Title: Distribution trategy for ASTR distribution following the option 1 selection
Date: Mar 1st 2024
Proposed by: Starlay Chan Initiative (SCI)
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Summary
Following the community’s decision to select the option 1 (Snapshot), we propose to allocate 50% of the ASTR/WASTR in our treasury (DeBank | The Web3 Messenger & Best Web3 Portfolio Tracker) for compensation to users affected by the recent incident. This document outlines two potential approaches for distribution, seeks community feedback, and is open to discussing new suggestions.
Specification
Option 1-1: USD-Based ASTR Distribution This approach calculates compensation based on the USD value of DOT/LDOT at the incident’s time, with ASTR distributed accordingly. It ensures a swift and straightforward distribution process.
Option 1-2: DOT-Based ASTR Conversion and Distribution Alternatively, this option involves converting ASTR to DOT based on current valuation and then distributing DOT to affected users. While this aligns compensation more closely with the original asset lost, it may necessitate additional conversion steps and more time consuming.
Recovery and Excess Funds: For both options, should any stolen funds be recovered, the compensation increase from the initial loss percentage. Any surplus recovered beyond user losses will remain in the Starlay treasury, acknowledging that the initial compensation came from these funds. ※ If the DOT is returned, it will be returned it as a percentage of the amount at the time of the hack, not by its USD value.
Next Steps:
Initiate a detailed discussion within the community to gather feedback on the proposed options.
Consider and develop any new options proposed during the discussion.
Thank you for putting together the proposal. Though the proposal covers the main objective, adding additional details on how %compensation is calculated is critical for maintaining records for both SCI as well as for the affected users. Irrespective of the proposal’s outcome, be it ASTAR based comp or DOT based comp, it is critical to know how much of the lost underlying, in this case DOT is received as initial compensation. Thereby in case of any future compensation if any, for example if SCI recovers the lost DOT, the %compensation would be a helpful data in determining how much more DOT needs to be distributed to the users for remaining compensation.
The following scenario explains why DOT should be the frame of reference when calculating %compensation. It gives a stable data point irrespective of DOT to USD price fluctuations.
All the following numbers are just to illustrate the case and not to be interpreted literally. Say Starlay recovers hacked DOT,
Person A lost 1000DOT.
Initial Compensation: 500DOT
Remaining Compensation 500DOT
Scenario #1:
DOT price during hack(D1): $8
DOT price on the Day of recovery(D2): $15
D2 – D1 = $7
Starlay gets to keep: 500 x $7 = $35000
User Loss = $35000
Scenario #2:
DOT price during hack(D1): $8
DOT price on the Day of recovery(D2): $1
D2 – D1 = -$7
Starlay loss: 500 x $7 = $35000
User Gain = $35000
To avoid this scenario and to be neutral to SCI and users, I propose the following %compensation calculation to be added to the proposal.
Acronyms
ASTAR current Value: vASTAR
DOT current Value: vDOT
Number of ASTAR token issued for initial compensation: nASTAR
Number of DOT token issued for initial compensation: niDOT
Number of DOT user lost: nDOT
In case of Option 1:
Initial compensation% = 100 x (vASTAR x nASTAR)/( vDOT x nDOT)
In case of Option 2:
Initial compensation% = 100 x (niDOT)/( nDOT)
Remaining DOT to compensate if hacked DOT is recovered= (100-initial compensation%) x nDOT /100
Final Note: Adding of %compensation will not change what the user will receive as initial compensation irrespective of the proposals outcome but only adds more clarity and bookkeeping for SCI and users to aid in future compensation if any. Thank you.
As stated before, DOT is better for book keeping. I recommend the following.
compensate in ASTR
for bookkeeping, calculate the DOT being compensated on the day of compensation with the DOT/ASTR pair value.
keep note of the DOT percentage compensated in case hacked funds are recovered.
This way is more transparent for everyone. With this it is also easier for us to go to Acala, show what percentage of dot was compensated and ask them for extra compensation i similar terms:
“compensation based on dot value on the day of compensation”.
Last, this way victims who wish to have DOT can the trade their ASTR themselves to minimize price difference.
I’ve already included the note, “※ If the DOT is returned, it will be returned it as a percentage of the amount at the time of the hack, not by its USD value.” and don’t feel the necessity to add more. As it is written, the users will get back DOT based on the amount if the DOT is returned from the hacker.
If we decide on the percentage for compensation based on the current prices of DOT and ASTR, we would probably swap ASTR to USD first and then wait for the DOT price to decrease. The first priority should be the growth of the Protocol. This should have been decided in the last vote, and since Acala’s users are not everyone, this shouldn’t be prioritized. If this option is included, it would be better for the swap to DOT and compensation to be done at a timing preferred by SCI. This would likely significantly delay the distribution.
I’m directing my compensation towards a USD-based calculation, that is option 1-1, not option1-2:
Given the current rise in DOT prices, it seems the users now requesting calculations based on DOT. If DOT’s price had fallen, would the users still argue the same?
If we’re looking at future compensations with the potential airdrop of a new token, would it be logical to calculate based on DOT’s value, even if its price decreases? Compensation aligned with our protocol’s growth seems more rational in USD. If you’re solely interested in DOT, that doesn’t indicate an expectation of our future.
Converting ASTR to DOT takes time and likely incurs significant slippage. Since we don’t use CEXs, our options are limited, and the amount receivable may decrease.
At the end of the day we all lost dot or ldot (equivalen), not usd.
Let me ask you, if dot would have fallen relative to usd would you be pushing towards usd compensation?
Dot based calculations make sense to me. But at the end of the day, this is just my opinion. I have no voting rights and Im happy to recover whatever is possible.
I think we need the confirmation that what you call “50% of ASTR in the treasury” means “50% of all ASTR in the treasury including WASTR”. And again, since in any case the compensation is calculated as a fraction of the ASTR in the treasury, I still believe that a vote between these 2 options does not make sense. The amount is the same in all cases. The only difference may be to clarify what happens in the future, but if you enact the proposal of a797, there is no doubt about the future and the 2 options are exactly identical amounts, with the only difference that asking Starlay to make the swap into DOT for affected users before sending the funds would only imply additional cost, time and risk for everyone.
The note added is lacking specifics regarding what you call “AMOUNT”. Please add more details to make the intent clear. The word “AMOUNT” is open for interpretation, I would suggest using numbers/equations which are definitive. Please include how the %compensation will be calculated, Thank you.
Agreed growing the protocol should be top priority and in this proposal it is clear that 50% Treasury retention is not going to change. The only point that is not clear is why DOT is not used as the frame of reference when it comes to calculating %compensation. Though %compensation is not relevant now it would play a significant role when and if funds are recovered, on how SCI will handle the recovered funds. Having DOT as frame of reference is unbiased to both SCI and Users, because lost DOT is compared to recover DOT 1:1 and not to USD which can be of any ratio.
Currently, the value of DOT has (coincidentally) increased. If we refer to the current price of DOT for exchanges, the rate of compensation becomes too low. Initially, the specific amount for the remaining compensation as an airdrop is not determined, so I don’t see the point in worrying about the compensation rate. Moreover, I have added that if DOT is recovered, it will be refunded based on the amount, not the monetary value, which is considerably in favor of the users.
If we are to calculate the compensation percentage based on the current value in DOT, I would wait for the price of DOT to decrease because it is more advantageous for the protocol as I have repeatedly said, we must prioritize the protocol. Also, while nothing is decided yet about the compensation airdrop, it is foreseeable that there will be criticism if this compensation turns out to be minimal. If it were Option 1-2 or based on DOT, I would prioritize the growth of the protocol by exchanging ASTR for USD, wait for the price of DOT to decrease, and then distribute it by exchanging USD for DOT.
Also we decided we focus on the protocol growth. Compensation aligned with our protocol’s growth seems more rational in USD, not DOT. If you’re solely interested in DOT, that doesn’t indicate an expectation of our future.
Growth of Protocol is not just Improving the product by introducing new features but also attracting new users by giving a secured and reliable platform. Given the hack situation the current userbase carries a negative sentiment which can overflow to new users thereby curbing the growth of Starlay. On the other hand, if Starlay aims in both improving the product as well as addressing user sentiment, that would be the definition of true GROWTH.
(2)
The decision to retain 50% of the treasure and grow the protocol, gave an opportunity for Starlay to remain operational and grow which in due course will accumulate dapps Staking reward and grow the treasure. Whereas we the user have sustained an enormous loss and when requested to use certain % of dapps staking rewards to compensate users loss gradually, the proposal was rejected. That puts a question what Treasure is for, if not addressing issues in the protocol.
(3)
Holding ASTAR till the DOT goes down in value is not what SCI should be spending their time and resource if the intention is growing the protocol. Also it will increase the negative sentiment of the user base and will affect the growth of STARLAY
(4)
If SCI is considering buying DOT when it drops in price, why not distribute DEBT coin now and keep buying as DOT falls in price and repay the user.
(5)
Starlay grows and users suffer, should not be the sentiment. If DOT value during hack is considered for calculating initial compensation, then it is equivalent to just returning capital lost during hack and negating the growth of underlying. In that case any future compensation that STARLAY might provide if DOT are recovered should include the lost opportunity cost as well
(6)
Here I see a protocol trying to grow by using the lost opportunity cost of the users. If Starlay were to grow it should be a combined effort of protocol and user. Irrespective of how the initial %compensation is defined it would not affect the current treasury balance; it will come into picture only in the case if funds are recovered. Then the DOT value used for initial compensation calculation would dictate what would go to Treasury and the affected users. Having lost our opportunity cost till then isn’t it fair to calculate the initial compensation in current market value and in the future when STALRAY treasury has grown can accommodate the difference between the DOT value during hack to during the compensation.
(7)
If hacked funds are recovered, it is going to be in the form of lost underlying which is DOT. If considering DOT value during hack for initial compensation, Is STARLAY going to enjoy the 25% growth in DOT value from the time of hack to the initial compensation date (hoping DOT stays at $9 till march12).
(8)
And again just having a word “AMOUNT” does not explain the specifics and is open for interpretation. I have also provided the equation to have it included in the proposal.
First, please review our previous discussions, the documentation on Astar’s dApp staking, and our conversations up to this point. It’s especially important to thoroughly review the discussions we’ve had. Most of what you’re saying has already been discussed and is not relevant. Regarding the opportunity cost, it’s no different from arguing that if someone had invested somewhere, they would have made a profit and it’s not constructive to discuss compensating the opportunity cost.
So, the reason for reaching a consensus among everyone and deciding through a vote was to correct the negative sentiments, right? First, please check that this consensus has already been achieved. Do you understand that we are offering as much compensation as possible? If this does not alleviate the negative feelings at all, then should we even need to provide compensation? Wouldn’t it be better to say that it would have been better if Starlay had been dissolved? By not choosing that path, we opted to reach a consensus and decided to support the growth of Starlay again. Also I believe that the possibility of compensating with an airdrop of a new token was confirmed in the last vote. I think that your negative commitment benefits no one because it will only lower the price of the airdrop.