Authors: 0VIX Protocol GotchiIDs: 22864 (@Maxicrouton) Quorum requirement: 20% (9M) Vote duration: 7 days Discord Thread: https://discord.com/channels/732491344970383370/1106249657425862827

Proposal

The purpose of this proposal is to vote on returning the GHST that GotchiVault transferred to the Aavegotchi DAO Treasury in one of the following ways:

• Send the GHST to the 0VIX multi-sig
• Send the GHST to a new multi-sig with Aavegotchi, 0VIX & neutral 3rd party
• Recapitalize markets directly according to [OIP21]

Introduction:

This proposal’s primary objective is the recovery of funds that were illegitimately obtained through the exploit on the 0VIX Protocol. Part of those assets were transferred to the GotchiVault, which in turn passed on the funds to the AavegotchiDAO.

In Summary, 763,624 GHST tokens are held by the Aavegotchi Treasury, leaving the rightful owners without access to their assets. The 0VIX Protocol Association is in discussions with the community to proceed with the distribution of recovered funds back to the respective markets and their rightful owners.

Objectives:

There are 2 main open items that need to be resolved:

1. Destination of funds
2. OTC-Deal terms (to be decided in follow-up proposal)

This proposal is about finding a trusted and secure location for the funds that ensures maximum benefit for the affected 0vix users in a way that satisfies the Aavegotchi DAO.

The following options are proposed on sending the funds to custody until the 0VIX DAO agrees on the distribution of recuperated GHST:

Option A: Directly transfer the funds to the 0VIX multisignature wallet.

• KYC of involved parties
• Address: 0x7b2b0cBaDC25953A64D77B4785848b48B45E1017 (Multisig - PoS)

Option B: Establish a new multisignature wallet with representatives drawn from three separate entities

• 1 from the 0VIX team,
• 1 individual from the Polygon team (likely Hamzah Khan, Head of DeFi @ Polygon)
• 1 individual from the QiDAO team (likely Benjamin.lens) \

Option C: Aavegotchi takes responsibility of recapitalizing the markets directly

• Swap into each of the markets tokens avoid ding tot the liquidity distribution at OIP21
• Transfer tokens directly to the markets by being themselves responsible for each transaction needed for this.

Next steps:

The 0VIX Protocol aims to allocate the recuperated liquidity in a manner that promotes fairness, accessibility, and the long-term sustainability of the affected markets. In Discord there was the call for comments on how we should distribute the recuperated funds. After getting feedback from the community the proposal was simplified, and in OIP 21 the community is voting on whether GHST funds from AAVEGOTCHI DAO should be distributed directly to affected markets proportionally to their net liquidity drained.

OIP21 Snapshot vote

The absolute amounts of each market’s recapitalization proceeds will ultimately be determined by the value of GHST/the terms of the OTC deal. Assuming the OTC deal goes through and the 0VIX multi-sig gets DAI in return. The DAI would then be swapped according to the liquidity distribution that the voted option suggests.

Background

OTC Deal (not part of this proposal)

In essence, our goal is to secure a fair OTC deal as preliminarily discussed with some of the AAVEGOTCHI DAO team members, that meets the needs and expectations of all stakeholders involved

• Aavegotchi DAO’s goal is to mitigate the sell pressure on the GHST token while concurrently ensuring the rightful owners of the funds receive their due
• 0VIX users want to have a fair price and get the maximum value from funds recuperated

0VIX DAO vote system

Pre-exploit, 0VIX governance was kept on https://community.0vix.com/ and the platform was in public beta preparing for a token launch.

Post-exploit, 0VIX DAO moved to a preVIX voting system to further ensure fairness and prevent bots and misuse. PreVIX is the de-facto pre-mine token that was accumulated by participating in a liquidity mining campaign, therefore it can be seen as a proof-of-liquidity where no individual address has a benefit over others. 0VIX governance will from now on be held on https://snapshot.org/#/0vix-protocol.eth

The exploit:

You can find more info in the post-mortem of the attack:

The total extracted value post-exploit amounts to a net total of $4.33 million, paid out of 0VIX’s user funds. Of these, 1.4M GHST excess tokens remained with the GotchiVault where they were used to process further withdrawals by users selling into the price increase until the vault was finally halted and 978K GHST tokens are in the process of being returned to 0VIX by the Aavegotchi DAO and GotchiVault DAO.

Returning the funds follows established protocols in the DeFi ecosystem for managing such situations. Recalling the Yearn incident, they successfully recovered $9.42 million that a Cream attacker had deposited into the yUSD vault as part of an attack. These retrieved funds were returned to Cream.