[Fast Track] eIP 55 Withdraw STG from the Reserves before the upcoming reissuance
Title: [Fast Track] eiP 55 Withdraw STG from the Reserves before the upcoming reissuance
Author(s): @carebbear
Related Discussions: N/A
Submission Date: March 6th, 2023
Simple Summary
The proposed action is to withdraw the STG (Stargate Finance) token from the project’s reserves, hold it until an airdrop occurs, and then deposit it back into the reserves using a new contract.
Motivation
In light of the recent decision by the Stargate DAO to re-issue its tokens to all token holders and the upcoming STG airdrop scheduled for March 15th, it is recommended that STG holders withdraw their tokens from Euler to ensure they receive the airdropped tokens. The Euler Foundation made a decision on February 22, 2023, to pause STG borrowing on Euler to prevent borrowers from taking advantage of the airdrop by borrowing the STG and repaying with worthless old STG after the airdrop. This action bypassed the normal governance flow to avoid alerting potential attackers to the opportunity.
To protect the value of the STG reserves held on the Euler smart contract (127.13k STG), it is crucial to withdraw the tokens from the reserves and wait for the airdrop. After the airdrop, the new tokens should be deposited back into the reserves of a new STG market that will be activated. The urgency of this situation requires swift action, as the current governance process typically takes 14 days from start to finish.
Failing to withdraw the reserves could create a potential vulnerability, allowing a potential attacker to steal the newly airdropped tokens. If the reserves are not withdrawn, new STG tokens will eventually be transferred to the Euler contract, which could be exploited by an attacker who front runs the transfer by opening a market for new STG token on Euler and deposit a small amount of new STG. When new STG tokens are received by the Euler Contract following the attacker’s transaction, the amount transferred will affect the eSTG/STG exchange rate, essentially crediting the attacker with the received amount. Withdrawing the reserves before the airdrop is necessary to avoid this situation.
Relevant information:
On March 15, the STG token will migrate to a new address. This was approved on Snapshot
Stargate STG Migration User FAQ.
Action to be taken:
- Withdraw the STG token from the project’s reserves.
- Wait for an airdrop.
- Deposit the STG token back into the reserves, but under a new contract.
| Voter | Cast Power | Vote & Rationale |
|---|---|---|
 0x1A18...2B8B16 | 549,997 | Yes - Withdraw STG from the rese |
 FranklinDAO (Prev. Penn Blockchain) | 100,000 | Yes - Withdraw STG from the rese |
 0xbE91...da506d | 38,164 | Yes - Withdraw STG from the rese |
 0x1109...CC43dA | 26,366 | Yes - Withdraw STG from the rese |
 0x31f4...39710d | 19,954 | Yes - Withdraw STG from the rese |
VOTE POWER
Proposal Status
- Mon March 06 2023, 08:36 pmVoting Period Starts
- Sun March 12 2023, 08:36 pmEnd Voting Period
Current Results
1-Yes - Withdraw STG from the rese
774,604.291