ParaSwap DAO

Keywords

Security

Simple Summary

To allocate the existing DAO treasury funds (80.6 ETH) and $ARB treasury reserves (6.36 wETH) to compensate stakers affected by the Epoch 3 distribution error totaling 86.96 ETH

Context

Due to an involuntary human mistake in the epoch distribution process, 86.96 wETH were sent from the Ethereum GovCo Multisig to the wETH contract, resulting in a loss. These funds cannot be recovered unfortunately, and an alternative course of action must be chosen to compensate stakers and let them get access to the epoch 3 rewards.

Goals

Compensate stakers affected by this distribution error as quickly as possible.

Means

To ensure the rewards are distributed as soon as possible, we propose the following:

• Use the existing ~80.6 wETH in the DAO treasury to fund the distribution.
• The remaining amount (~6.36 wETH) to be covered using the $ARB the DAO treasury
• Return the 80.6 wETH to the DAO treasury by converting part of the $ARB airdrop that was allocated to the ParaSwap DAO.

Metrics

The proposal will be successful once all stakers of epoch 3 receive their corresponding wETH amount relative to their ParaBoost score during the epoch. Additionally, the proposal will be considered complete once the DAO treasury recovers its 80.6 wETH .

Considerations

To avoid this error from happening in the future, more automation, such as the ones proposed by Mimic could be put in place to minimize human error. Additionally, the implementation of public DAO-facing checks, such as onchain automatic voting will ensure more voters can verify the validity of the distribution.

Starting from Epoch 4 distribution, those steps should be respected:

• Publicly sharing the list of rewards (address, ETH rewards) in order to allow DAO members to verify the correctness of the Merkle Root (the compressed param for rewards distribution)
• Reducing the MultiSig role by automating the distribution through a new smart contract, where its sole purpose will be transferring WETH from the MultiSig to the Distributor and updating of the Merkle Root.
• Providing a public link to a full simulation of the distribution using Tenderly.
• Fully automating rewards “bridge & transfer” of WETH to the Distributor contract.
• Adding more automation to data correctness verifications.

Other potential long term solutions:

• Using a third party to run the data generation scripts (Gelato & Co)
• Putting the final Merkle Root data on an express vote of 24h pre-distribution
• Having an independent watchdog, where their job is to double check the technical correctness of all MultiSig proposals.

Implementation overview

• Bridge all DAO treasury wETH to Ethereum mainnet
• Distribute the wETH to Epoch 3 stakers
• Return wETH to the DAO treasury during the next 3 epochs

Voting options

• For
• Against
• Abstain