SIP-18: Policy for replacing accidentally burned tokens

Background and goals

Sometimes tokens get accidentally burnt. There are various ways in which this can happen, for example transferring them to an address that you don’t own the private key for, or to a smart contract which has not been programmed to handle the tokens.

The goal of this proposal is to enable Key Holders of multisig wallets that guard token minting to replace lost tokens upon request, if certain criteria are met. This proposal also defines those criteria and the procedure that follows a successful invocation of this policy.

The proposed criteria are limited to a few common cases of accidental burn, and don’t attempt to cover every conceivable case due to the potential complexity of verifying that the tokens actually are permanently lost. This proposal targets the common cases and aims to create a straightforward process for them.

Tokens lost in other ways not covered by this policy can potentially still be replaced, but that would require a separate governance decision to either amend this policy or decide about a particular case specifically.

Criteria

For a replacement of lost tokens to be possible, all of the following criteria must be met:

1. The lost tokens are:

• DATA tokens on Ethereum mainnet, or
• Bridged DATA tokens on a chain where Key Holders possess the power to mint said tokens.

2. The tokens were lost by transferring them to:

• The DATA smart contract address on the chain in question, or
• The zero address (0x000…000)

3. A request to replace the lost tokens is communicated on project Discord or sent via email to the project contact address, along with the ID(s) of the transaction(s) in which the burn happened.

4. The request is given within 30 days of the earliest burn, or within 30 days of the acceptance of this governance proposal.

5. This policy has not been previously invoked for those transactions.

6. The lost tokens have not been created as a result of invoking this policy during the 6 months prior to submitting the request.

Fees

A fee of 5% of the total burned amount in the request is charged and deposited to the Data Fund to benefit the builder community. The minimum fee is 1,000 DATA.

The fee is split on a pro rata basis to each transaction in the request. For example:

Two burn transactions in the same request:

• tx 1: burned 10k DATA (10% of total burned)
• tx 2: burned 90k DATA (90% of total burned)

Total burned: 100k DATA Fee: 5k DATA Total to be replaced: 95k DATA

The replaced amounts per tx:

• tx 1 gets back 9.5k DATA (10% of total replaced)
• tx 2 gets back 85.5k DATA (90% of total replaced)

Procedure

Assuming the above criteria are met, the successfully invoked replacement happens as follows:

• For transparency, a notification about a successful invocation of this policy is posted on the #governance channel on the project Discord, along with the total DATA amount and a list of transactions that burned the tokens.

• Key Holders mint tokens on the chain where the burn happened.

• If multiple replacement requests are open at the same time, Key Holders prioritize the requests with the highest amount of lost tokens.

• The tokens are transferred on the same chain and to the same address(es) that burned them. The origin address is determined by inspecting the submitted transaction IDs.