DAO Maker Compensation Plan
Dear friends, users, and supporters of DAO Maker,
If you are one of the affected users of the recent exploit of the USDC pre-funding contract, we sincerely apologize for the inconvenience to you directly. We have made changes to the security protocol to drastically improve key protection, as well as committed to continued efforts in upgrading our smart contract architecture.
Primarily, we want to clarify that all affected users of the hack will be redeemed in full. The compensation plan will be executed in 2 Phases.
Phase 1: The SHO Must Go On
500 USDC will be airdropped to all affected users’ wallets without delay.
This money can be used to participate in the SHOs or withdrawn from your wallet at your discretion. All users that were affected will be able to smoothly continue participating in SHOs.
The average user lost between 1,000 to 1,500 USDC. Therefore most affected users will instantly be refunded 50% to 30% of their loss on the 19th of August prior to the next SHO.
Thus, over 35% of the total loss amount will be refunded immediately.
This equates to an expense of approximately $2.5M, or almost ⅓ of our raise earlier this year. While steep, we are confident this is the best use of our resources, as it ensures affected users are able to participate in SHOs without interruption and business can continue as normal.
Phase 2: Remaining 65% Refund & Liquid IOU Tokens
Given that the net exploited amount was $7M, the amount due (after the $2.5M deposit to users’ escrow) equals $4.5M. This $4.5M will be provided to users in exactly one year’s time in the form of DAO tokens at the future market price.
The $4.5M in DAO tokens will be taken from the “customer incentives” tranche, which has 10% of the total DAO supply.
This future redemption will be accompanied by a 10% interest rate. Therefore a total of $4.95M will be given out. If a user lost $1,250, they will receive $500 airdropped to their DAO account on the 19th of August. The remaining $750 will be provided to them in the form of equivalent value in DAO tokens, with a 10% added yield, after one year.
USDR — Liquid IOU Tokens
On September 8, we will airdrop USDR tokens, which represent the future redemption given in 1 year. Each USDR token is equal to 1.1 worth of DAO, 1 year after it is airdropped.
On redemption day, September 8, 2022, USDR tokens will be deployable to a smart contract in return for a pegged rate of 1.1 worth of DAO for every USDR. All received USDR will be burned at that point.
Example Redemption of Two Affected Users:
- Person A lost $1,000 in the hack
- Person B lost $3,000 in the hack
Person A will receive 500 USDC upfront, deposited to his DAO Pad-connected wallet. This can be used to participate in the next SHO or can be withdrawn immediately. The remaining $500 is due after 1 year, in the form of DAO tokens. It will be accompanied by a 10% yield, making the 1-year pay-out $550.
In the meantime, person A will receive 500 USDR tokens on September 8, 2021. These tokens can be traded. They can be held for 1 year. After 1 year, they can be redeemed for $550 worth of DAO tokens.
Person B will receive 500 USDC upfront, deposited to his DAO Pad-connected wallet. This can be used to participate in the next SHO or can be withdrawn immediately. The remaining $2,500 is due after 1 year, in the form of DAO tokens. It will be accompanied by a 10% yield, making the 1-year pay-out $2,750.
In the meantime, person B will receive 2,500 USDR tokens on September 8, 2021. These tokens are tradable. They can be held for 1 year. After 1 year, they can be redeemed for $2,750 worth of DAO tokens.
The redemption plan is designed to let the operations proceed smoothly. All affected users are given USDC upfront to participate in all immediate SHOs. They also have the option to withdraw the USDC.
Additionally, the USDR airdrop provides a liquid redemption for those who want to trade it to others. It also turns the remaining dues, $4.5M, into a form of DAO staking as holding USDR gives DAO Power and earns a 10% yield. It is more or less similar to staking DAO.
As for the hack itself, we continue the investigation and have also informed EU law enforcement. Further, a forensics team has been on-boarded and we’ve received gracious support from several cyber security professionals in the space. We will continue to pursue the hacker.
Regardless of the outcome of this pursuit, we believe the redemption plan outlined above will allow all affected users to proceed as if nothing happened.
DAO Maker Team