On July 2nd, 2023, an unfortunate incident occurred when the Poly Network bridge contracts across several chains were exploited. Sadly, a total of 141,209,922 $XTM was stolen from Poly Network’s bridge contracts on Ethereum Mainnet and BNB Chain. In swift response, Team Torum took immediate action by halting the bridging operation of $XTM, requesting the suspension of $XTM deposits and withdrawals on centralized exchanges, and entirely removing all protocol-owned liquidity from the on-chain liquidity pools across Ethereum Mainnet, BNB Chain, and HECO Chain. The broader community was also continually reminded to withdraw their liquidity from the on-chain pools throughout the whole ordeal. All these proactive measures were undertaken to mitigate and minimize the potential risks and damages stemming from the exploit.

However, despite the concerted efforts of both the community members and the team in urging liquidity removal during this crisis, a substantial amount of idle liquidity persisted within the XTM/BNB LP pool.

Approximately $70,000 worth of XTM/BNB LP remained as of July 10th, before the team executed a manual drainage:

$XTM: 2,514,413.52 $BNB: 150.14

This represented a significant sum and inadvertently provided an avenue for the exploiter to profit from the stolen 141,209,922 $XTM. In fact, the exploiter intermittently sold $XTM into the pool, resulting in a total of 252,641.5024 $XTM being successfully traded into the XTM/BNB LP pool through six different transactions prior to the team's manual drain. This yielded the exploiter approximately 15.8404 $BNB, equivalent to roughly $3,801.672 at a $240 valuation per $BNB.

Txn 1: https://bscscan.com/tx/0x65e9f04ab15e4ac0a345a8ff63f791710514695900e979a5ee00c18a8a3c68aa Txn 2: https://bscscan.com/tx/0x5c986453f92e4986d400e3d82e2367a91f10cf7cc9a47f4f0f71e78c784c3df6 Txn 3: https://bscscan.com/tx/0x3879448a30840f9e4f3519533bfd6575c0d51aacf1cf304a4bb03062a2ff3761 Txn 4: https://bscscan.com/tx/0x65f48a1cc54918fc633c83ebb6e7e945245bcfa60ee46ed03dff536f809314ad Txn 5: https://bscscan.com/tx/0x130af33e22cf1c77ccabbe909fb908339238dc18f0fa1fc01a32010fdda1bc61 Txn 6: https://bscscan.com/tx/0xbd75cc4ddbfc334b90dd113d559760f3d5b28326097504c34e103401298b3389

These actions had a negative impact on the $XTM price to some extent. If left unchecked, they had the potential to cause considerable financial harm to the remaining idle liquidity providers.

Acknowledging this risk, Team Torum took proactive measures to manually drain the liquidity pool. It's important to note that this decision was taken after a period of more than a week during which constant reminders were provided.

The team publicly announced the manual drainage of the XTM/BNB pool on July 10th via an official announcement (https://www.torum.com/post/64abf5d49db092711ebd19d7). The actual execution of the liquidity pool drain swiftly followed. After a span of six hours, the manual drainage was successfully concluded. This proactive intervention by Team Torum effectively safeguarded the value of idle LP holders. For detailed information, please refer to this announcement (https://www.torum.com/post/64ac487e9db092711ebe2bc1).

According to the announcement, Team Torum drained a total of 205.34 $wBNB (Wrapped $BNB) from the XTM/BNB LP pool which is publicly held in this address (https://bscscan.com/address/0x97588fe7c5EadF50aF74Da68a22A8278271D0A0E). The sum of $wBNB drained surpasses the requirement to ensure full restitution for all remaining LP holders, which originally called for only 150.14 $wBNB. This signifies that an additional 55.2 $wBNB was drained by Team Torum. This additional $wBNB came from on-chain speculators that were attempting to speculate on the price of $XTM while Team Torum was executing the drain.

At a valuation of $240 per $wBNB, the extra 55.2 $wBNB amounts to approximately $13,125.6. This is a substantial sum that can certainly be utilized to benefit all $XTM holders. Team Torum would like to propose two potential uses for the 55.2 $wBNB surplus:

1. Utilize the entirety of the 55.2 $wBNB to purchase $XTM on-chain and subsequently burn all purchased $XTM, effectively reducing the circulating supply.

2. Allocate 50% of the 55.2 $wBNB surplus to purchase $XTM on-chain, and pair the acquired $XTM with the remaining 50% $wBNB to generate XTM/BNB LP tokens, adding it to the protocol-owned liquidity.

Nevertheless, it's important to note that the aforementioned options are mere suggestions from the team. We wholeheartedly welcome alternative suggestions regarding the utilization of the extra 55.2 $wBNB.

=========== MOTIVATION

Option 1 - Buyback and Burn $XTM

Option 1 involves buying back and burning $XTM, which would create buy pressure for $XTM in the short term, helping stabilize the price. Additionally, this action would contribute to the long-term value of $XTM by permanently reducing the circulating supply once the bought tokens are sent to the burn address.

Option 2 - Deepening On-Chain Liquidity

Option 2 aims to enhance the trading experience for users looking to buy/sell $XTM on-chain. It would facilitate smoother transactions and potentially increase on-chain trading volumes. This improved trading experience could lead to greater volumes on both centralized exchanges where $XTM is listed and the PancakeSwap XTM/BNB pool.

=========== RISK ASSESSMENT

Option 1 - Buyback and Burn $XTM This option could cause short-term price increases and possible short-term volatility from on-chain speculators.

Option 2 - Deepening On-Chain Liquidity There's a potential risk of impermanent loss if the $XTM price falls against $BNB upon creating LP tokens, resulting in a loss for deployed capital.

=========== SPECIFICATION

Option 1 - Buyback and Burn $XTM Selecting option 1 would grant Team Torum the discretion to use the surplus 55.2 $wBNB held in this BNB Chain address, 0x97588fe7c5EadF50aF74Da68a22A8278271D0A0E, to purchase $XTM on-chain. The bought $XTM would then be sent to the burn address 0x000000000000000000000000000000000000dead on the BNB Chain.

Option 2 - Deepening On-Chain Liquidity This proposal would authorize Team Torum to use 50% of the surplus 55.2 $wBNB (27.6 $wBNB) held in the BNB Chain address, 0x97588fe7c5EadF50aF74Da68a22A8278271D0A0E, to purchase $XTM on-chain. The acquired $XTM would be paired with the remaining $wBNB to create XTM/BNB PancakeSwap v2 LP tokens (https://bscscan.com/token/0x78051673fA5d9Bb0c8fC9bb0D8359e3E9D98b772), thereby enhancing the liquidity of the current XTM/BNB PancakeSwap pool (https://pancakeswap.finance/info/pairs/0x78051673fa5d9bb0c8fc9bb0d8359e3e9d98b772).