Hundred Finance: Meter Exploit Compensation Response

We would like to begin this post with a big thank you to the community of veHND holders who went out of their way to participate in the recent Meter Exploit Response Vote. Community is incredibly important to us at Hundred Finance, and we appreciate that this is a difficult topic. We are thus very grateful to those who turned out to vote, as well as for the quality of the majority of discussion that has taken place around these matters over the past several weeks.

Prior to discussing the vote itself, we would like to share an item of good news relating to the Moonriver incident. Today, March 10th, the owner of one of the accounts that chose to return funds got in touch. Their reason for reaching out was their recovery of access to approximately 22.79 ETH that they had thought locked in Tornado. These were funds they then withdrew and sent to the project multisig on Ethereum using this transaction. Due to the Moonriver markets now being defunct, these recovered assets will be assessed for their USD value at the time of the transaction at which they entered our custody and be distributed pro rata to affected accounts along with the Meter-issued PASS token, once those too are in our custody (more on this to follow).

To return to compensation vote, the vote entailed responding to a complex question and consideration of various factors related to both the protocol in particular and, more generally, approaches to losses experienced by the innocent victims of malicious actors, as well as the implications of responses to these losses on non-affected persons sharing the same ecosystem. While it did not prove as definitive in terms of participation as the required quorum, we have nevertheless used the vote as a means of reaching a final decision on how the project will respond to the inadequacy of the Meter exploit compensation package in the face of losses experienced by Hundred Finance users. Before elaborating further, however, we would like to present some statistics derived from vote:

  • In spite of the need for an 80% quorum to be met, at the conclusion of the voting period, of a total number of veHND in existence at the snapshot (2,710,244 veHND), approximately 40% (or 1,090,00 veHND) of vote weight was cast prior to the deadline.
  • From the votes cast, the majority of veHND was used to express a wish to decline to add to Meter’s compensation package, with “NO” receiving 783K veHND in vote weight, or 69.1% of the total used in voting. Of the remaining veHND used, 292K veHND, or 25.75% of the total, was in favor of using treasury funds to add to compensation, while 58K veHND, 5.15%, chose to abstain.
  • While a larger number of veHND was used to vote no, a greater number of individual wallets possessing veHND was actually in favor of contributing to compensation. In total, 120 wallets were in favor, 117 wallets were against and 18 chose to abstain.

Considering all of the above, as well as the technical invalidity of the vote due to the failure to reach the desired quorum, we on the team have chosen to pursue a course that provides a gesture of goodwill to those impacted but in a manner that doesn’t put excessive burden on the project and its token holders. In this, we have sought to balance both the necessity of acknowledging the interests of those not directly affected and the project as a whole, with the desire of some to step back from the incident. As such, the following is the final determination on the procedure on our end for issuing Meter’s compensation and Hundred Finance’s response to the notion of making a contribution to it in order to ameliorate some of the damage to our users:

Meter’s Compensation

  1. Today, March 10th, 2022, we sent the compromised Meter-issued BNB to the Meter account in line with their stated procedure. The transaction and our alert informing them of this fact can be seen here. These were sent from an Admin-held account owing to the difficulty in ensuring a multisig generated on their own chain would be able to correctly receive the PASS token.
  2. Meter have stated that PASS tokens will be airdropped to the same sending address on Meter mainnet starting from March 15th, 2022. The Meter mainnet is EVM-compatible, and so it appears it will allow us to carry out distribution to affected users from there.
  3. As soon as the total allotted number of PASS tokens issued by Meter according to their compensation package are received by the project, these will then be distributed to affected users according to their portion of the lost funds their personal losses amount to, calculated in USD. These PASS tokens are projected to have a value of $685,000 USD by Meter.
  4. At the same time the PASS tokens are being distributed on the Meter network, a pro rata share of the funds generated from today’s 22.79 ETH will likewise be distributed on the Moonriver blockchain to the same addresses.

Hundred Finance’s Contribution

  1. Hundred Finance has decided to make a contribution to Meter’s compensation package as a gesture of goodwill by distributing specially created bonds to the Moonriver accounts of affected users.
  2. Each of these bonds will be redeemable through the team for 4-year locked veHND at a 1:1 ratio that can be granted to the redeemer on any eligible chain. Alternatively, should the recipient not wish to redeem them for veHND themself, they will be free to trade them on the open market of Moonriver like regular ERC20 tokens with buyers who may wish to acquire max-locked veHND.
  3. For those who make a veHND redemption, the bonds will be fully compatible with yield boosts, gauge voting, governance interactions and future airdrops in an identical manner to all veHND. They will also be compatible with the mirroring of veHND for the chain on which they are issued at the point of redemption.
  4. The quantity of bonds to be distributed is to be determined by calculating a TWAP price for the HND token and then issuing an amount equal to 75% of the lost funds not covered by Meter’s compensation package. This 75% is equal to approximately $1.1 m USD.
  5. Using the HND price period on Coingecko between February 6th and March 5th as the TWAP price, the value of each distributed token is assumed equal to $1.50. This means that the total number of bonds to be distributed will be 730k.
  6. We will be issuing these bonds once the appropriate contracts have been generated and preparations made.

To reiterate, these are the final determinations of the project on the financial response to the Meter exploit and its repercussions on Hundred Finance. For recipients who choose to trade their bonds, we recommend using an OTC service or other secure means of exchange. We cannot take any responsibility for loss of bonds once they have arrived at a user account, so please ensure appropriate security and due diligence is used when transacting in them. Furthermore, we have added a disclaimer to the website that covers our approach to meeting situations where external contract failures result in repercussions on Hundred Finance users. Please consider reading the project documents carefully and in full before continuing to use the protocol in order to ensure adequate due diligence has been carried out.

Once again, thank you to the community for bearing with these issues along with us. We hope this gesture of goodwill to the affected can bring some degree of closure, though we understand ambiguity remains about when and how Meter will issue their promised compensation.

4 Likes

Sers, this rationale post is as well written as any I’ve ever seen. While I know all readers may not agree fully with the Team’s choice, you outlined the process, the metrics that guided your decision and a rational proposal which, while inflationary to HND circulating supply, spreads the impact over a period of time. The benefits to the recipients in terms of voting power and boost are immediate, while sell pressure on HND price is so far down the road that near term price action will likely be unaffected. Most importantly, the reputation of Hundred is protected, the community knows this project is the opposite of a rug. Bravo Sers, well played.