Over the past month, we’ve held numerous internal meetings and engaged in discussions with various parties about our next move. Given that there’s been no progress in the investigation of the hacker, and we can’t keep our community waiting indefinitely, especially with many members asking daily about our next steps, we believe it’s time to make a decision.
The options essentially boil down to two:
- Option #1
Liquidate treasury with exploit victim snapshot - Option #2
Relaunch with a new token, airdrop former holders and victims, add initial liquidity with remnant treasury
Initially, we considered making the decision through a community vote via snapshot, but in the current situation, $veVC and $VC holders and LP victims inevitably have completely different stances, making it difficult to devise a fair voting method. While $VC is an investment asset and under normal circumstances, all platform fees would go to $VC holders, LPs assumed safe deposits when they entered, so they must take priority for compensation in this situation. $VC holders would choose Option #2 because, if Option #1 is selected, most of the treasury would be used to compensate LP victims, and relaunching increases the chance of preserving their value. Similarly, LPs would choose Option #1 because, if Option #2 is selected, their share of the treasury would be smaller compared to a direct liquidation. Therefore, if voting is done with $veVC, option #2 is likely to win. However, if each user gets one vote, option #1 has a higher probability of winning due to the overwhelmingly larger number of LPers over voters.
Given the nature of veDEX, the flywheel fundamentally won’t work without a token, so relaunching without a token is also not an option.
In the current competitive DEX situation on zkSync and Linea, we judged that even if we relaunch, it would be difficult to achieve satisfactory results while carrying the label of an exploited DEX. Therefore, we decided it’s better to use the treasury for compensation as much as possible before consuming more runway, rather than wasting the not-so-large treasury on a reboot, and plan for the future.
It’s very regrettable to conclude this way after building rapidly for over a year and presenting freshness to veDEX, where only Solidly forks were rampant.
The liquidation will be calculated in the same way as the previous $ZK airdrop snapshot, including Linea, to calculate each user’s snapshot value. The value of all LPs was calculated based on their USDC equivalent price at the time of the snapshot. After combining the treasuries of both chains and converting them to USDC, users will be able to claim according to their share on both chains. The total is about 266k USDC, which is about 4% of the hacked ETH and USDC value, excluding native tokens. Including the zkSync airdrop portion, it’s only about 10% of the damage amount, but if we are able to recover the treasury in the future or receive additional airdrops, we will distribute again based on the same snapshot.
The distribution ratio between the two parties from the entire treasury is allocated as 95% for LP victims : 5% for $VC, $LVC related holders (including veToken, voters). This aligns with the ratio when we allocated about 95% to LP victims during the zkSyncEra airdrop distribution.
On the Telos side, we will resume the swap function, but due to the vulnerability, the swap fee must be set to 0%, making it impossible for internal bribes to accumulate.
The claim page will not be a separate link. Instead, the main pages for zksync and linea chains will directly serve as the liquidation claim pages. Therefore, please be extremely cautious of scammers who may try to direct you to other links.
In conclusion, after extensive deliberation and consultation, we have decided that the best course of action is to liquidate the treasury to compensate LP victims, rather than relaunching with a new token. This decision acknowledges the irreconcilable differences between $veVC and $VC holders and LP victims, and prioritizes the immediate need for compensation over the uncertain prospects of a relaunch. While it is regrettable to end our efforts in this manner after over a year of rapid development, we believe this is the most prudent path forward. The liquidation will follow the same snapshot method used in the previous $ZK airdrop, and although the compensation will only cover a fraction of the losses, we are committed to distributing any future recoveries based on the same snapshot.
