On compensation for ~250 affected lenders, it appears both @Ceazor and @SadMan are in agreement on two things: compensation should certainly be provided, and it would be MUCH more favorable to both affected depositors and SUMR holders to be covered in USDC.
Unfortunately, the Lazy Summer DAO doesn’t have the funds to make good on these losses - which is the sole reason why depositors are willing to accept the uncomfortable compromise of taking a speculatively priced governance token in its stead.
Let’s remember SUMR is being used to cover losses of individuals’ personal savings denominated in USDC, in a vault & on a platform that promised “set and forget” functionality in theory, and guaranteed multiple layers of risk controls to mitigate or socialize any realized losses in practice. Instead, the affected lenders experienced 100% losses, WHILE acting as guarantors to first-out depositors. This meets the legal bar for misrepresentation.
TLDR 1:
- User expectation was same-day exit in USDC at ~84% of deposit value - based on marketing, technical and risk-control guarantees plastered protocol & forum-wide
- Protocol reality to date has been ~2 months of DAO debate with inversely-incentivized SUMR token holders to hopefully receive some compensation on some timeline, while affected depositors have lost 100% of their USDC deposits.
At the very same time: Lazy Summer DAO vaults have yet to make the technical changes that would guarantee other vaults are free of similar crises, while Summer.fi continues to claim its vaults are as hands-off and safe as ever. As you can imagine, this - plus the appearance of sandbagging the restitution process - is making lenders fairly pissed off, and I can imagine few things that would make them lend again short of a >=84% USDC comp presented ASAP.
But forget these affected lenders for a second: consider the value-proposition of the protocol in the first place, from which the inherent value of SUMR stems. If users cannot trust the very “set and forget” premise on which Lazy Summer is built, and in this CRITICAL precedent token holders shortchange depositors, the alignment between lenders and token holders split. At the worst, you may see affected lenders explore more combative means of seeking restitution, negative PR at the critical launch period of the token, and an environment in which present and future depositors no longer feel safe to add to the protocol TVL.
So what does “shortchange” mean in this scenario? Every departure from “TLDR 1: User expectation…” - and we’re already so, so far off the promises made.
Ok, so what?
6 months is not a trivial timeline for accessing one’s savings. Taking a speculatory, illiquid, multi-month SUMR position instead of an instant USDC withdrawal is not what ANY depositor has in mind when entering a Lazy Summer vault.
Because affected depositors and SUMR holders are inversely incentivized, I propose a compromise: depositors release expectations of no vest, while @Recognized_Delegates compromise from their preferred 6 mo target. Instead, we settle the question of vesting here in the forum, agreeing to a 3 month vest, starting from TTE.
TLDR 2:
Democracy in governance is not a pack of wolves and a few sheep voting on what they’ll have for dinner. Clearly SUMR-rich delegates will vote in the immediate interest of their own token holdings, at the expense of present and future depositors - hence the urgency for meeting depositor needs through discussion versus token vote.
My proposal is a “hardcoded” compromise of 3 month vest, to be reflected in the final Tally proposal.