Hundred Finance Phase 1 Grant Distribution Amendment Request

On the 20th of July, 2022, the Optimism Collective kindly awarded an OP token grant to Hundred Finance as part of its Phase 1 grants program. These 300,000 OP were set to join the HND token in being used to incentivize growth in stablecoin liquidity on the Optimism L2 blockchain and, in particular, within Hundred Finance’s lending markets during their first year of operation. Through collaboration with the Optimism Collective over the course of the grant application process, a key performance indicator (KPI) based approach to distribution was proposed that would be put in place over the 52 weeks of emissions. This approach dictated that emissions would only continue as long as TVL remained above predefined targets, and failure to meet those targets would merit discussion on how best to proceed. And while during the initial phases of the program things went smoothly, with updates regularly posted to this forum tracking TVL growth and its maintenance, this changed radically in Spring of 2023 when Hundred Finance’s Optimism deployment suffered a major hack.

On April 15th, 2023, the Hundred Finance team regretfully announced the theft of approximately $7m USD in assets by way of a vulnerability to empty but active lending markets present in Compound V2 and its forks, of which Hundred Finance was one. This vulnerability allowed a Tornado Cash-fed wallet to drain all tokens within the protocol’s Optimism markets, after which the majority of these assets were rendered unseizable through exchange and transferred to the attacker’s corresponding mainnet address - for a full breakdown of the hack, please see the dedicated Medium post. Despite engaging security professionals and cooperating with law enforcement of several jurisdictions in an ongoing investigation, to this day the stolen funds remain present yet unmoved at either the hacker’s mainnet or Optimism addresses, or within a permissionless liquidity pool created by Curve.

The hack was undoubtedly devastating to all those affected, yet it thankfully did not impact the yet-to-be-emitted OP tokens the project held due to them being stored with DAO assets in a treasury multisig. In total, following our cessation of emissions with the conclusion of the epoch during which the hack occurred, 191,448.97 OP remain untouched since our TVL KPIs ceased being met due to the actions of the hacker. With this post, it is the Hundred Finance team’s intention to address what is to be done with these remaining OP tokens and request consideration of a proposal that they be distributed to those whose provision of liquidity per the objective of the grant led to their exposure to losses as a result of the attacker.

Distribution Amendment Request

Given the length of time since the hack occurred and the insurmountable hole left in the project’s finances by the losses it created, in August of this year the Hundred Finance DAO near-unanimously voted to sunset the protocol and distribute treasury assets to victims, with veHND holders receiving any value recovered once victims had been made complete. These treasury assets amounted to:

  • 1,117,218 USDC
  • 391,811 ARB
  • 107.29875 ETH acquired through the recent sale of a Velodrome veNFT
  • 191,448.97 OP

While the first three of these four primary assets have been distributed, per the commitment we made prior to receiving the remaining 191,448.97OP, we would like to request that the Optimism Collective consider allowing us to distribute the OP tokens to victims on a pro rata basis calculated according to their losses calculated in USD at the time of the hack. This would complete our distribution of all major treasury-held assets.

Response to Misgivings

While there are certainly arguments that could be raised opposing amending the distribution in the manner outlined above, such as its failure to proceed according to the original grant application, the creation of unwarranted sell pressure for the OP token, and more, which are suggestions both valid and simultaneously challengeable, I believe there is a compelling reason to set aside these misgivings while fully considering the request.

The many, many hacks suffered within the crypto space have ended innumerable projects and fractured countless communities, all due to the actions of a few bad actors willing to engage in conduct that is clearly morally wrong (often disavowing the lives they ruin by abstracting their actions to the running of code). Though a small act, by taking a sympathetic approach to victims and seeking to contribute to making them whole the Optimism Collective would be using its power as a collective to help mitigate the actions of a bad actor and support a positive and optimistic outlook at what is undoubtedly a difficult time for crypto. For this reason I, the author of the original grant proposal, am putting this distribution amendment request to you.

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Thank you for the update. It’s always tough when a project decides to wind down.

CC: @lavande in case this gets lost in the forum

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The post has been tagged as “not-passed”. Would somebody in authority care to elaborate on this? Without discussion, we have no means of knowing if it was something done unilaterally by a single mod or a collective decision.

Incidentally, I’ll take this as an opportunity to attach a csv file that covers the proposed distribution schedule for all Hundred DAO related assets.

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CC: @lavande for the above in case this gets lost in the forum.

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Hi, I would support this demand as hundred finance was a first mover on the op chain and drove adoption.

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This needs to be approved by the Grants Council, as it is the “grants process in place” right now, as outlined in the Code of Conduct:

    • Mandatory (Violation 7): Must execute the grant in accordance with what is outlined in the approved grant proposal. Grant recipients that wish to change the use of the grant from what is outlined in the proposal must submit a new proposal requesting approval for the change. To do so, they must follow the grants process in place at the time. If the change is not approved, the recipient must execute the grant as outlined in the original proposal or return the portion of grant funding affected by the unapproved change.

cc @Gonna.eth

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