MonoX
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MonoX

The Path Forward Part 2: Community Compensation

MONO Family. We want to extend our thanks for your support over the past week since the expolit. The MonoX team is devastated by what happened, and we’ve been hard at work to try and locate the hacker with our forensics partner. The investigation into the hacker is ongoing. In the meantime should we not be able to get the funds back, we have formulated a remuneration plan.

Community Compensation

As a new start up that had only launched our product for 2 months, we are in a tricky situation. Immediate remuneration of $31m to our users and investors is not possible. We also have to be conscious of compensating users with $MONO immediately because that would cause a downward death spiral of the token as users liquidate the $MONO. However, we are working on a strategy to pay back our users in full over time.

High-Level Strategy:

If we can’t recoup the funds by 1/3/2022 we will issue a debt token dMONO for every dollar we are compensating. This token will be non-transferable, and we will deploy a dMONO vault.

The way our protocol works, we are around 100x more profitable than a regular DEX with a similar TVL. When we relaunch again we will be buying back MONO using our revenue and sending MONO to this vault. Any holders of dMONO can withdraw from the vault at any time by burning their dMONO. When a withdrawal is done it is not reversible. If you choose to withdraw your dMONO before it reaches the owed value, it means you are forgiving the remaining portion of the debt.

For example, if a user burns 1 dMONO to get 0.1 MONO, that means that they are fine with forgiving the rest of the debt by getting 0.1 MONO immediately.

This means users who choose to claim immediately and forego the rest of the debt owed to them; the rest of their owed tokens will stay in the pool and be distributed to the other users.

We will launch the vault when we do our product relaunch in January. At this time we will release another in-depth walkthrough article to detail how to take part in the compensation plan.

Code Fix

  • Adding new restrictions
  • Adding new risk management systems to ensure this never happens again.

MonoX developers are working to implement new functionality to prevent exploits in the future. We will also be implementing new features to minimize LP risk by offering protocol-owned liquidity via bonds. More details on this to come in the near future.

Team Tokens

The MonoX team will not be receiving any of their team token allocations until the community is paid back in full. The community comes first and we will make sure that none of us receive our vesting until our community has been made whole again.

Future prevention:

Insurance — B2B insurance coverage in crypto is small and a $1m coverage is already on the higher end of the spectrum. At launch, we announced a $1m insurance coverage with Tidal. The hack for $31m took place only 6 weeks after our launch. In the future, we will scale out TVL more slowly and are actively seeking ways to match higher insured amounts for the pool.

Immunefi — We have started to work with Immunefi and will offer an ongoing bug bounty for our product. We will scale the bug bounty amount as our TVL increases.

Security Partners — We won’t even consider a full re-launch until we partner up with a highly reputable security partner. We are working on refactoring the code with additional restrictions.

Airdrop: Bug Bounty and Liquidity Mining — These are paused until we relaunch our product because our token was designed for governance and product utility. We understand the delay is frustrating however it is what is best for the protocol.

MonoX 2.0

The next iteration of the MonoX protocol will be launched with the utmost attention to security and detail. MonoX will relaunch only after a considerable effort from its developers and safety partners is spent to ensure robust security. The second iteration of MonoX will also include further bug bounties to incentivize a further level of security from the crypto community.

Community Measures

Investing in cryptocurrency projects is a choice that should be made with much deliberation and a high margin of safety. We are incredibly moved and saddened by our users who lost their funds while putting their faith and support in a new project like ourselves.

The MonoX exploit highlights how protocols and communities can put trust in code that has gone through security measures. Please be careful and never invest more money than you can afford to lose. Moving forward, MonoX will do our best to have better insurance coverage. To our community: we urge you to also consider some additional risk measures such as Nexus Mutual coverage in the future for B2C insurance.

Lastly,

We know it will take time for the community to trust us again, but the team isn’t going anywhere and we plan to still build our products to make a difference for DeFi capital efficiency. We know and accept what is at stake here. We will make this right.

As we mentioned previously, this is only the beginning of our story. We will continue to work on MonoX and double down on our security, improve our product, and relaunch soon. To our community: Thank you so much for your love and support during this difficult time. Last week was indeed a setback, but we want to remind you again that we are more committed than ever to building a bright future for MonoX and the DeFi space.

For now, we will be back behind the scenes building again.

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