Summary of Action Steps
Create a refund distribution system funded from the treasury (~$150k of alUSD and 5,590 gALCX) to refund 0.909 OP-alUSD per 1 ftm-alUSD and 1.289 OP-ALCX per 1 ftm-gALCX, with refunds available to be claimed on Optimism.
Context
Multichain was the bridging solution for alAssets on Arbitrum, Optimism, and FTM for alETH, alUSD, and gALCX (not all assets were deployed on all chains). On each non-mainnet chain, the Alchemix multisig deployed an upgradeable version of each asset - this is the Canonical asset on that chain. When a user bridged from mainnet to another chain, they would lock their asset within the multichain contract on mainnet, and then the multichain asset would be minted to the user on the destination chain. The user could then deposit the multichain asset to the Canonical asset contract, which would allow them to mint an equivalent amount of the canonical asset. When multichain was exploited, the DAO disabled the ability for multichain assets to mint canonical assets. However, someone with key access at multichain was able to steal the funds the multichain contract held on mainnet. Because of this, many of the assets on Arbitrum, Optimism, and Fantom are no longer able to bridge back to mainnet, and are therefore no longer backed. Additionally, FTM USDC, DAI, and USDT were all originated via the multichain bridge. This means the collateral in the Alchemists on FTM is also worth less than the loans they originated. This proposal seeks to restore the backing of all FTM assets affected by the multichain exploit using the DAO treasury.
Multichain Mainnet
Multichain holds 1.92m alUSD on mainnet, these funds are currently considered out of multichain’s control, effectively lost and potentially in circulation: https://etherscan.io/token/0xbc6da0fe9ad5f3b0d58160288917aa56653660e9?a=0xf49818b5d7de5b0dbfccb3ddcd14e1f0aa1a6f01Multichain holds 901.7 alETH on mainnet, these funds were moved to an EOA and considered effectively lost and in circulation: https://etherscan.io/token/0x0100546f2cd4c9d97f798ffc9755e47865ff7ee6?a=0x6b6314f4f07c974600d872182dcde092c480e57bMultichain holds 5845 gALCX, these funds are current considered out of multichain’s control, effectively lost and potentially in circulation: https://etherscan.io/address/0x6474239b1a83ceb3789cd8ddb2218e6f5c6840dd
FANTOM alUSD and gALCX
alUSD Fantom - DATA
| Asset | Supply/Quantity/TVL | Link/Source | Approx Value |
|---|
|
| alUSD FTM | 170,693 | ftmscan | |
| Multisig alUSD | 1743 | debank | |
| Multisig multiDAI | 92931.95 | debank | $0.08244 per, $7661 |
| Multisig multiUSDC | 879 | debank | $0.1976 per, $173 |
| Multisig multiUSDT | 5181 | debank | $0.1348 per, $698 |
| Yearn DAI Alchemist | 10640 yvDAI | https//app.alchemix.fi/vaults | $1444 |
| Yearn USDC Alchemist | 6040 yvUSDC | https//app.alchemix.fi/vaults | $1599 |
| Yearn fUSDT Alchemist | 193.50 fUSDT | https//app.alchemix.fi/vaults | $50 |
| Approx Alchemist Debt | 8437 alUSD | | 50% of total deposits |
| Multi alUSD | 153,620.5 multi alUSD | ftmscan | This is the amount considered “lost” on mainnet |
| Transmuter DAI | 7091 DAI | ftmscan | $963 |
| Transmuter USDC | 3135 USDC | ftmscan | $830 |
alUSD FTM Analysis
There is 170,693 alUSD on FTM. Of this, 153,620.5 is meant to be backed by multichain. 8437 is meant to be backed by alchemist collateral. The remaining supply (~$10k) is backed by funds held by the transmuter buffer, which no one is currently transmuting as alUSD value > multiUSDC/DAI/USDT value on the market. The entire Fantom loss is caused by multichain. One aspect of the loss is directly related to Alchemix relying on multichain for bridging to/from Fantom. The other aspect of the loss is due to Fantom’s decision to rely on multichain.The live status is that there is 170,639 alUSD on FTM, with a total backing of $3339 (total deposits / 2 + total transmuter underlying assets), and DAO owned funds of $8532 plus 1743 alUSD.
Proposed alUSD FTM Solution Outline
The DAO could restore backing for the alUSD specifically lost in the multichain contracts, and NOT restore backing for losses caused by the depegging of other multi-assets on FTM. This would mean the DAO would restore 153,620.5 alUSD of backing. Additionally, the DAO could burn its 1743 FTM-alUSD. The DAO would keep its multiassets (at this point, they have negligible worth and large upside if fantom ever recovers the backing). The end goal would be a pro-rated restoration - essentially, 1 alUSD on FTM would be able to be swapped for (153,621)/(170,693-1743) = 0.909 alUSD on mainnet. If the above plan is followed and all alUSD on FTM converts to alUSD on mainnet, then the end result would be 0 alUSD circulating on Fantom, but there would still be users with debt within Alchemix. Because the system treats DAI, USDC, and USDT as = 1 alUSD and $1, these users could self-liquidate their debt to get a portion of their collateral back. From here, the DAO would own multi-Assets in its wallet as well as in the transmuter. These assets could all be held in the multisig to see if multiassets ever have backing restored, to help recoup the costs of this solution. Alternatively, the DAO could later decide to sell them if more information emerges. This decision does not need to be made in this proposal.The alUSD would come from the dev multisig (https://debank.com/profile/0x9e2b6378ee8ad2a4a95fe481d63caba8fb0ebbf9), specifically from selling a portion of the 326,495 unlocked CRV (obtained from AMO harvests).
Proposed alUSD FTM Technical Solution
gALCX Fantom
There is 5,590 gALCX on Fantom. This is entirely backed by multichain. In line with the logic of the solution above, and in this simpler scenario, the DAO can offer 1:1.289 conversion from gALCX on Fantom to ALCX on Optimism, using the same technical solution as for alUSD. Note multichain holds more gALCX on mainnet than exists on FTM. If users are stuck in other unique situations with gALCX, they can reach out to be handled case by case, but this solution covers almost all of the FTM gALCX.
Alchemix BizGov was introduced to Paladin, an auditing firm capable of building the necessary solution using Layer 0 architecture. The cost to the DAO for Paladin to build this tool will be 4150 USDC. The tool will bridge alUSD to OP at a rate of 0.909 OP-alUSD per FTM-alUSD, and 1.289 ALCX per gALCX (this means gALCX on FTM is effectively now considered unstaked, rather than trying to achieve a constant live value. This design was deemed preferable to giving users 1:1 gALCX, but on mainnet (higher gas). Paladin will build the contracts and Alchemix will provide the front end.
Voting Options
Voting will be simple for/against:
For - Refund Create a refund distribution system to refund FTM-alUSD holders on Optimism (at a 1 ftm-alUSD/0.909 OP-alUSD ratio) and FTM-gALCX holders on Otimism (at a 1.289 ALCX/ 1 gALCX ratio)
Against - No Refund Do not refund holders of FTM-alUSD and FTM-gALCX
Note: The execution of this proposal does not block the launch or expansion of Alchemix on Arbitrum and Optimism
