[RFC] Arbitrum User Reimbursement, Insurance Fund, and Other Improvements

[jensei]

Disclaimer: This proposal was co-created with a group of affected users (coordinated on Discord; DM Group Size: 10), namely @Meta, @Drarox, @zibazaba, and others.

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1. Summary

Lazy Summer Protocol experienced an unexpected loss in its Arbitrum USDC LR Fleet, specifically in exposure to the Silo SUSDX/USDC (127) strategy due to a cascading liquidation (or lack of thereof) triggered by an external protocol failure of Stables Labs $USDX and Silo Finance’s collateral architecture.

This event exposed gaps in user expectations, curated-strategy accountability, and crisis workflows. These are explored further in the document below.

Additional context: RFC, SIP, Tally vote, BA retrospective, and Summer.fi post-mortem.

This RFC explores a three-part response plan:

1. One-time SUMR-based Reimbursement for affected users (null, partial or full, to be finalized by Lazy Summer DAO discussion/vote).

2. Deployment of a protocol-level Insurance Fund, to handle any approved SUMR-based compensation and manage any eventual collections, but also exploring other funding sources (e.g.: external contributors, and/or a % of protocol revenue).

3. Protocol, communication & governance improvements, including a Guardian module, SEAL Safe Harbor Agreement, and elevated communication requirements.

This approach ensures transparent exploration and potential addressing of the loss of funds for the affected users, while avoiding the moral hazard and poor incentive alignment that emerges when platforms cover losses without structural safeguards.

It goes without saying, that any/all funds recovered from the Silo Finance, should immediately be redistributed to all the affected users.

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2. Context & Motivation

2.1 Lazy Summer as a curated strategy platform

Although Lazy Summer Protocol is technically decentralized, and permissionless, the branding, UX/UI, and messaging emphasize:

• Strategies are DAO curated
• Risks are thoroughly screened by @BlockAnalitica, and
• therefore the result is a simple “set-and-forget” yield offering.

Acknowledging differences in operational and protocol specifics, precedent from other DAOs has a lot to teach us. As reflected in the Euler Finance governance discussion on their Elixir/Steam Labs collapse, curated yield platforms implicitly create higher user expectations, regardless of where the technical fault originates.

Several Euler users phrased this strongly:

“Curators are responsible, both for the losses and for how they’re handling the situation.”

”When curators vanish during crises but keep earning elsewhere, incentives are broken.”

Similarly, on the Summer.fi discord channels users expressed:

“Depositors relied on the vault’s “Lower Risk” label & “set it and forget it” messaging as a meaningful, curated indicator of reduced risk within Summer’s strategy set.”

”No user action contributed to the failure; all loss resulted from systemic issues in strategy integration, oracle design, and missing operational safeguards.”

As observed, everyday depositors and affected users alike voiced this event as potentially undermining their faith in any other existing, and/or future vault deposits.

2.2 User Expectations as Voiced by the Lazy Summer Community

Lazy Summer Protocol or the DAO did not cause the Silo failure, but its role in surfacing curated strategies means users reasonably expect elevated responsibility in monitoring and crisis handling.

The following record attempts to point out observed gaps between these expectations:

• The “Lower Risk” Arbitrum USDC vault contained exposure to “exotic” asset (Silo’s SUSDX/USDC market 127; as defined by @BlockAnalitica’s post) onboarded, voted, and executed by the Lazy Summer DAO (SIP2.26 / Onchain); but which contained risks users reported as “not having explicit knowledge of nor directly opting into”.

• Users expect emergency controls to stop and isolate failing strategies. This is the role of Guardians, which were not assigned to pause failing vault strategies.

• Users reading the Summer.fi tooltip suggesting the vault was “free of stablecoin depeg” expected the protocol to detect and react to such an incident.

• Users expect losses would be socialized proportionally - which is the expected behavior had Silo reported onchain backing. Regardless, first-out depositors exited with their full position recovery, whereas the last-out depositors lost 100% of their positions.

None of the affected depositors expected total losses. It is reasonable to believe present and future depositors will have similar expectations. It is important to view this user feedback as an opportunity to improve the protocol and DAO’s products and operations. This will help the Lazy Summer Protocol stand out as the best choice for passive onchain yield.

2.3 Moral Hazard and Incentive Alignment

A crucial insight from the previously mentioned Euler thread is Hasu’s warning:

“If a platform compensates deposits unconditionally, curators capture upside while offloading downside to the protocol.”

Lazy Summer DAO must avoid this trap. Therefore, this RFC seeks input for the following:

1. Compensation: if-any; one-time, exceptional, and vested.

2. Long-term solution: Insurance Fund, funded methodically (not ad hoc).

3. Allocators and the protocol: aligned with user expectations, through SUMR.

4. Better safeguards: Guardian role, monitoring, and possibly SEAL Safe Harbor Agreement; reducing future bailout risk.

This strikes the balance between honoring trust without making the Lazy Summer DAO a perpetual backstop. The strategies considered here are those that are most believed to restore user trust.

This RFC embraces that reality, and is seeking for high attendance from @Recognized_Delegates, and Lazy Summer community members.

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3. Options for Reimbursement

The core of the short-term response is providing direct compensation to users affected by the Silo (SUDSX/USDX 127) event. Appropriate compensation is considered a function of reasonable user demands, against market reality and timeliness, aligned with the long-term interest of the protocol.

Affected users’ demands range from requesting full compensation of losses (100%) on par with first-out depositors, to retroactive loss socialization (84%) of their deposits. Nearly all affected users prefer their reimbursement in the asset they deposited (USDC). For payouts in SUMR, users requested valuing the asset at a rate set by the market (post Token Transferability Event).

Affected users’ recognize that the Lazy Summer DAO treasury (<$200k) is not able to cover a total of $1.5M losses in full. The DAO may be able to develop an insurance fund against future losses, and potentially, also pledge a % of future revenues for direct repayment.

Protocol alignment in this context means recognizing the tradeoffs of none, partial, or full compensation. Well aligned repayment would rebuild user trust by making fair and timely payment without setting a precedent of future bailouts. Especially if pursuing SUMR compensation, the goal should be to make affected lenders at least satisfied enough to be constructive DAO participants.

3.1 One-time SUMR Reimbursement for Affected Users

The core of the short-term response is providing direct compensation to users affected by the Silo (SUSDX/USDC 127 market) event.

Two snapshots have been taken:

• Snapshot A: moment @BlockAnalitica set caps to 0 (tx).

• Snapshot B: moment of strategy offboarding executed on Arbitrum(tx).

Final eligibility (in case of @Recognized_Delegates support), should be derived from:

• user IDs present in Snapshot B, with balances sourced (inputTokenBalanceNormalized = USDC equivalent); after discount of ~7.8% (yield earned after the incident).

If supported, I propose the reimbursement to be delivered in SUMR token, at the market value (post-TTE) at its 30d average price.

Spreadsheet for overview and verification can be found here: https://docs.google.com/spreadsheets/d/e/2PACX-1vSfgWYJgCSl9BnYzhBkHWGfnY59IOUk7F5Inx0myoVY9la50dFE03BaXYf6ngJSDmR1eRCdrd2_bIXp/pubhtml

Four possible models:

1. No Reimbursement (0%)

• Pros:

  • Avoids SUMR dilution entirely.
  • Maintains a strict interpretation of shared-risk DeFi participation.
  • Prevents setting any precedent for future bailouts.

• Cons:

  • Users who experienced losses may feel unsupported.
  • Potential reputational impact given Lazy Summer Protocol’s curated positioning.
  • May reduce long-term user confidence or deposits.

2. Flat, partial reimbursement (50%) in SUMR

• Pros:

  • Offers partial user support, while maximizing treasury sustainability
  • Flat amount settles debate on appropriate amount owed
  • Acknowledges shared-risk nature of external protocol dependencies

• Cons:

  • Affected depositors demands for parity with expected protocol behaviour
  • Timely to execute/deliver

3. Retroactive, proportional loss reimbursement (84%) in SUMR

   Since ~16% of the vault’s deposits were allocated to the Silo SUSDX/USDX (127) strategy, retroactive proportional loss reimbursement (as expected in case of socialization of the losses) would have seen all depositors experience slashing against the full value of the vault’s bad debt, with 84% of their deposit remaining.

• Pros:

  • Achieve parity with user expectations of protocol behaviour
  • Balances user support with treasury sustainability.
  • Reduces dilution relative to full reimbursement.
  • Acknowledges shared-risk nature of external protocol dependencies.

• Cons:

  • Some users may feel the restitution is incomplete.
  • Timely to execute/deliver.

4. Retroactive, full reimbursement (100% of loss) in SUMR

• Pros:

  • Maximizes user trust and brand credibility.
  • Strong alignment between users and protocol via SUMR.
  • Simple to calculate and implement.

• Cons:

  • Highest SUMR dilution.
  • Taking on responsibility for incidents caused by 3rd parties.
  • Sets a sensitive precedent.
  • Other users may feel the restitution is unfair.

In case of reimbursement proposal, the Lazy Summer DAO should choose the percentage and discuss the vesting of such reimbursement, before the consecutive governance vote. This vote should appoint the below described Insurance Fund to be the custodian of said SUMR reimbursement, and upon transferability - calculate the proportional SUMR reimbursement at the 30d average market price, and set up the vesting.

Reimbursement in SUMR, is hereby proposed to align users for the long-run, and avoids draining liquid treasury reserves (~$200k) aimed to be used for seeding liquidity in preparation for the upcoming SUMR transferability event (~mid-January 2026).

3.2 Establishing the Lazy Summer Insurance Fund

A permanent Insurance Fund ensures this, and future incidents are handled systematically, not reactively. By pairing this event with an insurance vehicle, Lazy Summer DAO begins solving the questions of custody, collections and claims proactively - for this and future incidents. Should the DAO approve, and then be satisfied with the results of, the Lazy Summer Insurance Fund, may choose to develop the fund further.

Launched in phases, the Insurance Fund may first act as a vehicle for distributing all approved repayment, in SUMR, to users affected by Silo 127 market-related losses. It may also distribute any funds stemming from successful collection activity the same way, creating trust and continuity throughout recovery.

In future phases, the DAO may vote to top up the SUMR allocation, dedicate a certain % of protocol fees, or seek to diversify the Insurance Fund’s asset holdings. The DAO may also succeed in inviting external contributors to the fund.

Sources of capital:

1. DAO allocations from treasury

   • SUMR tokens, for this or other incidents
   • Other tokens via treasury swaps

2. Lazy Summer Protocol revenue

   • A %TBD of the DAO fees earned (atm set at ~20% of the Lazy Summer Protocol revenue)

3. Potential external contributions (proposal for exploration for either compensation / the above mentioned insurance fund initiative), given the ecosystem nature of the incident, the Lazy Summer DAO should explore whether strategic partners may be willing to contribute:

   • Stables Labs (stablecoin designer; reputational interest in supporting recoveries).
   • Silo Finance (whose liquidation mechanics underpinned the loss).
   • @BlockAnalitica (risk tooling provider; may support improvements).
   • Arbitrum DAO (Arbitrum ecosystem grants for user recovery, resilience, security, or infrastructure risk).
   • Others?* (*suggest below)

These contributions would strengthen the ecosystem collaboration, show multi-protocol commitment to depositor protection, and help to grow the Insurance Fund initiative.

“This RFC does not assume protocol revenue allocation nor 3rd party contribution, but formally proposes exploring funding sources and partnerships.”

3.3 Guardian Module & Risk Controls

To reduce the probability of future events:

1. Guardian Module

   • Emergency “vault-pause” capabilities.
   • Emergency right to “cancel-governance-proposals”.
   • Set up as a multi-sig controlled by at least 5 community members.
   • Decide on the thresholds (e.g.: X% loss on a fleet level).

2. Curation Standards

   • Risk manager (@BlockAnalitica) must meet minimum communication, update, and monitoring requirements.
   • Weekly/Bi-weekly reports and analysis of existing and newly onboarded (in RFC phase) ARKs.
   • Failure to do so may result in suspension of future risk curation involvement.

   This addresses a major user complaint seen in the Summer.fi discord as well as previously referenced Euler Finance topic.

3. SEAL Safe Harbor Agreement

   To materially improve protocol security and emergency fund recovery, this RFC proposes the exploration of adopting the SEAL Safe Harbor Framework, already used by Uniswap, Pendle, ZkSync, and others.

   • Pre-authorizes vetted whitehat hackers to rescue funds during live exploits.
   • Removes legal ambiguity and delays.
   • Drastically increases chance of fund recovery.
   • Work seamlessly for DAOs.

   “I have already initiated outreach to samczsun / SEAL_Org to explore onboarding opportunities.”

   In case of interest / successful onboarding of SEAL, the Lazy Summer DAO should:

   • Define scope for covered contracts, chains, and recovery addresses.
   • Register Safe Harbor parameters onchain.
   • Commit to a predefined bounty schedule.
   • Communication & Transparency Improvements

Mirroring user demands, Lazy Summer DAO should implement mandatory strategy post-mortems, and public guardian activity logs to convert trust from implicit to explicit to auditable actions.

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4. Cost Analysis & Dilution Considerations

Depending on the reimbursement option chosen:

• The SUMR allocation required, if any.

• The vesting schedule, if any.

• The dilution impact.

• The expected reduction in future risk via the Insurance Fund.

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5. Next Steps

1. Collect community feedback on all independent components.

   • Sense-make/gauge sentiment via below posted polls.

2. Integrate agreed upon revisions into formal SIPs.

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6. Conclusion

This RFC proactively incorporates the lessons learned from the Lazy Summer Protocol community, and a precedence/reference from Euler Finance and other industry incidents:

1. Distinguish technical liability from curated-platform responsibility.

2. Avoid moral hazard through structural improvements, transparently.

3. Gauge interest of the @Recognized_Delegates on immediate user relief, while strengthening long-term safeguards.

4. Support alignment through SUMR token.

5. Build trust with transparency and public governance.

This RFC is an important step towards a future, where Lazy Summer Protocol sets the industry benchmark for incident response, and for curated yield platforms being transparent, resilient and user-aligned; without compromising incentives or decentralization.

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7. Informal Support Indicator

7.1 Reimbursement of Arbitrum USDC Vault Depositors

Choose one:

• No reimbursement (0%)
• Flat, partial reimbursement (50%) in SUMR
• Retroactive, proportional loss reimbursement (84%) in SUMR
• Retroactive, full reimbursement (100%) in SUMR

If in support of reimbursement, choose one to follow the Token Transferability Event (TTE); planned for mid-January:

• No vesting (unlocks at TTE)
• 1 month (valued at first 30d avg. token price)
• 3 months, monthly vesting (30d avg. token price)
• 6 months, monthly vesting (30d avg. token price)

7.2 Insurance Fund Establishment

Choose one:

• Do not create Insurance Fund
• Create Insurance Fund (funded only with SUMR)
• Create Insurance Fund (SUMR + explore % of revenue)

Choose one (if in support of the insurance fund):

• Mandate exploration of external contributors
• Do not explore external contributors

7.3 Adopt SEAL Safe Harbor Agreement

Choose one:

• Adopt framework
• Do not adopt framework

Keep in mind that the poll options are non-exhaustive, and are subject to change according to the discussion. The options outlined are independent and can be combined freely.

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Tagging @Recognized_Delegates, @BlockAnalitica, and other community members to voice their opinions and cast their votes in the polls above.

[SadMan]

Thank you @jensei and contributors for this RFC and for the clear effort to find a workable path forward.

As one of the depositors who lost literally 100 % of my USDC in the Arbitrum Lower-Risk vault, I appreciate that this draft incorporates a lot of community feedback and finally puts concrete polls on the table.

That said, one critical fact still feels dangerously diluted compared to the victims-led RFC, and it has to be restated loudly:

The Silo sUSDX/USDC (127) market that destroyed the vault was using a hard-coded $1 oracle for USDX — a token that was experimental, low-liquidity, and clearly not a blue-chip stable like USDT or USDC.
This is not a subtle risk. It is the most basic oracle anti-pattern imaginable. No serious risk curator should ever have allowed a “Lower Risk / set-and-forget” vault to have any exposure to a market whose entire solvency depended on a price feed that literally cannot move from $1.

That single curation oversight — not just the later depeg or the lack of pause — is why the vault went from “Lower Risk” to total wipe for last-out depositors.

With that in mind:

1. SUMR-only remains very hard to accept
   The 30-day average post-TTE is better than an arbitrary FDV, but it still puts 100 % of the liquidity and price risk on victims who deposited stables.
   Given the treasury is only ~$200 k USDC, I fully understand full USDC isn’t realistic. But a small upfront tranche in USDC (even 20-30 % of treasury, i.e. $40-60 k total spread across all victims) + the rest in $SUMR would already feel like the protocol is meeting us halfway instead of asking us to bear all the risk a second time.

2. The 84 % retroactive socialization option must stay front-and-center
   It’s not “one option among many” — it is the exact outcome the vault was supposed to deliver if everything had worked as advertised. Framing it as equal to 50 % or 0 % risks making delegates think it’s negotiable. It isn’t.

3. Silo recoveries 100 % to victims — make it on-chain and unbreakable
   Glad it’s mentioned. It needs to be the very first priority claim of the Insurance Fund, with a transparent dashboard.

4. Insurance Fund + Guardian + SEAL → full support
   These are excellent and should ship regardless of the reimbursement debate.

Delegates, please remember: this incident didn’t happen because of a black-swan depeg alone. It happened because a curated, “Lower Risk” vault was allowed to allocate capital to a market with a hard-coded $1 oracle on an exotic stable.
That single due-diligence failure turned a manageable 16 % exposure into total losses for some users.

A reimbursement package that contains zero USDC and treats the hard-coded oracle as just another “exotic asset risk” will not restore trust — it will confirm that the curation promise was marketing, not substance.

I will vote in favour of the upgrades and Insurance Fund, but I will vote AGAINST any reimbursement proposal that does not include at least a symbolic upfront USDC component and keeps the 84 % socialization level as the clear baseline.

Happy to discuss numbers. Let’s get this right.

[StealthyTrain]

Hey, I am an affected lender who lost 100% of my savings in the Arb USDC vault. Here are some of my thoughts on why I think at least 84% of compensation at 30d avg token price is the most aligned option for both the affected lenders and the rest of the community who hold the SUMR tokens.

The whole Lazy Summer Protocol is advertised around the core concept that the DeFi users can put their money in a vault where the curator can find relatively yield-risk balanced assets to generate interests, while balancing out the risk by auditing the downstream assets and diversifying to minimize the risk of devastating events. It naturally attracts risk-averse users. That’s the reason why the affected lenders, especially those were sold by the “set and forget” marketing term by the Summer protocol, were so frustrated to find out that they lost 100% of their savings when realistically the bad debt only contributed to 16% of the vault. The expected outcome is plain and simple that if the vault is exposed to x% of compromised assets, the returned shares of the curated vault should be devalued by x%, which lays down the foundation of any future “risk management” statement in Summer. The current event literally breaks the future users’ expectancy of risk management.

That being said, as an affected lender, I am not seeking an unrealistic guarantee that the vault cannot go wrong. The 84% compensation baseline, however, is a fair and the expected outcome for the lenders, which sets the correct tone for the market and future users. This ensures the success of the TTE, and also the long-term success of the SUMR protocol.

[FBrinkkemper]

Thanks for the proposal.

We support the reimbursement in SUMR of 84% without vesting.

We abstain from the insurance fund at this point in time. Whilst we believe it is a solid idea, we support these one-offs for the time being, and figure out insurance on a longer timescale.

[MasterMojo]

What is the current contract with @BlockAnalitica ? how much are they paid, and do they offer protection in events like this? I am curious of what they agreed to

[MasterMojo]

@jensei

7.1 Reimbursement of Arbitrum USDC Vault Depositors

Some thoughts:

• I am a fan of having an option where the $SUMR is locked up for a year post TGE.

• Is Summer.Fi going to join in any legal/recovery? In the Silo/Euler vs Stream
• I believe Summer.Fi should explore/integrate Insurance. Put the insurance on the user if they want it or not. If they want it they pay the premium they can toggle it when they deposit. An example of this is with Nexus Mutual (I am not supporting them, just providing an example). https://app.nexusmutual.io/cover/buy-cover for further research
• For more insurance checkout the Base Defi Pass https://opencover.com/basepass/ (Currently it covers Beefy, Aerodrome, ExtraFi, Morpho, Moonwell, and a few others - OpenCover - Base DeFi Pass)

Is Summer.Fi going to join in any legal/recovery? In the Silo/Euler vs Stream

[JavierD]

I support the proposal for the 84% distribution and for determining the exact SUMR allocation after the first 30 days. Doing this post-TGE is the only realistic approach; before the token trades, any estimate of its value is speculative. A $250M FDV does not seem defensible when benchmarked against comparable DeFi protocols. Using the FDV divided by TVL, we can see the mismatch:

Beefy
• FDV/TVL ≈ 0.04

Yearn
• FDV/TVL ≈ 0.33

SUMR
• Current TVL: ~$82M
• Proposed FDV: $250M
• FDV/TVL ≈ 3.05

I would also like clarity on how the 1% tipstream is allocated. If @BlockAnalitica is receiving a portion of it, it would be ethically appropriate to renounce their share for this vault and direct those funds to affected users.

A balanced reimbursement structure could be:
• 80% in SUMR tokens
• 20% in USDC sourced from BA’s tipstream for this vault

This approach supports victims in a meaningful way, avoids placing the entire burden on token emissions, and aligns the resolution with transparent and fair practices.

[JavierD]

I fully agree on the insurance point. It’s straightforward to implement and there’s a proven model for it. Ether.fi already offers this for their Liquid vaults: users can opt in or opt out, and the feature exists without adding any cost or burden to the protocol itself. It simply gives users an extra layer of protection if they want it.

[Hydronium]

I was also affected by a 100% loss in this vault, and I would find it unfair if some people were able to leave first with 100% of their funds in USDC while less reactive users would recover 84% in SUMR tokens. I vote for 100% compensation in SUMR tokens out of pragmatism, even though I would have found it fairer if the compensation had been at least partly in USDC.

[SadMan]

I also want to add one point as someone who personally lost 100% of my USDC in this incident.

Even though my own loss was total, I still believe the 84% retroactive socialization baseline is the fair and correct number, because it reflects exactly what would have happened if the vault mechanics had worked as advertised.

The goal is not to demand impossible compensation, it’s simply to restore the outcome that should have occurred under normal functioning: a proportional loss shared across all depositors, not a 0% vs 100% split caused by a failure of curation + lack of pause.

For vesting, I also want to clarify (again, for anyone voting):

“No vesting” means reimbursement is priced at the initial TTE price, which can be extremely volatile, thinly liquid, and far from the true value the token finds once trading stabilizes.

The 1-month option protects victims by using the 30-day average price, a far more reliable value that reflects real market discovery.
It still unlocks very quickly, but avoids the risk of being compensated at a distorted or manipulated initial price.

Just sharing this to help ensure voters understand the practical consequences of each option.
Thanks to all participants for the constructive discussion.

[Bozer76]

I’m also an affected lender who lost 100% of my savings in the Arb USDC vault via Silo. I agree to the proposed 84% compensation at 30d avg token price. This represents IMO the most aligned option for both the affected lenders and the rest of the community who hold the SUMR tokens. When can we expect any update or discussion of next steps?

[jderias]

I will echo what many others have said. First, thank you @Jensei for putting this thorough and balanced RFC together.

At the most basic level, depositors in a diversified pool of funds should be expected to share the benefits and the risks together, so I believe that all depositors in the Arbitrum USDC vault should have lost 16% - not 100% and not 0%. This is crypto and this vault provided higher yield than US Treasury Bills (the presumed “risk free rate”), so some level of risk has to be assumed, regardless of “lazy summer” set and forget branding. However, to have a 100% loss in a diversified mix of high quality stable coins is unreasonable. I believe that SUMR is responsible for the losses being 100% for some depositors and not 16%, due to not having a guardian in place. Although there were many moving parts and several things that could have been done differently to detect or avoid the losses preemptively, the reality is that this whole chain of reasoning relies upon the premise that if we had avoided the risk, this wouldn’t have happened at all. While true, I do not think that it is a practical long term plan to simply research better and, as a result, never be invested in anything that goes bad again. In crypto, surprises continuously happen (sometimes in familiar ways and sometimes in new ways that we have not seen before). I do think we should learn from this and be more diligent about what we are investing in, on both an individual level and a protocol level, however this is not the primary solution. The crux of the matter is that**, regardless of how many other things went wrong with underlying assets, if there was an ability to pause withdrawals and distribute the money proportionally, we would have had a totally different (and appropriate) outcome**, namely that all depositors would have received 84% of their deposits back, instead of some receiving 100% and others receiving 0%.

I was fortunate that my money was in other vaults, but I would have been mortified if I came back to a low risk stablecoin vault and found that I had lost 100%. My sympathy and support is with those of you that are in this boat.

If guardians are not put in place across all of the vaults (so that any future losses can be socialized within the given vault in the future), then I will not be a long term depositor in Summer.fi. I have been using Summer.fi and Oasis.app since inception, but this is a deal breaker for me if it is not addressed. No matter how well we think we’re assessing risk, I can assure you that right now, as of this very moment, there are risks within the other vaults that could cause a similar outcome under the right set of circumstances. If there is some other way to address this, then I am all ears, but otherwise we need to have guardians in place across all vaults immediately.

I am in support of an 84% reimbursement in SUMR, offering optional insurance, and pursuing the SEAL Safe Harbor Agreement, but want to reiterate again that the guardians are the key issue at hand if we want Summer.fi to be treated as a viable place to deposit ETH and Stablecoins. If there is not a clear and decisive plan to prevent depositors from having a 100% loss in the future, Summer.fi will cease to be competitive and will probably cease to exist in any meaningful way because nobody will take that high of a risk for an extra few percentage points of yield - they will just move their deposits to other protocols.

I am optimistic that we can and will get this resolved based on the constructive discussion that is happening. We just have to make sure that we move things along quickly to address the key issues ASAP.

[halaprix]

Thanks for putting this proposal together. I would like to voice my support for the following path forward, along with specific suggestions on the reimbursement liquidity and the structure of the insurance fund.

1. Reimbursement & Vesting Structure

I am voting for the Retroactive, proportional loss reimbursement (84%).

However, regarding the payout mechanics, I propose a hybrid approach rather than a simple SUMR airdrop. My preference is for a 6-month vesting schedule, structured as follows:

• OTC Deal for Liquidity: The DAO should seek an OTC deal to sell SUMR at a discount to strategic partners/investors to raise USDC.
• 50% Upfront: Use that raised USDC to cover 50% of the reimbursement upfront (in stablecoins).
• 50% Vested: The remaining 50% (of the 84% total) would be vested in SUMR over the proposed 6-month period.

This approach balances immediate relief for users with long-term protocol alignment, while minimizing immediate sell pressure on SUMR.

2. Insurance Fund & Frontend Integrations

I strongly support the creation of the Insurance Fund, but I believe we should structure the funding differently.

• Insurance as a “Tip Jar” Recipient: We should not just ask for “contributions” to a pot. The “Tip Jar” is the protocol’s fee-splitting contract (currently paying risk curators, etc.). I propose we negotiate with Nexus Mutual / OpenCover to become official recipients of the Tip Jar.
• The Model: In exchange for a dedicated stream of protocol fees (via the Tip Jar), they would provide partial coverage for the protocol. This aligns incentives: as our TVL and fees grow, their premium/payment grows, and our coverage scales.
• Frontend: We should also bring OpenCover directly to the Lazy Summer frontend to make personal supplemental coverage easily accessible.

3. Personal Note

For transparency, I was not affected by this specific loss on Arbitrum. However, I have “skin in the game” regarding strategy failures. I lost 100% of my deposit in Apostro USDC on Sonic (also via Silo), where Apostro was unable to socialize the losses, fur to Silo protocol design. I understand the pain of the affected users, and I believe the “84% socialization” reimbursement model proposed here is a much fairer and more resilient way to handle these incidents than what I experienced elsewhere (no updates from neither Silo, nor Apostro).

[Miranda]

Hi Summer.fi Team, @jensei Thank you for this! I am submitting this request because I am an affected user of the Arbitrum USDC Lower Risk Vault (exposed to the Silo sUSDX/USDC market 127 bad debt), but my wallet 0xEE4CBE4BbccA5e5ceBD1BCc394299a62DE4341e9 does not appear in Snapshot B, even though I held a valid position in the vault at the time of the event.

1. Evidence of Actual Vault Position and Loss

Here is the verified information from my position page on Summer.fi:

• Vault: Arbitrum USDC Lower Risk Vault

• Net Contribution: 5,060 USDC

• Current Market Value: 0.0003 USDC (fully wiped due to bad debt)

• Instant Liquidity: 0.1088 USDC

• Vault Warning: “This Vault has suffered from a potential loss on the Silo susdx/usdc 127 market.”

This clearly shows:

I deposited funds into the affected vault
My position was directly exposed to the Silo 127 strategy
I incurred a total loss
This position existed during the timeframe of Snapshot B
The UI shows my funds were not withdrawn prior to the bad debt event

2. Issue: My Address Is Missing From Snapshot B

Despite being an affected depositor, my wallet does not appear in Snapshot B, even though:

• I deposited into the exact vault involved in the incident

• I held my position through the event

• My funds were never withdrawn

• My position is fully wiped (value = 0.0003 USDC)

This indicates that the snapshot may have missed or failed to index my position.

Other affected users reported similar UI inconsistencies vs. snapshot results, so I believe this is a case of missing snapshot inclusion, not a user error.

3. Request to the DAO

I respectfully request:

• A review of this wallet and its vault position

to confirm that it was indeed part of the Arbitrum USDC LR Vault during the bad debt event.

• Inclusion of my address in the reimbursement eligibility list

• Correction of the Snapshot B dataset and the google sheet if an omission is confirmed.

4. Supporting Reasoning

This falls under the governance objectives described in the RFC:

• Ensuring fairness

• Addressing inconsistencies between UI-reported positions and snapshot indexing

• Maintaining user trust in curated “Lower Risk” vaults

• Confirming all affected users are treated equally

• Avoiding unintentional exclusion of legitimate victims

My position clearly meets the criteria of:

“Verified loss + verified vault exposure + missing from snapshot list.”

This correction aligns with the intended goals of the DAO and the RFC.

5. Wallet Address

0xEE4CBE4BbccA5e5ceBD1BCc394299a62DE4341e9

Thank you for reviewing this request.
I am happy to provide any additional data, screenshots, or transaction hashes if needed.

I hope the DAO will consider including my address so that affected depositors are treated fairly and consistently.

Feel free to tag me for follow-up.
Thank you for your time and consideration.

[Taxguy]

I have been effected by this vault as well.

Wallet: 0x48dc3A11dfB47Dfa90641F638a96fEeEF64a5689
USDC deposited 10.03K

Please inform me about the progress.

[SadMan]

Hi everyone,

The discussion has been quiet for a little while now, so I wanted to kindly ask: what is the expected timeline for the next steps?

Should we anticipate an updated draft, a new round of comments, or a move toward a formal SIP submission?

Just trying to understand the process and make sure the momentum doesn’t fade, especially given the impact on affected lenders.

Thanks in advance for any clarity.

[jensei]

hello @SadMan, this all depends… from my perspective, I would like to see as many @Recognized_Delegates voicing out their perspective as possible - to better sensemake according to the decision makers;

then I would imagine every point of the proposal to have their own RFC where the details / proposal would be more fleshed out and once confirmed - then it can get promoted to SIP - with an onchain vote to follow.

When it comes to reimbursement - since this is very much linked to SUMR transferability (market value of SUMR) - it can go under specific RFC - it just wont have exact impact specified - since its derived from the SUMR market value.

Regarding the Guardian setup, Insurance Fund (more challenged in polls), and SEAL Safe Harbor those should get their respective RFCs as well to specify the individual items / proposal and then if agreed - promote it to SIP with a following onchain vote.

[SadMan]

Thanks for the clarification @jensei, that makes sense from a process perspective.

That said, I think it’s important to be very explicit about one risk here:
stretching this into multiple sequential RFCs over an extended period risks killing momentum and further eroding trust among affected lenders.

Many victims have already absorbed a 100% loss. What they need now is not just procedural correctness, but clear forward motion and visible commitment that this won’t be allowed to fade out over time.

Breaking this into multiple RFCs is reasonable, but only if:

• there is a clear and communicated timeline for each step,
• the reimbursement track is explicitly committed to progressing immediately after TTE, and
• affected users are not left in a “wait and see” limbo for months.

From a trust-restoration standpoint, speed and clarity matter as much as structure.
The longer this feels unresolved, the harder it becomes to convince users that Summer.fi stands behind its “Lower Risk / set-and-forget” promise.

I’m fully supportive of doing this properly — but I strongly believe the DAO should aim to:

• converge quickly on the reimbursement principle,
• lock in the baseline expectations (e.g. 84% socialization logic),
• and communicate a clear path to execution, even if the exact SUMR valuation comes post-TTE.

The goal should be to move forward decisively, not let this slowly lose energy while victims disengage.

Appreciate the work so far, i’m hoping we can now focus on momntum and delivery.

[Meta]

I notice at least two @Recognized_Delegates have voted for a 6 month vest, while the majority have voted for shorter terms. This suggests an actual Tally vote on the matter would fall much further apart between affected lenders and core delegates than it appears - so it’s incumbent on us to find a path forward.

The lender perspective on the matter is pretty plain: lenders expect immediate USDC liquidity throughout their time in Lazy Summer vault - and equally so following any slashing that might occur from vault-socialized losses.

Accepting SUMR as compensation is a substantial lender concession, especially when affected lenders became USDC-denominated guarantors to first-out Summer.fi depositors.

Agreeing further on a 6 month (or longer as proposed by @MasterMojo) strikes me as egregious, and I see no reasoning to explain or justify "$SUMR is locked up for a year post TGE” in the original post.

I appreciated @halaprix’s proposal of a USDC-denominated reimbursements funded by OTC sales of SUMR. It’s a great suggestion- if at all realistic. Lenders have no way of gauging that, nor timeline. Therefore: certainly open to consideration, but what no lender wants to see is this dragging on - not with 6-12 months of vesting, neither with governance theater. What’s next here?

[unwelcomeexplorer]

Well said, perfect. To restore trust, we must be compensated.