Recovery and Re-launch
What happened?
As most readers are probably aware, Glide suffered an exploit and a theft of funds totaling around $300k shortly after opening up for liquidity deposits. This attack vector was introduced while updating the fee structure of the AMM smart contracts. There is no acceptable excuse for such an error. All we can do is learn from this experience, implement better due process, and endeavor to restore trust by reimbursing users and delivering value to the community.
What’s next?
We have come up with a reimbursement plan that we believe will allow us to make users whole again without negatively impacting the short to mid-term future of the Glide platform. Given that this event occurred pre-launch, we do not yet have a treasury to cover the loss. However, we want to ensure that we can provide a means of exit for those who lost funds and would prefer not to participate in Glide moving forward.
This will involve the issuance of a bond token that will allow users to transfer debt if desired (skip to the next section if you just want to learn how to sell your bonds). The details of this plan are as follows:
1) — All users who experienced losses up to $1000 will be reimbursed in full in each of the assets they lost. Of the 73 accounts affected (list may be viewed here), this will cover 52 of them.
2 )— The remaining 21 accounts with losses exceeding $1000 will be airdropped GLIDE-BOND tokens that will be representative of the assets lost, but denominated in ELA. The price conversion will take place at the time of the airdrop. For instance, if a user lost $1000 worth of stablecoins, and the price of ELA is $5 on the spot market, the user will receive 200 GLIDE-BOND tokens. After this event, the underlying value of the GLIDE-BOND tokens will be 1 ELA, regardless of ELA’s price movement.
3) — Bond holders will receive weekly airdrops of GLIDE (interest on their debt) and ELA (repayment of principle). Token rewards and principle will primarily come out of the team’s development fund, with a lesser amount to come out of the community treasury if necessary. In order to ensure that we do not find ourselves in a situation where a rise in ELA’s price forces us to convert and distribute an unhealthy amount of GLIDE tokens to keep pace with a fixed rate APR, we will instead base the APR on the GLIDE to ELA price ratio.
For example, if the price of ELA is $5, and the price of GLIDE is $0.2, the price ratio is 25 GLIDE per ELA (25:1) and GLIDE tokens will be distributed at approximately 30% APR for that week. The prices will be determined based on a weekly average to prevent manipulation of the ratios just prior to the airdrop.
4) — Every week, the Glide team will repurchase ELA and distribute to bond holders. Following each ELA distribution, the underlying value of the bond will decrease. For instance, if there are 50k GLIDE-BOND tokens in circulation (and therefore 50k ELA underlying), and we airdrop 5k ELA to bond holders, then 10% of the debt will have been repaid and underlying value of a GLIDE-BOND token will decrease from 1 ELA to 0.9 ELA. Eventually, the goal will be to reduce the underlying value to 0, at which point all users have been fully compensated for their losses. Once 0 is achieved, the program will be terminated.
5) —The rate of principle repayment (ELA) is difficult to pin down at this stage since we do not yet have data surrounding trade volume, GLIDE price, etc. However, it is in our best interest to repay this debt as soon as possible so that we can end the bond program and limit unnecessary inflation. In addition to tokens, we will explore other means to earn ELA to reduce the bond values. This could include releasing an NFT collection, partnerships & integrations, or any more creative alternatives we come up with. Weekly updates will be provided that report the GLIDE APR for the previous week, how much ELA was repaid, and the new underlying value of the bond.
What if I don’t want these bonds?
The benefit of a system such as this is that the debt can be transferred. Upon the initial token drop, set to happen this week, we will provide recipients with the opportunity to exit this bond position if they choose. The Glide team will make best efforts to match buyers and sellers.
It is our belief that there will be a relatively active market for these bonds because they will effectively allow ELA users an opportunity to single-stake and receive an APR anywhere between 10–50%. Currently the best single-stake option for ELA is about 3% from DPoS, and will decline to between 1–2% after the block rewards halving in early December. Therefore, bond holders will receive an APR 10 to 20 times higher than that of DPoS staking, which should allow us to reliably find buyers throughout the duration of the bond.
Trades will always occur based on the underlying ELA inherent to each GLIDE-BOND token. If we pay off 50% of the debt, GLIDE-BOND tokens will trade at 0.5 ELA each. We will need to act as an escrow service throughout the duration, as for user protection it doesn’t make sense to create a liquidity pool for this type of asset.
Keep in mind it is not a completely zero-risk proposition. It does require that Glide remains solvent throughout the duration of the bond and are able to pay it in full.
When will this occur?
Full reimbursement of accounts <$1000 and distribution of GLIDE-BOND tokens to accounts >$1000 will occur this Friday (October 22nd). Tokens will be airdropped directly to individual address on ESC. No claiming or action is required by users.
If you plan to hold your bond tokens, you won’t need to do anything except check your wallets for tokens after airdrops. Since we are still planning to launch without a pre-mint or pre-mine, the first airdrop of GLIDE and ELA should occur 1-week after the start of farming.
If you don’t plan to hold, please drop into the Glide Telegram group and we will make arrangements to convert your bond tokens into ELA. We know this may be a frustrating experience for users who just want their money back, but we kindly ask you to have some patience through this process and we’ll get there together.
Weren't involved in the exploit but interested in purchasing some bonds? Great! Reach out to us and we’ll add you to a wait-list of interested buyers.
When will the platform re-launch?
The best thing we can right now to move past this event is get the platform up and running. However, before we do so we will get a public acknowledgement from our audit organization that the deployed contracts are verified on the explorer and match the audited versions. The timeline for this is uncertain right now, but we are still hopeful to proceed to launch before the end of the month. It could come sooner if things fall into place.
Wrap-up
We must take a moment to thank everyone in the Elastos community who expressed their empathy for us during this time and confidence that we will return stronger. It means more than you realize. We will double-down on our commitment to developing an active economy on ESC.
We’re also interested in expanding our team and adding more skill sets. If there are any developers out there with solidity, web3, and/or front-end experience who might be interested in joining us, please drop a message on socials or at hello@glidefinance.io and we can chat.
As always if there are any questions or concerns regarding this bond program, we will do our best to answer them. Stay tuned for more updates to come.
