Looking forward at Rari Capital

The path forward from May 8th’s exploit

The yield aggregator suffered an exploit on May 8th which led to a loss of approximately $10m (2600 ETH). David Lucid, a leading protocol contributor, wrote a post-mortem on everything that happened and what we are going to be doing to prevent this in the future here. I suggest giving that a read if you’re curious about the specifics of what went wrong.

A little bit of background is important before we dive into next steps. We started Rari Capital as a fair launch project without selling a single token or raising a single penny from VC’s because we wanted to be completely controlled by users. Our DAO currently holds barely 1% of $RGT’s supply and we genuinely don’t have the firepower enabling us to easily bail out the platforms users.

It was a hard decision on how to proceed here, given we don’t have a treasury stacked with hundreds of millions of dollars.

We introduced RIP-1 nearly five months ago to give the protocol the tools it needed to expand: liquidity initiatives and $RGT for developer incentives. Within that, it set aside 2M $RGT to scale the team. However, this proposal was never initiated.

While it was indeed initially meant to scale the team, all of the protocol contributors have elected to give that 2M $RGT back to the DAO with the ask of using the newly acquired $RGT to reimburse lost funds and reward those that helped in the war room.

This should be more than enough and the DAO can keep the remaining tokens. We chose to do it this way as we believe that the token holders should choose the path forward and we wanted to provide the resources to give them as much flexibility as possible.

Future contributors who want to work for the protocol can ask the DAO for a $RGT allocation from now on. I have a lot of thoughts on scaling up the team in a decentralized manner, but that can come at a later time. We’ll also have on-chain governance out shortly to match the mission.

In terms of next steps that you will see (starting today):

1. RIP-1 being initiated, with the Rari Capital team allocation being merged into the treasury. The proposal will be backdated to the date of its approval, meaning that a large portion of the tokens will be unlocked in the beginning for use in the reimbursement.
2. Proposal to the DAO regarding how to go about the reimbursements (all at once, vested, at what price, etc….should be up on the forum in the next couple days, after we hear everyone’s ideas in the community town hall)
3. Everyone (hopefully, assuming DAO can agree on a solution) reimbursed!
4. There is no more Rari Capital team. There are only contributors to the protocol. I am a contributor to the protocol to the same magnitude that any other one of our token holders is. If I want to be rewarded for my work, I need to go ask governance.

I would also like to take a moment to highlight the rest of the Rari Capital contributors: David Lucid, Ben Mayer, Jack Lipstone, Jet Jadeja, Justin Yu, Samuel Shadrach, Will Gallon, Sharad Shekar, Gautham Elango and many others. They have chosen to forfeit their set aside allocation, requiring them to individually lobby to the DAO to compensate for their work going forward, in order to help make users of the protocol whole. To be clear: this is not a company or even the DAO itself making depositors whole — it is the exceptional individuals who have poured their time, talent, and creativity into this protocol and this community, each choosing to put their own financial well-being secondary to our collective mission. All I can say is, I work with the best people.

While the protocol has been through a few dark days, this is a learning experience. I have no doubt that our community and protocol will bounce back harder than ever and continue shipping world changing products.

We have seeded the DAO with the resources to take action, now it is up to the token holders to decide on how to best use the new resources. Let’s determine next steps and move forward, together, as a community.

Come talk to us in our Discord or DM me on Twitter. Also, come join us at our town hall this evening (5PM PT).

Thanks to everyone that has helped. I really appreciate each and every one of you. To any user who lost money during the hack, I feel for you. I had REPT in that pool as well. Let’s build this back stronger than it was before. Countless protocols get hacked each year and it is a matter of how the community and the protocol that determines the future of the project. Let’s make a positive future.

See you all in the Discord.

Best Regards, Jai