July 20, 2021
Summary of THORChain Treasury Proposals
In the wake of last week's attack on the THORChain network, the THORChain community has outlined a number of proposals for restoring solvency to the network.
In the wake of last week's attack on the THORChain network, a series of proposals have been created by the community outlining the different possibilities for rectifying the network’s insolvency. These ideas are continuing to develop and are subject to change.
Below is the expanded discussion on the various options and their pros and cons. Please note, the order of these proposals does not indicate any particular preference.
Accumulate ETH over-the-counter using a variety of treasury assets. Restore the pool state and solvency to pre-hack levels. RUNE is added to the pool from the treasury to rebalance, preventing arbs from extracting further profit.
- Market resumes to expected ETH price pool is balanced to pre-hack levels.
- Does not sell RUNE or put additional downward pressure.
- All network participants benefit.
- Looks good from PR standpoint.
- Spooking the market — even OTC sales impact market price.
- Continuing market decline increases the RUNE cost of this option.
Network participants “return” profits made during exploit.
- Node operators return slippage fee.
- Arb traders return a portion of ETH they were able to swap cheaply.
- Liquidity providers contribute some profits.
- Treasury makes up remainder.
- Based on community willingness.
Build an outbound campaign to crowdfund a small part of the balance as a show of support. Target decentralization believers. Give them a special edition $RUNE physical coin + NFT. Turn this into a community marketing campaign.
- Builds community.
- Exposes the brand to new audiences and makes a headline.
- Allows fellow projects to pledge support. Make this an industry call since THORChain is a public-service.
- Isn’t a donation, people receive memorabilia. The value they pledged represents the value for a physical coin/NFT.
- Easy for media to spin negatively as "community bailout".
- Limited to the people willing to give address for shipping.
Borrow against RUNE to finance new ETH pool.
- Pool could be staged in a way so that funds are not lost to arb.
- Dangers of borrowing and leverage in a declining market.
- Drains funds via centralized action.
- The protocol doesn’t currently support splitting/assigning LP positions.
Use treasury USD (current reserve is $17M USD) to accumulate the 4000 ETH necessary for solvency.
- Will not depress price by selling RUNE in the open market, or selling OTC at depressed prices.
- Most straight forward.
- Drains most of the stablecoin funds from treasury.
- Does not cover the addition of RUNE to the pool so value will be lost to arbs.
Use treasury USD/BTC to accumulate ETH necessary for solvency, and sell RUNE over a long period of time to restore treasury USD/BTC.
- Can be combined to other proposals.
Cover the losses by selling non-RUNE treasury holdings. Excess from the treasury assets used to buy more RUNE on open market (similar to a stock buyback).
Issue a supply increase to the network that will only be distributed at the end of 2021 to all affected LPs.
- Increases TVL.
- Decreases RUNE supply on exchanges.
- Rewards loyalty.
- Shows confidence in RUNE.
- Allows recovery of expenses over an extended period.
- Decreases treasury diversity.
- Small increase in RUNE supply.
- Minting new RUNE may be difficult or prohibited in this respect.
- Inflation sets a bad precedent.
A combination of all of the other proposals, and reduce ETH LP unit value. Socializes losses aross various network participants.
- Node operators return the large slip-fee profit.
- Pending arbitrage transactions are purged.
- non-RUNE treasury assets are used to purchase lost ETH.
- Do not sell RUNE on the open market or OTC.
- Possibly establish a line of credit.
- Utilize treasury LP units.
- Raise capital via VCs.
- Ask community to return profits made during exploit.
- Reduce LP unit value in ETH pool.
- Reduces burden on treasury.
- Little to no value lost to arbs for ETH.