[RFC] Addressing the Loss of 326M SPELL on Avalanche Due to Multichain Exploit on July 2023

[RFC] Requests For Comment
10

Hey Admin, pls edit my thread above using the post below.. For some reason, I cannot edit my thread.

[RFC] - Addressing the Loss of SPELL and sSPELL Tokens Across Multiple Chains Due to Multichain Exploit

Summary/Scope: This RFC proposes that the Abracadabra DAO formally recognize the SPELL and sSPELL tokens stranded across multiple chains due to the Multichain.xyz bridge exploit, and initiate a remediation process for affected holders. We suggest the DAO consider a 1:1 replacement, a Merkle-claim redemption system, or an equivalent token burn to preserve trust, supply integrity, and user value.

Reference:

Affected Token Contracts:

  • Avalanche:
    • SPELL: 0xce1bffbd5374dac86a2893119683f4911a2f7814
    • sSPELL: 0x3Ee97d514BBef95a2f110e6B9b73824719030f7a
  • Fantom:
    • SPELL: 0x468003b688943977e6130f4f68f23aad939a1040
    • sSPELL: 0xbB29D2A58d880Af8AA5859e30470134dEAf84F2B
  • BSC:
    • SPELL: 0x9fe28d11ce29e340b7124c493f59607cbab9ce48
    • sSPELL: 0x66eff5221ca926636224650fd3b9c497ff828f7d
  • Arbitrum:
    • sSPELL: 0xf7428ffcb2581a2804998efbb036a43255c8a8d3
  • Optimism:
    • SPELL: 0xe3ab61371ecc88534c522922a026f2296116c109

Main Objective

High-Level Overview The Multichain.xyz exploit has rendered cross-chain SPELL and sSPELL tokens permanently inaccessible across multiple chains including Avalanche, Fantom, BSC, Arbitrum, and Optimism. Many community members lost access to their tokens, which are now effectively frozen in defunct contracts.

This RFC aims to begin discussion around a fair, secure, and technically feasible response from the DAO, such as:

  • A 1:1 replacement of affected tokens via claim
  • A Merkle-claim contract for users to redeem replacement SPELL/sSPELL on Ethereum
  • A burn or marking system to neutralize stranded tokens across all affected chains
  • An official DAO acknowledgment of the incident and its effect on tokenomics

Low-Level Options to Discuss

  • Use a Merkle tree-based claim system to let users redeem SPELL/sSPELL on Ethereum
  • Consider a burn (or marking as invalid) of the frozen tokens to prevent supply distortion
  • Alternatively, mint new tokens to compensate losses — transparently, fairly, and with DAO oversight
  • Address both SPELL and sSPELL holders across all affected chains

Motivation and Risk Analysis

Motivation:

  • Restore value to loyal SPELL and sSPELL holders affected through no fault of their own
  • Strengthen trust in Abracadabra’s governance and token integrity
  • Prevent long-term inflated supply metrics by addressing these frozen assets across multiple chains
  • Ensure fair treatment for both SPELL and sSPELL holders

Risks:

  • Implementation complexity (Merkle system across multiple chains and token types)
  • Potential for fraud (mitigated by chain-level data)
  • Setting a precedent for future recovery demands
  • Minor supply inflation if no burn is performed
  • Additional complexity due to multiple token types (SPELL vs sSPELL)

Contracts / Technical Requirements

  • Affected token contracts listed above across 5 chains
  • Suggested tools:
    • Merkle claim distributor (similar to Uniswap, Gitcoin)
    • Deployment of claim contract on Ethereum
    • Multi-chain snapshot capability to capture balances across all affected chains
    • Consideration for sSPELL conversion ratios if applicable
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