Moving Forward with Concentric

If you have not read the post-mortem, a Concentric developer was social engineered to download a piece of software that contained malware that allowed the counterparty to access our deployer keys, upgrade the vault implementations and mint vault tokens to burn and withdraw the funds in our vault contracts. It was suggested in our contract audits to convert the deployer to a multi-sig. We acknowledged this comment but unfortunately did not fast-track its development. We now see this was a mistake.

$CONE and $xCONE:

Since the hacker now has access to the deployer wallet, they were able to withdraw the remaining xCONE in the deployer that was going to be used for emissions. Due to this circumstance, to prevent them from converting their xCONE and selling into the remaining liquidity on Camelot, we have decided to sunset the $CONE token. As the team was already thinking about a v2 for $CONE with a higher degree of tokenomics, this is in the best interest of all parties. To sunset $CONE, we will be taking the following steps for token holders:

1. Withdraw remaining CONE-USDC liquidity

2. We will take a snapshot of all CONE, xCONE, and xCONE vesting balances.

3. We will post these balances in a spreadsheet, and allow a 1 week dispute period.

4. We will use the remaining USDC in the liquidity pool to set up a claim contract, where CONE, xCONE and vesting holders can redeem their USDC, and we will blacklist any addresses affiliated with the security breach and team addresses from redemption.

More details will come soon, including the price per token and total USDC in the redemption pool. At the time of this, there are 91141.640823 CONE, 118,128.73 xCONE and 51,665 vesting tokens eligible for redemption. With 120,709.98 USDC remaining in the CONE-USDC LP, each user will be able to claim 0.457 USDC per CONE, xCONE or vesting balance. We will give a 30 day window for users to claim from the contract, and the remaining funds will be allocated to the LP remediation pool.

Liquidity Provider Remediation:

As we continue to work with authorities and relevant industry professionals to track down the funds and return them to LP’s, we will outline this plan below to begin a remediation process. At the time of writing this, the protocol holds about $25,000 in treasury funds and 0 TVL. While we understand getting capital back into hands will be a long process, we will continue to work on the protocol, launch new products, and rebuild the trust we damaged in the process.

1. A snapshot will be taken for all LP balances and converted to dollar value prior to vaults being drained of funds.

2. Each individual user will receive a transferable ERC-20 token corresponding to their dollar denominated vault deposits.This means If you had $1,000 deposited into WETH-USDC, you will receive 1,000 “coneLP” tokens. There are two main objectives to this. As we are sunsetting both CONE and xCONE, 50% of all forward fees will be allocated to this new token, which will accrue these fees indefinitely, meaning even when LP’s are fully reimbursed, they will continue to earn protocol revenue. Making the ERC-20 transferable allows Concentric to use a further portion of fees to start re-purchasing and burning these tokens by offering OTC purchases on Pintswap for $1 each, equal to the raw value of their deposited liquidity. Users, if they wish to sell their Concentric LP debt, may also transact with each other for this ERC-20. This version of the ERC-20 will never be minted again, and as we continue to buy back this token and reimburse LP’s at face value for their deposits, remaining holders will see an increase in overall yield for their own share.

Future Protocol Development:

With $1.7M to work towards reimbursing and $25,000 in assets, the team will continue to develop new products and strategies in the decentralized market making space. Concentric also lost $30,000 in our vaults, as we were anchoring a few lower TVL pools, which consumed over 50% of our assets at the time, and is not nearly enough to make a dent in the remediation process. As a team, we will not give up on our initial vision for the protocol, and still plan to build out all of the products and advancement we were previously working on, and believe the protocol still has a bright future ahead. Below, we would still like to outline our plans beyond beginning the remediation process and sunsetting the token.

1. The team will re-architect some of the backend infrastructure, including fixing any previous comments on our audit that we acknowledged and pose a threat to capital preservation. The front-end is not compromised, and we will continue to use the same website for future products.

2. Once we have created a new deployer contract, we will first work on the CONE claim contract from splitting our LP, and give ample time for CONE, xCONE, and vesting holders to claim their USDC. We will post the spreadsheet of balances in advance of this, allowing a dispute timeframe before finalizing the claim shares.

3. We will post a second spreadsheet with all LP balances in dollar amounts and coneLP distributions, which will then be airdropped to vault depositors affected by recent events.

4. Once 2 and 3 are completed, we will start to slowly re-launch vaults with complete automation, and a flat 75/25 performance fee. As mentioned previously, LP’s will be able to claim their fees directly on the front-end, instead of compounding fees back into the contracts. The 25% performance fee will be allocated as such: 10% will go to coneLP holders indefinitely, meaning we will never sunset the token, and fees will continuously be allocated through these contracts from all future Concentric products. 5% will be used to re-purchase coneLP tokens through Pintswap. We will offer bids on a regular basis, both reducing the supply of coneLP tokens, and raising APR for those who wish to continue receiving future protocol revenue. 10% will be used to replenish the treasury, paying for protocol development, any future audits, and 3rd party services for marketing and account management.