Expanding Sharedstake ownership and governance while covering the exploit deficit

We want to allow long standing users a chance to gain a meaningful ownership and governance stake of Sharedstake and its future.

And believe we can use this to raise funds for our audit.

And cover the shortfall from the recent exploit https://medium.com/@chimera_defi/sharedstake-exploit-postmortem-sep-1-2023-50a85061d58c

Additionally we most likely have the attackers IP address and personnel in their jurisdiction and will be following up on it.

Main points:

• 10k+ ETH already redeemed
• ~6.6k ETH left to be redeemed
• 1k ETH in queue for user withdrawals at 1.1 exchange rate
• 100 ETH Exploit shortfall of which:
• 34 ETH lost from v2 stakers, who are willing to take a markdown to 30E
• 66 ETH lost from redemptions, of which 25–50% can be covered
• Adding potential audit cost of $20k ~14E

This leaves the DAO with the opportunity to raise between 14E and 114E.

While giving users a chance to become meaningful shareholders.

To accomplish this we will be taking a multi-pronged approach.

How?

1. Sell SGT via Options liquidity mining
2. TL;DR
   Pay 1c per contract, call option-like, worth 10 SGT,
   $1 each buy / 100 contracts.
   Redeemable at 10c if SGT price is over 10c
3. From the SGT rewards vault, we will pull a stream of upto 100E worth of SGT
4. Users will be able to purchase a redeemable options contract backed by SGT
5. At current market price, 5c / 0.00003 E, we can increase circulating supply by 1.6M to 3.3M tokens to recover roughly 50 to 100E
6. The options contracts will be sold at a premium of $1 / contract. When users redeem they will be able to acquire 1000 SGT tokens at a 10% discount from market rate for each options contract they hold [WIP]
7. The options contract will have a 10c / 0.00006 E floor price as price is easy to manipulate currently
8. This allows users to gain large SGT holdings with no slippage, at discount, either now or later
9. Make up shortfall with reduced exchange rate for exiters — 1.05
10. Deploy a new withdrawal contract (not exploited) with a rate of 1.05
11. Users that choose to exit early will receive options contracts from (1) for the remaining 5%

This route lets us:

1. Increase circulating supply and market cap for SGT
2. Get more SGT into the hands of investors while utilizing the tokens properly instead of spraying and praying on LM
3. Zero out our deficit
4. Raise funds to get an audit done

Use of funds:

• Any raised funds will first be used to pay for an audit to ensure the safety of our users
• Remaining funds will be used to cover the shortfall for both v2 users and v1 users
• Excess remaining will be returned to the community of SGT holders via means they choose including styles such as:
• Dividend distribution
• Buybacks

Benefits for users

• As we review our security practices, we concluded we want to increase the robustness of the multisig
• Users with large holding, are invited to take an active part in our multisig signing and voting
• Allowing us to create in essence a board of directors and a more robust decentralized multisig

Votes to be put up:

1. Approve/deny move losses to 4–5k vETH2 instead of socializing it across 6k vETH2
2. % sgETH markdown
3. Approve/deny supply expansion via selling options
4. Approve/deny fund allocation prioritization i.e. audit first / recovery first

Moving forward

• Within the end of the month new contracts will be launched for proposed supply expansion and new deposits
• Withdrawals will resume for at least 1k eth, batched like before if 35.1 passes