Preliminary Compensation Scheme Details
It has been a long wait, but we are nearing the final stages of preparation for re-launch, and thus also the long-awaited compensation scheme.
The Crosswise compensation scheme is a compromise that aims to be as fair as possible, prudent, yet practical. It is utilitarian in principle and therefore aims to provide the greatest benefit to the greatest number of people. The overall timeline errs on the side of caution.
Our approach to ascertaining entitlements is limited by what we can do technically and the amount of time and resources we can reasonably dedicate to this task.
A snapshot is an accurate, yet necessarily blunt tool when it comes to evaluating entitlements. Nonetheless a return to a state prior or near the event is the only equitable basis for compensation, as it is accurate and comprehensive.
Dip buyers and sellers have been taken into consideration, as well as users that moved or sold liquidity.
Reference Block (RB)
In our case the block chosen is the last block (14465247) prior to the first exploit transaction, which occurred at block number 14465248.
Price Before Exploit (PBE)
The CRSS token price just prior to the first exploit transaction. The price at block 14465247 was 1.2605653314300524 BUSD and derived from the CRSS-BUSD pool state, which contained 121004.672023137878940045 CRSS and 152534.294493431617799855 BUSD at the time.
We therefore divide 152534.294493431617799855 by 121004.672023137878940045 to obtain 1.2605653314300524 BUSD
Transparency & Auditability
In order to demonstrate our transparency we will be making available everything needed to reproduce the snapshot and calculations. This will include full instructions, data, sources, and tools.
Following the community vote that ended 27th April, the compensation scheme aims to re-instate the CRSS token amount users held prior to exploit. In cases where there is no direct equivalence, the PBE will be used to assess overall entitlement. All compensation will be distributed in CRSS token.
Scope & Eligibility
All amounts held in CRSS and xCRSS, or LP tokens in their wallet or our farms and pools prior to exploit:
All known attacker addresses, as well as our old contracts will be excluded.
The value of all liquidity movements of CRSS is assessed at the time of move. The net balance is either deducted or added to user’s overall entitlement, and will be compensated in CRSS using the PBE. For all non-CRSS liquidity movements we deduct or add the LP token amounts.
This part of the compensation scheme is intended to make adjustments for holders that “bought the dip”, but also those that sold their CRSS.
Dip buyers compensation in itself was a controversial topic both in our community and the team. Whilst we wanted to offer some compensation to genuine dip buyers or users that simply didn’t know better, we also want to avoid setting a precedent that might to readily legitimize such action. It was therefore decided that we would compensate these swaps but apply an overall “haircut” of 30%.
We first assess the monetary value of buys and sells at time of swap, in order to obtain an overall balance. We then apply the “haircut” to any positive balances. The resulting balance is then divided by the PBE to arrive at the total amount of CRSS to be added to a user’s entitlement.
Cut-Off Time for Eligibility
The eligible time frame has been set in reference to the timing of our communications. Given the confusion at the time, we have decided to consider buy transactions eligible all the way until the end of day on the 18th Jan 2022. Those that persisted in trading CRSS after this cut-off will not be compensated. Sell swaps that occurred after this time are deducted.
Distribution & Mechanics
Compensation will be distributed via a special pool that will only be visible to affected users. In order to ensure full audit-ability, users will receive a special token “cCRSS” dropped to their wallet. The cCRSS token will then automatically be deposited on your behalf to the Compensation Pool. Compensation is progressively paid out in proportion to your overall share of the CP. Similar to our regular pools, when claiming compensation, users will have the option to vest compensation over 5 months or pay the 25% Instant Claim fee.
The timeframe for full compensation is necessarily long given the significant amounts to be reinstated, and is likely to exceed 1.2 years. To avoid generating what might be insurmountable sell pressure, we have erred on the side of caution.
Not contributing to conditions that could cause a significant sell-off is particularly important with the 1:1 model, as it will directly affect the value of the overall compensation.
Just like in our standard pools, user will have a choice to vest their rewards, paying a 25% fee on instant claims. This allows for some diversity and ensures that in case the CRSS price tumbles and users opt for the instant claim option, we significantly reduce the tokens in circulation.
Bonus sCRSS Distribution
In order to thank our community and also remedy some dissatisfaction that is likely to arise from a necessarily imperfect solution, we have decided to airdrop a modest amount of our upcoming stakeholder/governance token, sCRSS, to holders that held CRSS prior to exploit. This is not intended as part and parcel of the compensation, but rather as a small gesture of gratitude for the support that many in our community have shown during these testing times.
As soon as we finalize our calculations and feel confident, we will publish preliminary results for consultation. The community can then feedback on any errors or divergences if they arise. Any fixes will then be implemented and another round of consultation will be carried out until all issues are resolved.
It is worth mentioning that nobody in the Crosswise team had any prior experience with compensation schemes. The costs incurred have been significant and perhaps an indication of why so few projects end up even attempting compensation.
We don’t know what the future holds for Crosswise, but we have followed our principles, and feel proud to pull through and deliver what we promised.
We would kindly ask the community to remain patient during these final touches and to allow the team to focus on getting these crucial final steps done. Please note, we will not be announcing any launch date until we have fixed any issues that arise with compensation. We thank you for your support!
About Crosswise Finance
Next-gen cross-chain Decentralized Exchange (DEX) building a seamless DeFi user experience. Crosswise Finance bridges the gap between centralized and decentralized exchanges, bringing together the best of both worlds. Crosswise is committed to it’s community and brings back customer service and support to the DeFi space.
Disclaimer: This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making investment decisions.