SIP-19: LP Compensation Plan


On 3 September 2021 at around 12:17 AM UTC several SIREN AMM pools were exploited via a reentrancy attack. As a result, approximately $3.5M worth of assets were drained from the AMM pools. An in-depth incident report can be found here.

The current total damage is assessed to be ~$3.5M USD in value at the time of the attack:

  • 266,708 WMATIC
  • 689,083 USDC
  • 50,959 SUSHI
  • 185,392 KNC
  • 268 WETH
  • 11,995 UNI

The exploited funds are sitting in these four addresses. We are closely monitoring the movement of these addresses and would appreciate extra community support to do the same.

  • 0x07Ba7e8947f8Fb4d33f3C7E25c2CB35B858F02Eb
  • 0xfAc4088BbA1fA090FD3F1F52fd691a45C30AC053
  • 0xf834eFE5B959E52E3b78cB28c4BC501b52CE41da
  • 0x99da8fb52f74b7a3e38d9c75c634f6386f1649c7

Past Reparation Plans

We have extensively looked into different plans for projects that have had similar incidents.

Harvest Finance

  • Hacked for $25M in October 2020
  • Proposed community solutions via Snapshot
    • Create an IOU token for USDC/USDT depositors that feeds a percentage of profit sharing cash flow and a percentage of weekly emissions to reparations pools, up to the amount lost in the attack.
    • Don’t create an IOU token, USDC/USDT depositors would take the ~13.5% loss. Dedicate all dev time and resources to the existing roadmap.
  • 75% of the community was in agreement with the IOU plan
  • Harvest is now recovered and are at a 2x of their token price since the hack.

Origin Protocol


Our Proposal

We can compensate LPs in two possible ways: either

Reparation A: SI in a vesting wallet at a 1$ $0.75 SI valuation that begins unlocking in 12 months and finishes unlocking at 24 months

Reparation B: Create an IOU token for depositors that feeds all protocol revenue and a 20% percentage of LP reward emissions to reparations pools until all LPs are compensated


  • For the next year we estimate a total LP reward emission of 1,825,000 SI and 20% of this totals 365,000 SI.
  • For the SI Price, the medium quarterly price prior to the hack average from June 2 - September 2 was $0.75. We believe this is the closest price to the current market landscape.

The community should decide which proportion of A and B should comprise the reparations out of these three possible scenarios:

Option 1

  • 100% future protocol revenue and emissions (Reparation B)

Option 2

  • 25% SI at $1 $0.75 valuation with lockup (Reparation A)
  • 75% future protocol revenue and emissions (Reparation B)

Option 3

  • 50% SI at $1- $0.75 valuation with lockup (Reparation A)
  • 50% future protocol revenue and emissions (Reparation B)

The Foundation Community Fund currently contains approximately ~16MM SI. A 50% payout in SI represents ~10.5% ~14.2% of the Community Fund, and a 25% payout represents ~5.3% ~7.1% of the Community Fund.

We developed this compensation plan to strike a balance between making LPs whole while also not painfully compromising the runway of the project. We welcome feedback regarding this proposal from the community. This proposal will be open for discussion after which voting will be conducted on Snapshot.

We will continue to fulfill our mission to bring DeFi options to the masses.

Thank you for sticking with us :mermaid:‍♀

I support option one. It accounts for the fault of the protocol while acknowledging that those who staked their collateral bear some risk in doing so.


None of the options leave the LPs with a good feeling, but option 1 is the best.

I don’t know how any plan for SI-based compensation can even be considered when SI is valued at $1 rather than the considerably lower market rate.

Support option one🧜🏼‍♀️ F*ck quantstamp btw we waited many months to see that

  • what flows/emissions would be included, and what % of them would be deducted?
  • should we be worried that will affect the viability of the protocol, ie will it impact pricing or reduce rewards?
  • is our ‘make whole’ number the value of liquidity we had provided at time of hack?

After initial community feedback, we suggest some adjustments to the initial proposal:

SI Price peg to change from $1 → 0.75

An adjusted price for the SI price peg to change from $1 - 0.75. The initial $1 peg was seen as an overoptimistic price. $0.75/SI price peg has been calculated on a quarterly average price as addressed in the Data section and is a fairer reflection of the current market.

IOU for future revenue

The IOU future revenue will feed all/100% percentage of revenue sharing cash flow until all LPs are compensated.

Weekly emissions

The suggested portion of weekly LP reward emissions to be allocated to hacked LPs is 20%. As addressed in the Data section, we estimate a yearly emission of 1,825,000 SI and 20% of this totals to 365,000 SI for the year.

CC @mark @deepsealchemist @johndoh

1 Like

Is there an estimate as to how long it would take to get the LPs who lost capital back to break even using Option 1?

Option 1 seems the most fair as it has the best chance of LPs getting the exact assets back that they provided.

We will be integrating future protocol revenues in the nearing quarter + pushing stronger marketing and products efforts towards SIREN awareness.

Can’t 100% give an answer on the timeline but are optimistic it will be as soon as possible for LPs to be compensated.

could you provide a bit more info on Reparation B, if you have it? What cash flows/emissions are included? what is likely % to be deducted for this pool? will the amount to be made up be based on USD value of holdings at time of hack? will these deductions negatively impact the protocols chances of succeeding by affecting pricing or rewards?

just having a hard time picturing how it would work and the implications, so any further color appreciated.

As answered in the #goverance Channel on Discord

In regarding to the future protocol revenue, it will most likely be the trading fees we are looking into implement from Q4 onwards (Roadmap to be posted soon)

Option 1 would be closer to getting all 100% recompensation. Option 2 and 3 would be closer to expected value of SI going further than its current price which could have potential upside. Hope that helps with a bit more clarity

We will be creating a Snapshot vote for this from Monday

I think we have a misunderstanding @dalakos . I’m asking how long it will take for option 1 to make LPs in the Hack to be made whole.

Meaning how much time will it take for the protocol to generate enough fees and emissions to cover all the losses?

Expected to be 12-24m +.

Our first Snapshot for SIP-19: LP Compensation is live + up until Thursday.

If you have SI tokens, please help vote on the latest proposal. :ocean:

Is there any interest rate on the reparations? That might be fair to account for the opportunity cost.