[SIP2.39] Offboard the Silo susdx/usdc (127) market from the Arbitrum USDC Vault using Sweep via Timelock

Governance Summer Improvement Proposals [SIPs]
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Disclaimer: This SIP has been posted as there was no clear viewpoint of the community expressed in the associated RFC and polls, and as such it has been pushed to an onchain vote for a decision by the delegates to decide on the appropriate action.

1. Overview:

It is proposed, based on the recent discussions within [RFC] Arbitrum USDC Vault next steps (Dealing with USDX bad debt) that the Silo susdx/usdc (127) market) is removed from the Arbitrum USDC Vault using sweep via the Timelock

This action would remove the vault, socializing losses for those remaining in the Vault. At the time of this SIP, 227k USDC liquidity remains in the Vault, with 1.5M USDC bad debt.

It is expected that should this vote pass, by the time of it’s execution, there is likely no more liquidity remaining in the Vault.

2. Motivation:

As explained in detail within [RFC] Arbitrum USDC Vault next steps (Dealing with USDX bad debt), the Silo 127 market suffered what is suspected to be losses of around $1.48M at the time (increasing still due to the value of the lent funds increasing via an exceptionally high supply rate)

This proposal removes the 127 market from Vault, allowing it to be managed independently in order to try and recover any losses, and redistribute these back to the users based on a snapshop that will be taken at the time of the vote execution, should it pass.

The reason for this SIP is that although a poll was inserted into the RFC, it had fairly low involvement, and this SIP is to decide onchain whether or not this market should be removed, or left in the Vault for it to continue accruing value through the supply rate.

3. Specification:

On Arbitrum, temporarily set ConfigurationManager.raft to the Timelock to enable Ark.sweep(tokens) to transfer specified tokens to the Timelock, then restore raft to the Raft contract.

Target Chain

Arbitrum

Contracts

ConfigurationManager: 0x8ae7fbAeCfBDb21c28b1854272BB7A3a813e2A66
Timelock: 0x447BF9d1485ABDc4C1778025DfdfbE8b894C3796
Raft (restore): 0x2E6FBcefA0480cF9f7920d98804A9BD72e1eFEc9
Ark (sweep target): 0x54749c15751137Be18768288D3945C4934fCb800

Tokens

0x2433D6AC11193b4695D9ca73530de93c538aD18a

Actions

  1. Set raft to Timelock in ConfigurationManager\n
  2. Ark.sweep(tokens) — executed by Timelock (as temporary raft).
    Restore raft to Raft in ConfigurationManager.

4. Risk Assessment:

It is not considered to create any risk to the protocol or supporting contracts.

5. Voting:

A YES vote for this SIP will remove the Silo susdx/usdc (127) market from the Arbitrum USDC Vault, using sweep via the TImelock

A NO vote will result in no changes to the Arbtirum USDC Vault, expecting the vault to be left as is, and rely on the keepers to try and recover any funds that may, at some point, be deposited back into the Silo market.

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Thanks @chrisb for posting this SIP and clearly laying out the context.

Given the recent events with the Silo 127 market and the substantial bad debt (~$1.48M), as expressed in the RFC poll, I support offboarding this market via sweep and Timelock.

IMO this approach:

  • Removes the market cleanly from the Arbitrum USDC Vault, isolating risk.
  • Allows any remaining liquidity to be redistributed fairly based on a snapshot at execution.
  • Minimizes ongoing exposure and reduces governance burden from trying to manage a compromised asset in the Vault.

I am definitely for (after potential off-boarding) to onboard new strategies and revive the Fleet. Also, I would further consider the comment made by @samehueasyou:

, or otherwise make sure that a snapshot has taken place and allows the Lazy Summer DAO to reimburse the users that has incurred the loss - in case that the funds will be recovered.

From a risk perspective, this seems to be the most responsible and transparent path forward but am curious about thoughts from other @Recognized_Delegates!

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YES to SIP2-39 – Lender stuck in Arbitrum USDC Vault (~21K USDC)

Hi !

I’m one of the last lenders still locked in the Arbitrum USDC Vault with ~21K USDC (position: 0x4f63cfea7458221cb3a0eee2f31f7424ad34bb58/0xcd7920b1d9c26e0896e5ca0054609dbb882046b6).

I strongly support YES to offboarding the Silo sUSDX/USDC (127) market via sweep + Timelock.

Key requests:

1. Fair snapshot at execution – to ensure any future recoveries are redistributed to affected lenders (as suggested by @samehueasyou).

2. Clear ETA for sweep execution and redistribution.

3. Transparency on final loss socialization for remaining users.

I’m ready to provide wallet proof in DM if needed.

Thank you for acting fast – let’s isolate the risk and protect the last ones in.

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Stream repaid 1.58M USDC to Silo about 1 hour ago ( Address: 0x9d7be3dc...22accc58b | Arbitrum One ). Hope for us ?

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This is nice, but unfortunately doesn’t apply to the strategy that Arbitrum USDC LR Fleet has been exposed to. The one repaid was Stream Finance and not the Silo sUSDx/USDC. Holding fingers crossed that it will happen though.

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As one who also remained in the pool with around ~2.5k USDC locked, I also request full transparency on final loss socialization for remaining users. Thanks.

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Hi everyone, I just discovered this situation now because my funds suddenly disappeared from my Summer.fi dashboard on November 21. I had 6.4k USDC in the Arbitrum USDC vault — all my savings — and it was supposed to be a safe and low-risk place to store them. That’s why I’m shocked to learn only now, after the fact, that the vault had been exposed to a market with major issues.

What confuses and concerns me the most is that during all this time, the vault was still shown on the dashboard as “Low Risk – Lower risk Vaults contain no exposure to peg or swap risk.” I checked my dashboard every single day and never saw any warning, alert, risk update, or notification telling me that something serious was happening. If users were at risk, why was nothing shown directly on Summer.fi where we monitor our positions?

I fully support any proposal or action that helps affected users recover at least part of their funds — YES to offboarding, YES to snapshots, and YES to any compensation mechanism that can help make users whole or partially whole. From everything I’m reading, it seems like this is the best possible outcome for those of us who were still inside the vault when the bad debt happened.

Thank you to everyone working on this. I just hope there will be transparency and that those of us who trusted the “Low Risk” label will not be left with nothing.

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Joining chorus of affected lenders with major personal exposure to a vault marked as low risk, until the very last moment, now finding out because my savings value is suddenly displayed as ~0 USDC in the portfolio.

@chrisb - It appears snapshot was voted YES in SIP2.39, “socializing the losses”? Where early exits get out in full, and the last folks to get out become USDX depeg bagholders and go to 0?

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One hundred percent of my deposit of 25,000 is affected. I chose SummerFi as I trusted the “set it and forget it” claim. As this is financially devastating for me, I hope the loss can be socialized among many to soften the blow. What’s the current status and next step?

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hi Meta, am in the same situation as you. The silence and non-activity are bothersome. Is this forum the only avenue to get updates? Anything else we ought to be doing?

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The following RFC was just posted in connection to this topic: [RFC] Arbitrum User Reimbursement, Insurance Fund, and Other Improvements