim and dump STG on the market, in violation of the three year lockup agreement, the following could occur. The actor would hypothetically claim the tokens as they vest to the wallets over a 6 month period for example. This would introduce 100,000,000 STG (10% of total supply) into the circulating supply over the next 6 months. This could be dumped into existing LP, draining stablecoins from POL as Stargate owns its own liquidity.

We recognize that there may be ongoing discussions surrounding the 100M tokens as part of the Alameda bankruptcy process. As such, we propose the Stargate Foundation set aside these tokens in a separate wallet where they will remain untouched until there has been clarity or a court order from one or both parties.

Proposal Stargate will reissue STG on March 15th, 2023. This will result in a state where the current STG will no longer power Stargate while a new STG contract replaces it. Users would not have to do anything for this swap to happen. On March 15th, a snapshot would be taken of all user balances, and a new token will be sent to every user on a 1:1 basis.

Doing this reissue will ensure that the 100,000,000 tokens (10% of total supply) Alameda acquired and then sold will not be stolen and sold onto the market, negatively impacting Stargate. The launch auction portion will be custodied in a designated mutisig wallet until further instructions are given by stakeholders. They will not be moved in any way absent such direction.

Execution Stargate should reissue STG on March 15, 2023 at a 1:1 basis for the existing STG token. Existing holders would have the new STG token airdropped to them (based on a snapshot taken the same day at a pre-announced time), including any unclaimed rewards earned in any farms at the snapshot date. Any unassigned tokens in any contracts would be returned to the Stargate DAO to ensure a clean transition. 24 hours prior to the snapshot all protocol owned LP would be removed from any on chain spots it exists within. All exchanges that currently support STG will be asked to pause deposit and withdrawals for the same 24 hour period. After the new token exists, the LP will be re-added with the new token as the pair, and all exchanges will be asked to resume deposits and withdrawals honoring the new token.

All users with STG vested as veSTG and aaSTG will have their vests reissued where upon unlock, they will receive the new STG token. This will allow all users to maintain the same terms of their locks and voting rights associated with them.

Finally, all farm contracts will be re-enabled with the new STG token as the reward given and users will be asked to deposit liquidity into the new contracts to resume farming STG and supporting Stargate.

Success Success is defined as STG V2 launching and replacing STG. Upon successful reissue, all functions of the STG token will be identical to STG.

Summary Stargate faces a material threat to POL and the security of token holders due to potential security issues within Alameda Research. A token swap to a new STG token is proposed with holders getting an identical token to their current supply and state for STG.

A successful migration would prevent a potential catastrophic downside to the protocol while maintaining smooth function robust markets for STG.